Copyright Benzinga
Yum! Brands, Inc. (NYSE:YUM) shares rose on Tuesday after the fast-food giant topped third-quarter estimates and unveiled major strategic moves, including a review of its Pizza Hut business and U.S. expansion plans for Taco Bell. The company reported third-quarter adjusted earnings per share of $1.58, beating the analyst consensus estimate of $1.49. Quarterly sales of $1.979 billion outpaced the Street view of $1.970 billion. Also Read: Pfizer’s Core Drugs Offset COVID Revenue Drop, Lifts 2025 Profit Outlook Despite Tariffs Worldwide system sales grew 5% excluding foreign currency translation, driven by a 9% increase at Taco Bell and a 6% rise at KFC. The KFC Division opened 760 gross new restaurants across 60 countries, while the Taco Bell Division opened 74 gross new restaurants across 14 countries. Pizza Hut Division opened 289 gross new restaurants across 31 countries. Habit Burger & Grill Division opened 8 gross new restaurants. The company’s unit count expanded by 3%, including 1,131 gross new units in the quarter. Digital system sales hit a record $10 billion, representing a record digital mix of roughly 60%. Foreign currency translation favorably impacted divisional operating profit by $7 million. Strategic Review Yum! Brands initiated a strategic review to explore options for the Pizza Hut brand aimed at maximizing long-term value. The company highlighted Pizza Hut’s strong brand equity, scale, and global franchise network as key advantages. “The Pizza Hut team has been working hard to address business and category challenges; however, Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum! Brands,” said CEO Chris Turner. “To truly take advantage of the brand we’ve built and the opportunities ahead, we’ve made the decision to initiate a thorough review of strategic options.” Yum! expects to finalize the acquisition of 128 Taco Bell restaurants in the Southeast U.S. in the fourth quarter. The deal will boost EBITDA, operating profit, and development potential through high-margin, mature assets. Apart from this, new leadership changes took effect on October 1, including the appointment of Chief Financial Officer Ranjith Roy. Sean Tresvant becomes Taco Bell CEO and Chief Consumer Officer, while Jim Dausch is elevated to Chief Digital & Technology Officer and President of Byte by Yum!. Long-term Outlook Yum! Brands outlined its long-term growth algorithm, originally announced in 2022. The company aims for an average annual unit growth of 5%. It targets 7% system sales growth, excluding foreign exchange and the 53rd week. Additionally, Yum! expects to deliver at least 8% core operating profit growth over time, also excluding foreign exchange and the 53rd week. Price Action: YUM shares were trading higher by 6.87% to $148.95 at last check Tuesday. Read Next: Lattice Semiconductor Analysts Boost Their Forecasts After Q3 Earnings Photo by Iv-olga via Shutterstock
