Yum Brands (YUM) Q2 2020 earnings report: Same same-store sales down

Yum Brands on Thursday reported that global same-store sales fell 15{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the fiscal second quarter as most of its dining rooms remained closed, but it said sales have begun to stabilize in open locations. 

“Digital sales were a big driver of the dramatic improvement in sales from the initial impact of COVID-19, reaching an all-time high of $3.5 billion for the quarter, an increase of more than $1 billion over the prior year,” CEO David Gibbs said in a statement. “Same-store sales trends for open stores stabilized in June just a few points short of flat … and these trends have continued into July.”

Yum Brands shares were down 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in premarket trading. 

Here’s what the company reported, compared with what Wall Street was expecting based on a survey of analysts by Refinitiv:

• Earnings per share: 82 cents, adjusted, vs. 54 cents expected
• Revenue: $1.2 billion, vs. $1.19 billion expected

Yum said net income for the quarter ended June 30 was $206 billion, or 67 cents per share, down from $289 billion, or 92 cents per share, a year earlier. The company’s minority stake in Grubhub favorably impacted earnings per share by 21 cents.

Net sales fell to $1.2 billion, down 8.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} compared with a year earlier.

KFC was the weakest performing division, with same-store sales down 21{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the quarter. However, the fried chicken chain reported an 8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} increase in U.S. systemwide sales. It’s the only region where the chain reported a systemwide sales increase compared with last year. In China, which accounts for more than a quarter of the chain’s annual sales, the company reported a 6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} decrease in quarterly sales, excluding the impact of currency.

Pizza Hut, typically the laggard of Yum’s portfolio, reported a 9{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} drop in global same-store sales. In the U.S., which accounts for 42{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of Pizza Hut’s annual sales, systemwide sales rose 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. In the chain’s second biggest market, China, the company said sales fell 12{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

Taco Bell’s quarterly same-store sales dropped 8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. The company warned earlier this month that the chain’s U.S. same-store sales had declined by high-single digits so far in the quarter, although they turned positive from the end of April through May. 

Yum is trying to recover after many of its stores were shuttered due to government responses to the coronavirus pandemic. At one point, 11,000 Yum locations were closed due to the pandemic, representing more than a fifth of its total restaurant base.

With coronavirus cases surging again across large swaths of the U.S., prompting some local and state officials to roll back reopening efforts, Yum has continued to struggle to navigate the public health crisis. 

— CNBC’s Amelia Lucas contributed to this report.