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Yum earnings beat, but sales growth disappoints

Monday, 3 Feb 2014 | 4:42 PM ET
David C. Novak, chief executive officer of Yum! Brands Inc., reacts during an interview after the opening of the company's new KFC restaurant in Calangute, Goa, India.
Dhirah Singh | Bloomberg | Getty Images
David C. Novak, chief executive officer of Yum! Brands Inc., reacts during an interview after the opening of the company's new KFC restaurant in Calangute, Goa, India.

Yum Brands reported quarterly earnings that beat analysts' expectations on Monday, but same store sales in U.S. and China stores disappointed.

The company said same-store sales in China dropped 4 percent, while they came down 2 percent in the U.S.

After the earnings announcement, the company's shares rose 4 percent in extended-hours trading.

(Click here to see what the company's shares are doing now.)

The company posted fourth-quarter earnings excluding items of 86 per share on sales of $4.18 billion.

Analysts had expected the company to report earnings excluding items of 80 cents a share on $4.26 billion in revenue, according to a consensus estimate from Thomson Reuters.

Last month, the parent company of KFC, Pizza Hut and Taco Bell said December sales at established restaurants in China, its top market, rose a weaker-than-expected 2 percent as results at its Pizza Hut Casual Dining chain fell far short of Wall Street estimates.

In an attempt to keep up with trendy competitors—offering quick, made-to-order pies—Pizza Hut recently said it plans to start offering pizza by the slice for the first time in two test U.S. locations.

The tests reflect how established restaurant chains are scrambling to reinvent themselves to keep pace with a rapidly changing industry.

Louisville, Ky.-based Yum has struggled since late 2012 to counter reports in China that its chicken suppliers were using unapproved levels of antibiotics.

Yum is the biggest Western fast-food operator in China, thanks in large part to the success of its KFC restaurants.

A survey conducted in November found nearly 40 percent of respondents were still very concerned about antibiotic use in KFC chickens.

Yum has since culled underperforming suppliers and begun an aggressive marketing campaign.

—By CNBC.com with Reuters

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