"Extraordinary volatility in financial markets" hit a new victim in China: pizza sales.
That's the message Yum Brands CFO Patrick Grismer gave analysts during an earnings conference call after posting massively disappointing results. The warnings sent the stock 19 percent lower, wiping out about $7 billion in market value.
Yum's Pizza Hut casual dining chain saw a "sudden and sharp deceleration at the end of August" that persisted in the fourth quarter, even as its KFC unit saw continued recovery in China in September, Grismer said Wednesday.
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In mid-August, China devalued its currency, and since then, the Shanghai Composite has sold off. This coincides with when Pizza Hut same-store sales began to materially change in the country, Grismer said.
At Yum China's Pizza Hut unit, people are cutting back on parties and entertaining, said CEO Greg Creed, adding there is "clearly a macro softening going on" in the country though "the economy is still growing."
Foreign exchange headwinds also hit results.
Analysts had expected same-store sales to jump 9.6 percent in the key China unit, but they only ticked 2 percent higher.
Following the massive miss, Yum now expects full-year China same-store sales to be "low single digit negative" and full-year EPS growth to be positive in the low single digits.