Yum Profit Tops Estimates as Taco Bell Bolsters Sales
Amidst turmoil in China, Yum! Brands is experiencing much better growth in the domestic market as sales of Taco Bell are up in America. The increase in sales was enough to offset losses in China. China recently has been facing a drop in sales due to a scare in the chicken supply and the current environment involving bird flu.
Although the net income of Yum! Brands has decreased from a year ago, it was still able to beat analysts in terms of profit per share, hitting 70 cents per share versus the average estimate of 60 cents. The stock rose 5.7 percent, off-setting losses from the incident in China, but the stock is still down an overall 3.4 percent for the year.
I feel that the increase in sales in the domestic market is a strong indicator of the confidence the consumer has in America, especially considering that Yum! Brands was still able to top estimates with China dragging down total sales overall. However, although Yum! Brands is working to introduce new products that will boost sales in America, I think it is very important that they resolve the problems that plague the brand in China, or else sales will continue to drop and hurt total sales to the point where the domestic market alone will not be enough to pull up the average.