Yum's China same-store sales to drop in Q4; EPS guidance lowered


YUM's Chinese same-store sales fell 11% Y/Y in September (13% at KFC), slightly worse than August's 10%. Moreover, the company now thinks it's "unlikely China Division same-store sales will be positive for the fourth quarter."

Thanks to China and a higher-than-expected tax rate, Yum now expects 2013 EPS to be down by a "high-single to low-double-digit percentage" Y/Y; the consensus is for a 6% drop to $3.06. 2014 EPS growth of "at least 20%" is promised.

Same-store sales were flat in the U.S. and up 1% for Yum Restaurants International (YRI). Yum's global restaurant margin fell 1.3% Y/Y to 17.6%.

The China unit had a $335M op. profit -11% Y/Y. It added 132 restaurant units in Q3, raising its YTD total to 458. Sales +1% Y/Y.

YRI had a $163M op. profit, -6% Y/Y. 215 new units were added. Sales +1%. India division same-store sales were flat, but systems sales rose 24% thanks to unit growth.

The U.S. division had a $164M op. profit, +1% Y/Y. Growth would've been 6% if not for refranchising.

YUM -6.5% AH. CC at 9:15AM ET tomorrow. Q3 results, PR.

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