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SHANGHAI - On Tuesday, Yum China Holdings, Inc. (NYSE:YUMC) reported better-than-expected second quarter earnings as operating profit jumped 14% YoY to a record high for the period.
The company’s shares were up 2.19% in pre-market trading following the announcement.
The fast-food restaurant operator posted adjusted earnings of $0.58 per share, slightly above analyst estimates of $0.57, while revenue matched expectations at $2.79 billion, representing a 4% increase from the same period last year. The company achieved a 1% same-store sales growth, marking a positive turnaround from the previous quarter, supported by a 2% increase in same-store transactions - the tenth consecutive quarter of transaction growth.
Operating profit margin expanded 100 basis points to 10.9%, reaching a second-quarter record high, driven by restaurant margin expansion and G&A savings. Restaurant margin improved to 16.1%, up 60 basis points YoY, primarily due to savings in food and paper costs and other operating expenses.
"I am pleased to announce that we achieved solid results in the second quarter. We turned same-store sales growth positive while expanding our store portfolio to nearly 17,000 locations," said Joey Wat, CEO of Yum China. "Our dual focus on innovation and operational efficiency enabled us to deliver compelling value and experiences to our customers."
The company opened 336 net new stores during the quarter, bringing its total store count to 16,978 as of June 30, including 12,238 KFC stores and 3,864 Pizza Hut locations. Notably, 26% of new store openings came from franchisees, aligning with the company’s strategy to increase franchise participation.
Digital sales reached $2.4 billion, with digital ordering accounting for approximately 94% of total company sales. Delivery sales grew 22% YoY, contributing approximately 45% of total company sales.
Yum China also continued its shareholder return program, repurchasing $184 million in shares and paying $90 million in cash dividends during the quarter. The company declared a quarterly dividend of $0.24 per share, payable on September 23.