Yum Brands cut its full-year profit forecast, citing a slower-than-expected recovery in its key market, China. Shares plummeted. Fred Katayama reports.
Yum's earnings looked more like yuck for investors. The company behind KFC and Pizza Hut reported third quarter earnings and revenue below Wall Street's estimates, and it cut its full-year profit forecast. Same-store sales for Yum's China division grew far slower than analysts' targets. The culprits: a strong dollar, and a slower-than-expected recovery in China. That's its biggest market for profit and sales. Its shares losing about a fifth of their value. Yum's challenges in China are in sum the 3Ms; a meat scandal, marketing missteps at Pizza Hut, and managing an economic slowdown. Reuters markets editor David Gaffen: SOUNDBITE: DAVID GAFFEN, REUTERS MARKETS EDITOR (ENGLISH) SAYING: " lot of people were trying to link the weak performances in U.S. stocks coming from mid August or so to China, and definitely it's part of it. You can kind of really put a chart up of China's main indexes and Yum brands and it certainly looks a heck of a lot closer." Separately, skincare products company Nu Skin's shares dropped sharply after reporting weak sales in China - leaving investors wondering what other companies could disappoint as earnings season kicks off.