Shares of Yum China Holdings Inc. rallied after hours on Tuesday after the corporate, which runs KFC and Pizza Hut eating places in China, mentioned it deliberate to “significantly accelerate” shareholder returns this yr, whilst different eating places warn of weakening demand in that nation.
Yum China mentioned its board had declared a 23% improve in its money dividend to 16 cents a share, payable on March 26. And it mentioned it deliberate to purchase again $1.25 billion in its inventory this yr.
Shares jumped 16.2% after hours on Tuesday.
The firm introduced the investor payouts in its fourth-quarter earnings launch. Yum China’s complete gross sales throughout the quarter rose 19% to $2.49 billion, above FactSet estimates for $2.32 billion. Same-store gross sales development of 4% additionally topped estimates for a 3% achieve.
Adjusted earnings per share of 13 cents, nevertheless, had been under estimates for 16 cents.
The restaurant operator’s outcomes and deliberate buyback arrived as China’s economic system navigates a wobbly post-pandemic reopening, deepening considerations about debt and a spiraling real-estate market, following the collapse of property-development behemoth Evergrande. But Yum China Chief Executive Joey Wat, within the launch on Tuesday, was optimistic concerning the firm’s prospects.
“Looking ahead, we remain very positive about the vast growth opportunities in China,” Wat mentioned.
“Currently serving just one-third of China’s population, our ambitious goal is to extend our reach to half of the population by 2026,” he continued. “Over half of our new stores are located in lower-tier cities, strategically positioned to capture the demand from long-term consumption upgrades there.”
Elsewhere, chains like McDonald’s Corp. and Starbucks Corp. have mentioned just lately that buyers in China have grown extra reluctant to spend. Rivals, they famous, have lower costs.
Starbucks
SBUX,
throughout its earnings name final month, warned of a “slower-than-expected recovery in China, driven by a more cautious consumer.” However, executives mentioned they weren’t fascinated with coming into the low cost fray, and would as an alternative attempt to place itself as a “premium” model there.
McDonald’s
MCD,
throughout its personal earnings name Monday, painted an analogous image of the economic system in China.
“Certainly in China, as you’ve read about and seen with a number of other companies, consumer sentiment in the country is a little bit more under pressure right now,” McDonald’s Chief Executive Chris Kempczinski mentioned.
“Q4 in particular, we saw the environment get more promotional,” he mentioned. “We didn’t necessarily follow that, but certainly the environment’s getting more promotional, and our focus is on making sure that we remain competitive.”
Source web site: www.marketwatch.com
