Yum! Brands Reports Strong Growth, Exceeds Q2 2023 Earnings Projections

Strategic Insights -

Yum! Brands, Inc. reported strong growth in its Q2 2023 earnings, exceeding projections despite headwinds from foreign currency translation and the impact of Russia's invasion on Ukraine. The company's system sales growth, same-store sales growth, and net new unit growth all showed significant improvement, driven by the accelerated use of technology and better leverage of its systemwide scale. The company's Recipe for Good Growth initiative is a key driver of this growth, focusing on unlocking the growth potential of its Concepts and driving increased collaboration across its geographies.

Key Takeaways:

  • System sales growth was up 3% year-over-year, exceeding projections and driven by the company's US market growth.
  • Same-store sales growth was 4.5%, with all three Concepts showing significant growth, driven by the company's operational and advertising initiatives.
  • Net new unit growth was 742 units for the quarter, with gross unit openings totaling 1,025 units.
  • The company removed 1,165 Russia units from its unit count and began excluding their associated sales from total system sales, as part of its Russia exit plan.
  • Foreign currency translation unfavorably impacted Divisional Operating Profit by $17 million and $44 million for the quarter and year to date ended June 30, 2023, respectively.
  • The company's diluted EPS, excluding Special Items, was favorably impacted by $0.09 and $0.02 for the quarter and year to date ended June 30, 2023, respectively, from mark to market adjustments from unrealized investment gains.

Statistics:

  • System sales growth: 3% year-over-year
  • Same-store sales growth: 4.5%
  • Net new unit growth: 742 units (quarter), 1,065 units (year to date)
  • Gross unit openings: 1,025 units (quarter), 1,771 units (year to date)
  • Foreign currency translation impact on Divisional Operating Profit: -$17 million (quarter), -$44 million (year to date)
  • Mark to market adjustments on investment gains: $0.09 (quarter), $0.02 (year to date)
  • Diluted EPS, excluding Special Items: -$0.05 (quarter), -$0.12 (year to date)

Sources:

  • Edgar Online via COMTEX
  • Yum! Brands, Inc. Q2 2023 Earnings Report