Yum's Profit Pressured by Stake in Grubhub--Update
October 30 2019 - 09:58AM
Dow Jones News
By Micah Maidenberg
Yum Brands Inc. marked down the value of its investment in
Grubhub Inc., a move that hurt the restaurant chain's third-quarter
profit but doesn't reflect the recent major selloff in shares of
the delivery service.
The owner of the KFC, Taco Bell and Pizza Hut restaurant chains
on Wednesday said it recorded a $60 million pretax expense tied to
its bet on the delivery service, a move that sliced off 15 cents
from its earnings per share for the quarter.
That markdown reflected Yum's valuation of the investment as of
the end of September, according to a spokeswoman. In February of
last year, the company paid $200 million to take what was then a 3%
stake in Grubhub to bolster its delivery business.
Grubhub shares plunged 43% on Tuesday after the Chicago-based
company on Monday issued a downbeat forecast for sales and profits,
warning about competition among delivery services and slowing
growth in the sector.
Yum on Wednesday reported global same-store sales, or sales from
locations open for at least a year, rose 3% in the quarter.
Same-store sales increased 3% in the KFC business and 4% at Taco
Bell, Yum said. Pizza Hut's had flat same-store sales. System sales
in the U.S. at Pizza Hut restaurants dropped 2% in the quarter.
"There is always unfinished business," Chief Executive Greg
Creed told analysts. "This unfinished business is probably most
pronounced at Pizza Hut U.S."
Yum, based in Louisville, Ky., reported quarterly net income
fell to $255 million, or 81 cents a share, from $454 million, or
$1.40 a share, in the same quarter last year.
General and administrative expenses increased 2%, while costs
covering franchise advertising and services jumped 13%.
Total revenue slipped 4% from the year earlier, to $1.34
billion, the company said, in line with expectations from
analysts.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
October 30, 2019 09:43 ET (13:43 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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