Yum! Brands, Inc. (NYSE:YUM) famously known for its lucrative Taco Bell, KFC and Pizza Hut chains reported continued low operations despite improvements.
The company’s results for the latest quarter still recorded less than stellar overall performance though there was some improvement noted. The company is still not up there with its projected performance. The sales and profits values were weaker than anticipated and, as a result, the firm’s stock was on the downturn. The company reported that its net profits for the second quarter dropped by 30% to $235 million, and the decline had a boost from the one-time charges.
Roughly half of the company’s sales are designated for the Chinese market, and that is why Yum! Brands have been placing more emphasis on the Chinese market with its expansion plans. Unfortunately, sales in the region have not been at their best for the past few years. The dismal performance might be attributed to fears about the quality of foods according to some reports.
The firm reported that sales dropped by 4% in the second quarter. Sales in restaurants that have been in operation for more than a year experienced a 10% decline, thus pulling down the overall growth for the company. Yum had already estimated that the sales value for this year’s second quarter would be less than those recorded in the corresponding quarter of 2014. Looking at it from a different perspective, there was a mild improvement because the sales in the first quarter dropped by 12% as opposed to the 16% drop in the fourth quarter last year.
Some of the challenges that Yum! Brands, Inc. (NYSE:YUM) has been facing include claims that it had been selling expired meat in 2012 and that the KFC suppliers had been using growth hormones for their chicken. More rumors purported that KFC was using genetically modified chicken. Last month, Yum said it would file a lawsuit against the Chinese rival firms that have been spreading the false claims. The company further added that the claims had negatively affected its performance and tarnished its name.
