Image source: Yum Brands earnings press release, Oct. 29, 2020
By Nivedita Balu
(Reuters) – Yum Brands Inc posted a smaller-than-expected drop in comparable sales and beat profit estimates on Thursday, helped by strong online sales at its Taco Bell chain as COVID-19 pandemic fears kept customers at home.
Yum Chief Executive Officer David Gibbs said online sales in the third quarter surged by over a billion dollars to $4 billion from a year earlier, setting a new quarterly record.
“Drive-thru demand skyrocketed this quarter as Taco Bell served over 30 million more cars.”
Taco Bell, which trounced third-quarter comparable sales estimates, remains the crown jewel in Yum’s portfolio, Cowen analyst Andrew Charles said in a note.
CEO Gibbs said while the upward online sale trend continues in the current quarter, pandemic-related uncertainty persists. He said there could be more challenges from fresh lockdowns.
Yum's net income rose about 11% to $283 million, helped by $8 million in pre-tax income due to change in fair value of its investment in Grubhub Inc, which would be acquired by European online food-ordering company Just Eat Takeaway.com NV early next year, once approved by regulators.
Yum sold its stake in food delivery firm Grubhub for $206 million, more than two years after making a $200 million investment to improve its delivery services.
Comparable sales fell 2% for the KFC owner in the quarter ended Sept. 30, compared with the estimate of a 3.74% slide, according to IBES data from Refinitiv.
Excluding items, Yum earned $1.01 per share, 21 cents more than expectations.
Reporting by Nivedita Balu in Bengaluru; Editing by Bernard Orr and Shinjini Ganguli
Source: Reuters, Yum Brands