Exhibit 99.1

Yum China Reports First Quarter 2020 Results

 

Total Revenues down 24%. System Sales down 20% and Same Store Sales down 15% in constant currency

Opened 179 new stores and Reported $97 million Operating Profit despite Unprecedented COVID-19 Impact

 

Shanghai, China (April 28, 2020) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC) today reported unaudited results for the first quarter ended March 31, 2020.

 

Impact of COVID-19 Outbreak and Mitigation Efforts  

 

As the COVID-19 outbreak progressed, Yum China further heightened its focus on safeguarding the health and safety of its employees and customers. The Company implemented stringent health measures at its restaurants and workplaces, and provided extended healthcare and other support to employees.

 

First quarter operations were significantly affected by the outbreak. Working closely with local health authorities to safeguard the public, the Company began temporary store closures in late January where appropriate. Approximately 35% of stores were closed by mid-February at the peak of the outbreak, with significant regional differences. As of the date of this release, approximately 99% of stores in China are either partially or fully open.

 

For restaurants that remained open, same-store sales declined due to shortened operating hours and reduced traffic, with a significant portion of stores providing only delivery and takeaway services. Our results were strong for the first three weeks of January, but then the outbreak led to subsequent same-store sales declines of 40-50% compared to the comparable Chinese New Year holiday period in 2019. As the first quarter progressed, sales performance recovered gradually, with same-store sales down approximately 20% in late March. The pace of recovery is uneven with recent sales and traffic still below pre-outbreak levels as people continue to avoid going out and practice social distancing. Same-stores sales were still down by more than 10% month-to-date.

 

Yum China pioneered contactless delivery and contactless takeaway in late January to enhance preventative health measures. Those services proved popular with customers and have supported the businesses during this period of reduced dine-in traffic. Delivery contributed to 35% of Company sales in the first quarter, an increase of 16 percentage points year over year.

 

Sales deleveraging and additional costs incurred reduced restaurant margin and Operating Profit for the quarter. Those negative impacts were partially offset by effective cost management, labor productivity improvement, and one-time relief provided by our landlords and government agencies.

 

During the quarter, the Company opened 179 new stores, with the majority opened in January before the Chinese New Year. After that, openings were interrupted due to outbreak-related traffic restrictions and unavailability of construction workers. The Company subsequently resumed new store construction with four store openings in late March.

 

First Quarter Highlights

 

Total revenues declined 24% year over year to $1.75 billion from $2.30 billion (a 21% decline excluding foreign currency translation (“F/X”)).

 

 

Total system sales declined 20% year over year, with declines of 15% at KFC and 38% at Pizza Hut, excluding F/X.

 

Same-store sales declined 15% year over year, with an 11% decline at KFC and 31% decline at Pizza Hut, excluding F/X.

 

Restaurant margin was 10.7%, compared with 18.5% in the prior year period.

 

Operating Profit declined 68% year over year to $97 million from $303 million (67% decline excluding F/X). Adjusted Operating Profit declined 67% year over year to $98 million from $303 million (66% decline excluding F/X).

 

 

Effective tax rate was 32.7%.

 

Net Income declined 72% to $62 million from $222 million in the prior year period, primarily due to the decline in Operating Profit and mark-to-market loss from our equity investment in Meituan Dianping.

 

 

Yum China Holdings, Inc. •  Shanghai, China •  Website http://ir.yumchina.com

 


The following information was filed by Yum China Holdings, Inc. (YUMC) on Tuesday, April 28, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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