Yum China Holdings Inc. (NYSE: YUMC) reported its first-quarter financial results before the markets opened on Thursday. The company posted $0.44 in earnings per share (EPS) and $1.28 billion in revenue, versus consensus estimates from Thomson Reuters that called for EPS of $0.23 and $1.6 billion in revenue.
Same-store sales grew 1%, including growth of 1% at KFC and 2% at Pizza Hut Casual Dining. Total system sales grew 4%, including growth of 3% at KFC and 9% at Pizza Hut.
During the quarter, the company opened 133 new restaurants, bring its total network of restaurants to over 7,600 in its system.
Total restaurant margin increased 3.7 percentage points to 23.0%, primarily aided by the impact of retail tax structure reform implemented in May 2016. KFC had a restaurant margin of 12.6% and Pizza Hut Casual Dining had 23.0%, versus 21.2% and 15.8%, respectively, in the first quarter last year.
On the books, Yum China cash, cash equivalents and short-term investments totaled $1.25 billion at the end of the quarter, compared with $964 million at the end of the previous fiscal year.
CEO Micky Pant commented:
I am very pleased with our performance in the first quarter of 2017, and at Yum China we are facing the future with increasing confidence. Both KFC and Pizza Hut Casual Dining delivered positive same-store sales in the first quarter of 2017, with KFC successfully lapping a particularly strong year ago performance. In addition to a good sales performance, our new unit builds, restaurant margin and operating profit showed strong improvement. We have over 7,600 restaurants, with a two-to-one lead over the nearest Western Quick-Service Restaurant competitor and an approximately six-to-one lead over the nearest Western Casual Dining Restaurant competitor, in China.
We are especially gratified with the progress made on two key drivers of growth – Digital and Delivery. A network of over 4,400 restaurants in our system offer delivery services and we believe we have established an infrastructure for continued growth. In the first quarter of 2017, delivery represented about 12% of our company sales. With approximately 93 million loyalty program members between KFC and Pizza Hut Casual Dining, we believe we have unprecedented insights into consumer behavior and have been engaging with them across the digital eco-system: from pre-order to payment.
Shares of Yum China were trading up over 11% at $31.28 on Thursday, with a consensus analyst price target of $32.45 and a 52-week trading range of $23.79 to $32.12.