Yum Brands Launches Strategic Review Of Pizza Hut Amid Struggling Sales

• CEO Chris Turner said that Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum Brands
• Yum Brands said that it has not set a deadline or definitive timetable for the completion of the strategic options review.
• The company noted that quarterly worldwide system sales grew 5%, excluding the impact of foreign currency translation, led by Taco Bell at 9% and KFC at 6%.

Yum Brands (YUM) said on Tuesday that it has initiated a formal review of strategic options for the Pizza Hut brand.

The company said that the intent is for Pizza Hut to reach its full potential for the benefit of its franchisees, consumers, and employees, and to maximize value for Yum shareholders.

Yum Brands stated that it has not set a deadline or definitive timetable for completing the strategic options review, and there can be no assurance that this review will result in any specific outcome or transaction. 

Pizza Hut has been struggling over the last several quarters to keep up with competition in the restaurant industry and drive demand. Analysts note that consumers, mainly in the United States, are becoming increasingly cautious about spending on dining out to save money.

Retail sentiment on Yum Brands remained unchanged in the ‘bullish’ territory, with message volumes at ‘normal’ levels, according to data from Stocktwits. Shares of the company were up over 2% in premarket trading.

Yum Brands CEO's View On Pizza Hut

“Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value, which may be better executed outside of Yum! Brands,” Yum Brands CEO Chris Turner.

He added that the Pizza Hut team has been working hard to address business and category challenges.

“Pizza Hut is a beloved global brand and industry innovator that connects people through the joy of pizza, and we are confident in its long-term future,” said Turner.

Yum Brands Q3 Results

The company reported on Tuesday quarterly net revenue of $1.98 billion, compared with Wall Street expectations of $1.97 billion, according to data compiled by Fiscal AI.

Yum Brands’s third-quarter adjusted earnings per share came in at $1.58, compared with estimates of $1.48.

The company noted that quarterly worldwide system sales grew 5%, excluding the impact of foreign currency translation, led by Taco Bell at 9% and KFC at 6%. On the other hand, worldwide system sales for Pizza Hut fell 1% in the quarter, lagging behind the other two divisions and indicating a strained business for the unit.

Shares of Yum Brands have gained nearly 4% this year.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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