I think Yum! may be a one-off situation. The business of fried chicken has just cooled there, and I can't draw any other conclusion. Plus, it is worth pointing out that the U.S. slowed a bit, too. It was, alas, a huge disappointment for a stock that had been on a tear of late.
All that said, Yum! is a remarkably run company. I would not be surprised if the stock hasn't overreacted to this news. My inclination would be to hold on to it if you own it. I believe you could get out at a higher price.
In general, it is worth pointing out, though, that the restaurant stocks have become quite inhospitable of late, with everyone from McDonald's (MCD) and Darden Restaurants (DRI) to Cracker Barrel (CBRL) and Chipotle Mexican Grill (CMG) disappointing the Street. Only Panera Bread (PNRA) remains solidly in the plus column.
My takeaway: Don't draw a conclusion that China is slipping back. We have way too much evidence to the contrary. Just conclude that something is awry right now in China for Yum! and that, not too long from now, Chairman and CEO David Novak will fix it, and, ultimately, there will be better times ahead.Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long SBUX.
J.C. Penney's Blip Posted at 3:35 p.m. EDT on Wednesday, Nov. 28 How important is IZOD to J.C. Penney (JCP)? From the looks of today's action -- when I simply reiterated this morning what PVH (PVH) CEO Manny Chirico said last night, that its IZOD brand is selling well at J.C. Penney -- it seems very important. But as is often the case, the way to play IZOD is with PVH. IZOD is one of the legacy brands that have gone from being a negative when it comes to growth -- not cash flow, as it is always bountiful-- to being a positive. You have 7% growth in legacy now vs. losses, and some of that is because of the push by J.C. Penney to feature IZOD as one of its key brands. The reason I say that you should play IZOD with PVH is simple: I don't know what J.C. Penney's making on IZOD, but I do know that PVH is being paid its price no matter what. For all I know, J.C. Penney's giving the stuff away.
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