The owner of the KFC and Taco Bell chains said Monday that its third-quarter profit rose to $270 million, or 50 cents a share, from $230 million, or 42 cents a share, a year earlier. Analysts polled by Thomson Financial projected earnings of 45 cents a share.
Revenue climbed 13% to $2.56 billion, besting Wall Street's $2.44 billion target. Yum!'s same-store sales, or sales at restaurants open at least a year, rose 4%.
That growth was buoyed by a 11% rise in same-store sales in mainland China, where Yum! has 2,347 restaurants. The company's international division, consisting of foreign areas other than China, recorded a 7% same-store sales jump.
In contrast, U.S. same-store sales rose 1% in the quarter.
"Strong unit expansion and same-store-sales growth led to system-sales growth well above our ongoing target for both our mainland China business and YRI," said Chairman and CEO David Novak. "Our U.S. business performance improved versus the first half of the year; however, sales and profit growth remains below our target level due to results at Taco Bell."
U.S. same-store sales at Taco Bell dropped 6% in the quarter. The chain has been hit by a string of negative publicity over the past year, with an E. coli outbreak at a few restaurants and a rat infestation in a New York City store.
The company said, though, that it expects improved Taco Bell results and "solid" U.S. profit growth.
For the year, Yum! now expects earnings to grow 13%, rather than its prior projection of 12%. That works out to earnings of $1.65 a share, a penny above the current average analyst estimate.
Yum! also said it will buy back up to $4 billion of its stock by the end of 2009, a move that could cut its shares outstanding by up to 20%. Already, the company has lowered its share count by 12% through stock repurchases over the past three years.
The latest buyback is expected to begin with the repurchase of $1.25 billion in stock over the next 12 months.
Shares of Yum! Brands were up $1.21, or 3.3%, to $37.50 in after-hours trading.