Consumer Sector Ideas

[gfp927z]

>>> Procter & Gamble Dinged By Beauty and Diaper Sales Declines


Investopedia

by Bill McColl

Jul 30, 2024


https://finance.yahoo.com/news/procter-gamble-dinged-beauty-diaper-150851535.html


Key Takeaways

Procter & Gamble posted a decline in sales of beauty products and diapers, and shares tumbled Tuesday.

The consumer products giant missed revenue estimates, although adjusted profit was better than expected.

P&G also faced what it called "unfavorable foreign exchange impacts."

Shares of Procter & Gamble (PG) tumbled Tuesday when the consumer products giant missed revenue estimates as sales of its beauty products and diapers declined.

P&G reported fiscal 2024 fourth-quarter revenue was basically unchanged from last year at $20.53 billion, affected by “unfavorable foreign exchange impacts,” while the average of analysts surveyed by Visible Alpha came in at $20.75 billion. Adjusted earnings per share (EPS) of $1.40 was above forecasts.

CFO Says Supply-Chain Constraints Hit Luvs

Beauty division sales fell 1% year-over-year to $3.72 billion, hurt by lower demand for the super-premium SK-II brand and in Greater China. Sales at its Baby, Feminine & Family Care unit dropped 3% to $5.01 billion, and Chief Financial Officer (CFO) Andre Schulten explained in an interview that the company wasn't able to innovate its Luvs diaper brand because of supply-chain constraints.

Chief Executive Officer (CEO) Jon Moeller said the company faced "a challenging economic and geopolitical environment" during the year.

Even with today's 6% declines to $159.69 as of 11 a.m. ET, shares of Procter & Gamble are about 9% higher year-to-date.

<<<



---

[gfp927z]

Procter + Gamble - >>> Coca-Cola Is a Rock-Solid Dow Dividend Stock, but So Is This Dividend King That Paid $9 Billion in Dividends Over the Last Year


by Daniel Foelber

Motley Fool

Jul 5, 2024


https://finance.yahoo.com/news/coca-cola-rock-solid-dow-075100352.html


Coca-Cola (NYSE: KO) checks all the boxes of a rock-solid dividend stock. It is an industry-leading, well-known business with diversification across beverage categories and geographic markets. It is a member of the Dow Jones Industrial Average, whose 30 components act as representatives of the broader market. It is also a Dividend King with 62 consecutive years of divined increases. And it has a compelling yield at 3.1%.

Procter & Gamble (NYSE: PG), commonly known as P&G, operates in completely different industries than Coke -- including fabric, home care, baby, feminine, healthcare, and beauty. But as an investment, P&G is very similar to Coke in that it distributes a boatload of money to investors through dividend payments.

Here's why P&G is a safe dividend stock that's worth a closer look.

P&G's multifaceted capital return program

P&G and Coke are two massive companies with sizable dividends. Their payouts are so large that P&G has paid over $9 billion to shareholders in the last 12 months while Coke has paid just shy of $8 billion -- earning both companies a spot on the list of the 10 largest companies by dividend expense.

The key difference between P&G and other companies that focus solely on a dividend is that it also buys back a ton of its own stock. P&G has reduced its share count by 12.9% over the last decade compared to just 1.8% for Coke. Reducing the share count increases earnings per share -- making the company a better value. P&G's consistent dividend, paired with its buyback program, more than makes up for its slightly lower yield of 2.5%.

Overcoming glaring challenges

The biggest issue with P&G in recent years is sales volume. The company has done a masterful job of improving operations and leveraging price increases. But brand consolidations and lower volume have resulted in very little sales growth -- just 12% over the last decade.

Still, P&G is undeniably a far better business today. As you can see in the chart, P&G's operating income has grown at a far higher rate than sales, indicating that it is expanding margins. When operating income grows faster than sales, it means a company is becoming more efficient and squeezing more profit out of each dollar it brings in from revenue. P&G's higher margins are a testament to its focus on quality over quantity. It has doubled down on its best brands rather than overexpand and become wasteful.

I'll admit, I had doubts about P&G, especially as inflation was ramping up a couple of years ago. But the company's results speak for themselves -- indicating P&G has impeccable pricing power. P&G's biggest advantage is attracting and retaining customers at different price points. For example, it owns Tide, Downy, Gain, and Bounce -- which have varying product offerings and price points. If customers pull back on spending, they may switch from Tide to Gain, but that doesn't mean P&G will lose the customer altogether.

By comparison, if a consumer chooses to shop at Walmart instead of Target, Target loses out completely. P&G's brands work together and protect the company from industry challenges even during economic downturns. This diversification and consistency makes P&G such a reliable dividend stock, no matter what the economy is doing.

The P&G premium

Aside from its stagnating sales growth, the biggest red flag for buying P&G stock now is its valuation.

P&G's price-to-earnings ratio is 26.6 -- which is high for a stodgy consumer staples company. But as mentioned, P&G is no ordinary dividend stock. It is a Dow component with 68 consecutive years of dividend increases.

The problem is that investors must pay a premium price for P&G's quality. But at least its historical valuation indicates this has been the case for a while now, as P&G's 10-year median P/E is 25.3. There are plenty of less expensive options than P&G, including Coke. Still, the fact that P&G has long sported a premium valuation should help investors understand that the stock isn't necessarily overpriced.

The perfect safe dividend stock

P&G's sales volume stagnated in its recent quarter (third-quarter fiscal year 2024). The company's guidance suggests 2% to 4% revenue growth for the full fiscal year, over $9 billion in dividends, and $5 billion to $6 billion in buybacks.

Investors should expect P&G to return to mid-single-digit sales growth in fiscal 2025 while retaining its high margins. Still, the company continues to deliver for shareholders in its capital return program.

P&G is the perfect dividend stock for risk-averse investors who aren't trying to outperform the S&P 500, but want to preserve capital and collect a steady stream of passive income from a company that can put up solid results even during a recession.

<<<



---

[gfp927z]

>>> 4 Reasons to Buy Celsius Stock Like There's No Tomorrow


by Josh Kohn-Lindquist

The Motley Fool

Jun 19, 2024


https://finance.yahoo.com/news/4-reasons-buy-celsius-stock-091552096.html


By disrupting the energy drink duopoly owned by Red Bull and Monster, functional energy drink upstart Celsius (NASDAQ: CELH) has grown to account for 11.5% of its industry's U.S. sales -- becoming the only new brand to reach this mark in the last decade.

Now firmly the No. 3 brand in the energy drink space, Celsius is larger than the No. 4 and No. 5 labels combined. It's grown from a mere 3.5% share of its category two years ago to its current double-digit level, and the company has seen its share price more than double since 2022.

Now, with the company's share price down 35% over the last month due to short-term worries, the time looks right to buy Celsius, thanks to these four key reasons.

1. Celsius is unlocking new opportunities with PepsiCo

After signing a massive agreement with beverage giant PepsiCo (NASDAQ: PEP) in 2022, Celsius finally gained the distribution heft it needed to launch its sales into full hypergrowth mode. It averaged triple-digit sales growth in the two years following the deal. The company has picked most of the low-hanging fruit after joining PepsiCo's network. However, there should be plenty of growth remaining in this distribution agreement.

First, building upon its land-and-expand strategy, Celsius now looks to execute the "expand" portion of this game plan by growing the display space it has in all the new stores it recently entered with PepsiCo's help. In highlighting this point in its first-quarter 2024 earnings press release, management explained: "We estimate that retailers' spring shelf resets were approximately one-third complete as of March 31st, and once concluded, we are expecting our best shelf space gains in company history."

At an investor conference on June 11, CEO John Fieldy explained that labor shortages have led to delays on these shelf resets, but that gains should be evident over the summer and fall quarters.

Second, partnering with PepsiCo has opened Celsius up to the food service channel. Case volume for this vertical grew by 186% in Q1 and already accounts for 12% of Celsius' total sales made to PepsiCo. Not only will this burgeoning channel bring sales growth, but it should also increase brand awareness for Celsius drinks as they continue to become more common across a broader array of locations.

2. Top-notch margins

What makes Celsius' incredible sales growth over the last few years all the more impressive is that it already boasts a 19% net profit margin. While this profitability is relatively new, with the company only breaking even in 2023, it already ranks favorably compared to some of its massive beverage peers -- an incredible feat considering the company's rapid growth.

This robust net profit margin is a promising sign for shareholders, as high profitability tends to indicate pricing power for brands with loyal customer bases.

In addition, reaching profitability means that Celsius is now self-sufficient regarding its growth and will have excess cash to spend on potentially rewarding shareholders or expanding internationally.

Speaking of which...

3. International growth ambitions just starting

After signing several distribution agreements with Japanese beverage giant Suntory early in 2024, Celsius plans to expand into Australia, New Zealand, the U.K., Ireland, and France. Similarly, the company recently started selling in Canada after expanding its distribution agreement with PepsiCo.

With international sales only accounting for 5% of the company's total revenue, these foreign markets could represent the next chapter of the Celsius growth story. To put the length of this growth runway for Celsius in perspective, consider that energy drink peer Monster generated 37% of its total sales from international markets in the fourth quarter of 2023.

The company generated $16 million in international sales in its latest quarter, compared to Monster's $637 million. Celsius could have decades of growth remaining in front of it should it continue to disrupt the energy drink industry globally.

4. A more reasonable valuation

With the company's share price down 35% in the last month due to short-term worries about a few weeks of sales data, the time might be right for long-term investors to reconsider adding to their Celsius position. While the company still trades at a lofty 57 times forward earnings, this is much more reasonable than the mid-80s figure it traded at one month ago.

While this is nearly three times the S&P 500's forward P/E (price-to-earnings) ratio of 21, analysts expect Celsius to grow its bottom line by 40% in 2024, compared to just 9% for the index as a whole.

Ultimately, despite its premium valuation, the four factors listed here show that Celsius still has plenty of room to run -- but investors should be ready for a turbulent ride along the way.

<<<



---

[gfp927z]

>>> The Coca-Cola Company (NYSE:KO)

https://www.insidermonkey.com/blog/5-best-stocks-to-buy-right-now-according-to-financial-media-1270874/2/

Number of Hedge Fund Holders: 62

Number of Times Stock Appeared in Top Picks of Financial Media: 4

The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. On March 7, investment advisory Argus maintained a Buy rating on The Coca-Cola Company (NYSE:KO) stock and raised the price target to $70 from $67.

Among the hedge funds being tracked by Insider Monkey, Omaha, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Coca-Cola Company (NYSE:KO) with 400 million shares worth more than $23 billion.

In its Q3 2023 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and The Coca-Cola Company (NYSE:KO) was one of them. Here is what the fund said:

“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.

Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.

I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, heathier beverage brands.

But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”

Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”

<<<



---

[gfp927z]

>>> McDonald's Corporation (NYSE:MCD) -- 14-day RSI: 35.50

https://finance.yahoo.com/news/11-oversold-blue-chip-stocks-195219274.html

Number of Hedge Fund Holders: 63

Chicago, Illinois-based McDonald's Corporation (NYSE:MCD) is the biggest fast-food restaurant chain operator worldwide. It began with a single drive-in restaurant in San Bernardino, California in 1955 and has since grown to nearly 40,000 locations across more than 100 countries globally and serves more than 60 million customers annually.

On February 5, McDonald’s Corporation (NYSE:MCD) released its financial results for Q4 2023. Its revenue increased by 8% y-o-y to $6.4 billion while it generated a net income of $2.04 billion. Its normalized EPS of $2.95 surpassed consensus estimates by $0.12.

As of Q4 2023, McDonald’s Corporation (NYSE:MCD) shares were owned by 63 of the 933 hedge funds tracked by Insider Monkey, for a total value of $2.1 billion. Ken Griffin’s Citadel Investment Group was the largest shareholder with ownership of 1.8 million shares valued at $533 million.

<<<



---

[gfp927z]

Altria Group - >>> Forget Buying a Rental Property: Investing $50,000 in These Ultra-High Dividend Yield Stocks Could Make You $4,500 in Passive Income


by Brett Schafer

Motley Fool

March 24, 2024


https://finance.yahoo.com/news/forget-buying-rental-property-investing-101500391.html


The internet is awash with claims that the secret to financial independence is buying real estate and renting it out as "passive" income. The problem with real estate investing is that it is not as passive as the internet claims. Maintaining a rental property requires work, as landlords must manage tenants, fix damage, and continuously search for occupants.

There are better ways to generate passive income with your savings. Enter dividend stocks. These are stocks that regularly give shareholders cash payments in the form of dividends. And the best part is, it is actually passive income, requiring zero work on your part. All you have to do is click the buy button, hold on to your shares, and, like magic, you have a new income stream.

Forget buying a rental property. With $50,000, you can buy these two stocks and get approximately $4,500 each year in passive income.

1. Altria Group: Price increases and selling minority stakes

Our first stock is Altria Group (NYSE: MO). This is a tobacco stock that sells Marlboro cigarettes (and others) in the United States, which is the largest driver of profits for shareholders. On top of cigarettes, the company owns cigar brands, nicotine pouches, and a vaping business, although they are much smaller than cigarettes today.

Cigarette volumes have been declining in the United States for the last few decades. This is good for society, but bad for a company like Altria. So what are they to do? Raise prices, of course. Altria has been able to raise the price of cigarette packs for many years to counteract volume declines. This has led to consistent growth in operating income and cash flow, which is what fuels its large dividend payout.

Altria Group owns a large stake in Anheuser Busch, the global beer company. It has started to sell off part of this stake in order to fuel share buybacks, which decrease Altria's outstanding shares. Why is this important for dividend investors? If Altria has fewer shares outstanding, it can raise its dividend payout per share while still paying the same nominal dividend each year. If the dividend per share gets raised, your passive income gets raised as well.

As of this writing, Altria stock has a dividend yield of 8.58%. That means if you use $25,000 -- half of the theoretical $50,000 pile -- to buy shares of the stock, the company will pay you $2,145 each year in dividend income. This is a dividend that has grown by 100% in the last 10 years. You can benefit without putting in any work yourself.


2. British American Tobacco: betting on a new generation

The second stock in this pairing is British American Tobacco (NYSE: BTI). Like Altria, it is one of the world's largest tobacco companies, and it has counteracted volume declines for years by consistently raising prices. It owns brands including Camel, Newport, and Lucky Strike and sells products in many countries around the world.

However, unlike Altria, British American Tobacco's non-cigarette business units are a sizable portion of its operations. These "new categories" (as the company calls them) generated $4.2 billion in revenue last year and are growing rather quickly. These are nicotine products, such as nicotine pouches or e-vapor. These brands have collectively turned a profit and should help the company further counteract volume declines with cigarettes.

British American Tobacco's dividend yield is 9.37%, slightly higher than Altria's. A $25,000 investment into shares of the stock will give you an annual dividend income of $2,342.50. With the continued growth of the new categories segment, I would expect the company's dividend per share to grow this decade as well.

Add it all together, and a $50,000 investment into these two nicotine conglomerates can generate approximately $4,500 in passive income in the form of dividends each year for investors. That's at current share prices, of course. These investments require almost zero work to maintain as a shareholder, which contrasts drastically with the work that needs to be done to maintain rental properties.

Real estate can be a great investment for some people. But for those looking to build truly passive income, you might want to look at buying dividend stocks with your hard-earned savings instead.

<<<



---

[gfp927z]

>>> Wingstop Inc. (WING), together with its subsidiaries, franchises and operates restaurants under the Wingstop brand. Its restaurants offer classic wings, boneless wings, tenders, and hand-sauced-and-tossed in various flavors, as well as chicken sandwiches with fries and hand-cut carrots and celery that are cooked-to-order. The company was founded in 1994 and is headquartered in Addison, Texas.

<<<



---

[gfp927z]

>>> Chipotle (NYSE:CMG) has been a top-performing stock as more consumers look for healthier alternatives. The company is in expansion mode as it aims to open 285-315 new restaurants in 2024. The midpoint of 300 new restaurants is a notable increase from the 271 restaurants Chipotle opened in 2023.

https://finance.yahoo.com/news/market-mavericks-7-growth-stocks-154037454.html

The company has the financial strength to gain more market share. Chipotle increased its revenue by 15.4% year-over-year while delivering a 26.1% year-over-year boost in net income. The company now has a net profit margin in the double digits.

Chipotle has been rapidly gaining market share in the fast food industry, and its stock price has followed suit. Shares are up by 78% over the past year and have registered a 335% gain over the past five years. Those stock gains outperform most of the Magnificent Seven growth stocks.

Demand for Chipotle’s food has only strengthened. Expanding its horizons and starting up additional restaurants will help the company reward long-term investors.

<<<



---

[gfp927z]

Procter + Gamble, J+J - >>> Warren Buffett Dumped These 2 Top Dividend Stocks. Should You Follow His Lead?


by Cory Renauer

The Motley Fool

December 28, 2023


https://finance.yahoo.com/news/warren-buffett-dumped-2-top-103900862.html


If you want to develop a skill like investing, it's usually a good idea to follow in the footsteps of folks who already know what they're doing. With a successful track record that spans nearly six decades, it's hard to find a better role model to emulate than Warren Buffett.

Buffett acquired Berkshire Hathaway for $14.86 per share in 1965, and since then shares of the holding company have increased by an average rate of 19.8% annually. Some money managers have outperformed Buffett over shorter time frames but nobody has been able to put up these kinds of numbers decade after decade.

Noticing his decades of success, many everyday investors are eager to know what he's buying and selling. According to disclosures that all large money managers must make to the U.S. Securities and Exchange Commission, we can see that Buffett completely closed out positions in Johnson & Johnson (NYSE: JNJ) and Proctor & Gamble (NYSE: PG) during the third quarter.

Both companies attract income-seeking investors with their legendary dividend programs. Let's look at the road ahead to see if dropping these stocks from your portfolio the way Buffett did makes sense right now.

Johnson & Johnson

Buffett closed out seven positions in the third quarter, and one of the most surprising was Johnson & Johnson. The healthcare conglomerate's dividend program is legendary with 61 consecutive years of annual dividend raises. At recent prices, it offers a 3% yield.

Despite a record of consistent dividend raises, Berkshire closed its J&J position in the third quarter by selling 327,100 shares. Buffett hasn't explained why, but I'd wager the recent spinoff of Kenvue was the deal breaker.

Kenvue was formed from J&J's old consumer goods segment. This August, J&J finalized Kenvue's separation and I wouldn't be surprised if Berkshire dropped its shares shortly after. Now that it no longer sells well-recognized brands like Listerine, Tylenol, and Band-Aid, an investment in this stock relies more heavily on its pharmaceutical and medical technology segments.

Buffett and Berkshire famously avoid investing in companies they don't understand well. There are a lot of ins and outs when it comes to medical technology, and the biopharmaceutical industry can be even more complicated. With this in mind, I wouldn't consider Berkshire's exit as a sign of a deeper problem at J&J.

If we ignore the effects of currency exchange, medtech sales jumped 10.4% year over year. Pharmaceuticals, which make up 65% of total revenue, had a rough quarter due to rapidly declining COVID-19 sales. Despite the challenge, J&J reported pharma sales that grew 4.4% year over year.

J&J recently submitted applications seeking approval for an experimental lung cancer therapy called lazertinib that could push pharma sales much higher in 2024. In a pivotal trial, patients treated with lazertinib in combination with Rybrevant, another J&J drug, were significantly less likely to experience disease progression compared to treatment with Tagrisso.

With $5.9 billion in annualized sales, Tagrisso is AstraZeneca's top-selling drug at the moment. Investors holding shares of J&J probably want to hold on at least long enough to see if lazertinib plus Rybrevant can take Tagrisso's place.

Proctor & Gamble

In the third quarter, Berkshire sold 315,400 Proctor & Gamble shares to close its position in the legendary consumer goods company. The sale was surprising because this company's dividend track record is even longer than J&J's.

Proctor & Gamble has paid a dividend every year since 1890, and this April it announced its 67th consecutive annual payout increase. At recent prices, it offers a 2.6% yield. This might not inspire anyone to buy the stock now but I wouldn't be in a hurry to let go either.

Proctor & Gamble recorded a very healthy $14.6 billion in free cash flow over the past year. It needed 62% of this sum to meet its dividend commitment. In other words, profits are more than sufficient to service its debt load and support future dividend raises in line with the company's overall growth rate.

Proctor & Gamble probably isn't going to be your portfolio's top performer, but steady gains seem likely. With a lineup of well-established brands that include Crest, Tide, and Pampers, the company was able to raise prices by 7% during its fiscal first quarter ended on Sept. 30. Sales volume over the same time frame came in just 1% lower.

Proctor & Gamble's brands gave the company enough pricing power to raise its dividend payout by 31% over the past five years. That isn't too bad, but rising interest expenses could make the next five years of dividend growth even less exciting.

Older investors who can't afford losses or declining dividends will want to hold on to this stock. For investors with a higher tolerance for risk, though, following Buffett's lead is probably the right move.

<<<



---

[gfp927z]

>>> Mondelez International, Inc. (MDLZ), through its subsidiaries, manufactures, markets, and sells snack food and beverage products in the Latin America, North America, Asia, the Middle East, Africa, and Europe. It provides biscuits and baked snacks, including cookies, crackers, salted snacks, snack bars, and cakes and pastries; chocolates; and gums and candies, as well as various cheese and grocery, and powdered beverage products. The company's brand portfolio includes Oreo, Ritz, LU, CLIF Bar, and Tate's Bake Shop biscuits and baked snacks, as well as Cadbury Dairy Milk, Milka, and Toblerone chocolate. It serves supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores, and other retail food outlets through direct store delivery, company-owned and satellite warehouses, third party distributors, and other facilities, as well as through independent sales offices and agents. The company was formerly known as Kraft Foods Inc. and changed its name to Mondelez International, Inc. in October 2012. Mondelez International, Inc. was incorporated in 2000 and is headquartered in Chicago, Illinois.

<<<



---

[gfp927z]

>>> Kroger to pay $68 million to settle West Virginia opioid claims


Reuters

by By Brendan Pierson

5-4-23


https://www.msn.com/en-us/money/topstories/kroger-to-pay-68-million-to-settle-west-virginia-opioid-claims/ar-AA1aKh08?OCID=ansmsnnews11


(Reuters) -The Kroger Co has agreed to pay West Virginia $68 million to settle claims that it fueled the opioid epidemic through lax oversight of its pill sales, bringing the state's years-long litigation over the opioid crisis to a close.

The deal, announced Thursday by West Virginia Attorney General Patrick Morrisey, comes a month before the grocery store had been set to go to trial against the state. All other companies sued by the state over opioids had already settled.

"This is an important day for West Virginia," Morrisey said. "This is a day of healing."

Morrisey also touted the state's framework for spending the funds on fighting the opioid epidemic, in which 72.5 percent will go to a newly created foundation, overseen by a board chosen by the governor and by local governments. Most of the remainder will go to local governments.

He said the framework would ensure that the money is spent well and does not disappear into a "black hole."

A Kroger spokesperson said in an email that the company believes the lawsuit is without merit, but that the settlement was the "best path forward to resolve this litigation."

West Virginia, which has opted out of nationwide opioid settlements totaling more than $50 billion in order to pursue cases on its own, has now secured approximately $1 billion from drugmakers, distributors and pharmacies, Morrisey said, a larger amount per capita than any other state.

West Virginia had the highest drug overdose death rate of any state in 2021, according to the U.S. Centers for Disease Control and Prevention.

Thousands of lawsuits have been filed by states, local governments and Native American tribes over opioids, accusing drug companies of downplaying opioids' risks and distributors and pharmacies of ignoring red flags that they were being trafficked illegally.

<<<



---

[gfp927z]

>>> Yum! Brands Reports First-Quarter Results


Business Wire

May 3, 2023


https://finance.yahoo.com/news/yum-brands-reports-first-quarter-110000725.html


Broad-Based Global Strength Resulting in 13% System Sales Growth excluding Russia Impact;

8% Same-Store Sales Growth and Record Digital System Sales With Digital Mix Exceeding 45%


LOUISVILLE, Ky., May 03, 2023--(BUSINESS WIRE)--Yum! Brands, Inc. (NYSE: YUM) today reported results for the first-quarter ending March 31, 2023. Worldwide system sales excluding foreign currency translation grew 13% excluding Russia impact, with 8% same-store sales growth and 5% unit growth. First-quarter GAAP operating profit grew 3%. First-quarter core operating profit grew 11% including a 1 percentage point headwind from Russia. First-quarter GAAP EPS was $1.05 and first-quarter EPS excluding Special Items was $1.06. First-quarter EPS includes a negative $0.07 mark-to-market impact from unrealized investment losses and a negative $0.08 impact from foreign currency translation.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230502005939/en/

DAVID GIBBS COMMENTS

David Gibbs, CEO, said "Our first-quarter results continue to illustrate the power of our global portfolio and the advantages of our business model. The demand for our iconic brands is evident as our incredible teams and franchise partners delivered another strong quarter with system sales growth of 13% excluding Russia, driven by 8% same-store sales growth and continued development momentum. We're seeing broad-based accelerating digital sales growth leading to a record quarter for both digital system sales of nearly $7 billion and digital sales mix that exceeded 45%. I’m pleased to see the revenue flow through in the quarter translate to 11% core operating profit growth. We're proud of the strong start to the year and confident we'll continue to build on our position as the global franchisor of choice."

RUSSIA UPDATE

On April 17, 2023, Yum! Brands completed its exit from the Russian market by selling its KFC business in Russia to Smart Service Ltd., including all Russian KFC restaurants, operating system, master franchise rights and the trademark for the Rostik's brand. With the completion of the transaction, we have now ceased our corporate presence in Russia.

As of the beginning of the second quarter 2022, we elected to remove Russia from our unit count and system sales, negatively impacting those key performance metrics as presented in our FIRST-QUARTER HIGHLIGHTS section and the remainder of this release.

FIRST-QUARTER HIGHLIGHTS

Worldwide system sales grew 11%, excluding foreign currency translation, with KFC at 11%, Taco Bell at 12% and Pizza Hut 10%.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.

Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

First-Quarter

Removing Russia from our first-quarter results negatively impacted KFC International system sales growth by 5 percentage points and KFC Division operating profit growth excluding foreign currency by 2 percentage points.

HABIT BURGER GRILL DIVISION

The Habit Burger Grill Division system sales grew 8% with flat same-store sales growth.

The Habit Burger Grill Division opened 11 gross new restaurants in the U.S. and Cambodia.

OTHER ITEMS

Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the first-quarter Form 10-Q.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2023, the KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking. In addition, in 2023 Yum! Brands was included on the Bloomberg Gender-Equality Index; Forbes’ list of America’s Best Employers for Diversity; and Newsweek’s lists recognizing America’s Most Responsible Companies, America’s Greatest Workplaces for Diversity and America’s Greatest Workplaces for Women. In 2022, the Company was named to the Dow Jones Sustainability Index North America.

<<<



===