Fast-food giant Yum Brands' (YUM) once-sizzling growth in China appears to have ground to a halt. The parent of Taco Bell, Pizza Hut and KFC late Thursday said it expects existing-restaurant sales there to slide 4% in the December-ending quarter.
It's Yum Brands' first same-store sales decline in its largest market in three years. Just a year ago, China comps surged 21%.
Yum shares tumbled 6% late on guidance. The stock had risen 0.8% during the regular session to a new record high.
Yum reaffirmed its 2012 full-year EPS target of $3.24, implying Q4 EPS of 82 cents. Analysts expect earnings of 85 cents a share in the current quarter.
The restaurateur expects 2013 adjusted EPS to grow by 10%. Wall Street had predicted a 14% advance.
The company issued the updated outlook in advance of its Dec. 6 investor meeting.
The China division, with about 4,500 restaurants — mostly KFC locations, generated about 44% of revenue last year.
CEO David Novak says sales in the world's No. 2 economy are still strong, and the division would likely enjoy 6% full-year same-store sales growth. And he said the roughly 800 restaurants it opened this year in China, and other initiatives, should reap dividends in 2013.
"We are extremely confident Yum China remains the best growth story in the restaurant industry," Novak said in a statement.
In its international division — which excludes China — Yum expects sales at restaurants open at least a year to climb 4% in the current quarter.
It guided U.S. same-store sales to climb 3%.
"For the fourth quarter, stronger-than-expected operating performance from Yum Restaurants International and our U.S. division is offsetting softer sales in China," Novak said.
Yum expects to open at least 1,800 international locations in 2013, including 700 in China and 150 in India.
Yum barely edged out analyst profit estimates in its most-recent quarterly report, but noted slowing growth in China, with rising food and wage costs. U.S. sales growth picked up in Q2, fueled by Taco Bell's new Doritos Locos Tacos.
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