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Yum China: Delta variant could lead to profit falling 50%, Weber shares surge after first earnings report since going public

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Yahoo Finance's Brian Sozzi and Julie Hyman discuss the recent warning on profit declines from Yum China, and the first earnings report from Weber since going public.

Video Transcript

- I want to talk about Yum China as well. Of course, this is a spinoff from Yum! Brands here in the US. It's just the China operations, but trades here in the US. YUMC is the ticker.

And the company came out with some commentary saying its operations are still heavily affected by the latest COVID-19 outbreak in China. They are saying there's a sales deleverage impact. Sharply reduced sales is what they're seeing in there. Same store sales in August down by the mid-teens percentage year over year.

So obviously, not great news for Yum China, and those shares are trading lower as well. A lot of analyst commentary this morning too expressing some concerns here and cutting estimates for these companies. You see-- for this company. You can see, Brian, the shares are down by about 4% here this morning.

- Julie, I'll just quickly add too, this report out of Yum China could be the canary in the coal mines to how a lot of US restaurants report their earnings in coming weeks. You're already starting to see reports that a lot of restaurants are having to close their indoor dining facilities, whether it's McDonald's, whether it's a Burger King. Certainly look at a Darden.

You know, they've had-- they had to control how many restaurants they have open. If you lose those interiors, again, I mean, you're losing large chunks of sales that started to come back during the summer, and now that can go away. Could see some more earnings warnings.

- Yeah. Maybe if people are going to be buying those Xpeng vehicles, just putting their own food in the fridge, in the back of the car.

- Yeah. Those are pretty cool cars.

- Kicking back. There were some pictures--

- Pretty cool.

- --that we got of people lying down in those cars. Anyway, I don't know. Who knows. We'll see what happens. And then finally, speaking of eating outside, Weber out with some numbers, and the market's not liking those numbers here this morning, Brian.

- Well, we did see-- we did see a little bit of a reversal here, Julie. It was under pressure initially. Now, it looks like Weber is coming back a little bit. Stock's up close to 4%.

Different reaction than when we saw from Traeger. We just talked to Traeger CEO last week. That stock was getting hammered after its earnings report. I think the Street wanted to see more in terms of guidance. Didn't get that guidance from Traeger.

The company warning about supply chain inflation and cost coming out of the Chinese market where it gets a lot of its parts. Weber, a little bit of a different story. Good quarter in terms of sales. Profits were-- I mean, they had adjusted operating profits of $134 million.

But again, margins on that basis were down year over year. All in all, you do get the sense, Julie, that people are still buying-- they're still buying grills. The top lines for Traeger and Weber, I mean, were really strong. Very impressive quarters overall.

- Yeah. Most definitely. People are still focused on being outside, on socializing outside, so that would seem to be giving a lift to things as well. All right. We are g--