Chinese KFC Owner Yum China Stock Dips As Company Closes 30% Of All Stores

The shares of Yum China Holdings Inc. (NYSE: YUMC) tanked in the after-hours session on Wednesday as the company gave a bleak outlook of the future due to the spread of the novel coronavirus hurting its business in China.

What Happened

The fast food chain, which controls chains including KFC, Pizza Hut, and Taco Bell in China, said that it has temporarily closed more than 30% of its stores as it seeks to protect employees and customers from the impact of the virus.

The company reported 40-50% reduced sales year-on-year in the restaurants that remain open since the Lunar New Year.

"Based on information currently available, the Company believes that the outbreak is likely to have a materially adverse impact on the Company's operating and financial results for the first quarter of 2020 and full year 2020," Yum China said in a statement Wednesday.
The Shanghai-based company said that it couldn't forecast when the stores can be reopened, and it may just need to shut down more stores if the coronavirus continues to spread.
Yum China expects to suffer operating losses for the first quarter this year, and if there is no relief from the virus, perhaps for the whole of 2020.
It also reported fourth-quarter revenue of $2.3 billion, up 6% YoY.

Price Action

Yum China traded 2.83% lower at $43.20 in the after-hours market. The shares closed the regular session earlier slightly higher, at $44.46.