Can Yum Survive its 45-Day Chicken Scandal?
Yum! Brands (NYSE:YUM) – the operator of KFC, Pizza Hut, and Taco Bell restaurants – will report fourth quarter and full-year earnings after the market closes on Monday, and both analysts and investors are wondering the same thing: how hard did the “45-day chicken” exposé dent results.
The term has been used by the Chinese media and blogosphere to describe the chickens used by Yum’s KFC restaurants that were allegedly injected full of dangerous hormones, meant to make the birds grow faster. As Yum stated in a regulatory filing made with the Securities and Exchange Commission in early January, the incident caused same-store sales in China to fall by 6 percent during the last quarter. In comparison, sales grew 9 percent in the first nine months of 2012.
Despite the damage done by the chicken scandal, the company has not changed its prediction for at least 13 percent earnings-per-share growth for the full year, and analysts believe that it will “just squeak by on its preferred earnings measures,” according to The Wall Street Journal. However, they have cut their 2013 targets for same-store growth and stock price…