Shares of Yum China Holdings, Inc. (NYSE: YUMC) surged 6.21% in Wednesday's trading session, following the release of its first-quarter earnings report and ambitious expansion plans. The company, which operates popular fast-food chains like KFC and Pizza Hut in China, demonstrated resilience and growth in a competitive market.
Yum China reported adjusted earnings of $0.77 per diluted share for Q1, up from $0.71 a year earlier, although slightly below the analyst expectations of $0.79. Revenue for the quarter increased to $2.98 billion from $2.96 billion in the previous year, showcasing the company's ability to drive growth despite challenging market conditions.
Investors were particularly enthused by Yum China's aggressive expansion strategy. The company opened 247 net new stores in Q1, with about 25% of these being franchised locations. Looking ahead, Yum China aims to open between 1,600 and 1,800 net new stores in fiscal 2025, signaling confidence in the Chinese consumer market. The company also plans to increase the proportion of franchised stores in its portfolio, targeting 40% to 50% of new KFC stores and 20% to 30% of new Pizza Hut stores to be operated by franchisees in the coming years.
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