Pizza Hut in China is owned by Yum Brands. (Photo : Getty Images)
Yum Brands, the owner of KFC, Taco Bell, and Pizza Hut, reported a 3 percent slide in China sales and blamed the South China Sea dispute. Low sales were reflected on the third quarter earnings year-on-year.
The company's global net income grew 48 percent to $622 million. However, it is lower than what was expected at Wall Street at share prices only grew to a dollar.
Greg Creed, CEO of Yum brands said that the weak performance of the China division was caused by many consumers boycotting the brand. The boycott was triggered by China's non-acceptance of the United Nations ruling.
He said in a statement, "Sales were off to a good start in the first six weeks of the quarter in the China division. However, anticipated tougher laps in the second half of the third quarter were compounded by an international court ruling on claims regarding the South China Sea, which triggered a series of regional protests and negative sentiment against a few international companies with well-known Western brands."
"The good news is the incident was short-lived and the sales impact continued to dissipate through August and September," he added.
The company also stated, "If not for this event, we believe the China Division would have delivered its fifth consecutive quarter of positive same-store sales growth."
Yum Brands attributed the recovery of sales in the later part of the year to in dining sales from Pizza Hut.
The company recently sold its China unit to Primavera Capital and Ant Financial. Trading of the new unit will start on Nov. 1 at the New York Stock Exchange.
Yum also anticipates that the current 6,900 stores in the country will increase to 20,000 with the arrival of new investors.
