Investors are closely following Yum! Brands’ (YUM) same-store sales growth progress in China. Same-store sales growth essentially means an average of sales growth at existing restaurant locations over a period, usually one year. So if the same-store sales growth figure in the current period is higher than in the previous period, it means a company’s existing restaurant locations have been able to generate higher sales in the current period.
Following its dismal performance in 3Q15, Yum! decided to release its same-store sales growth performance for China on a monthly basis as opposed to quarterly. The above chart shows how its same-store sales growth in China has trended.
Yum! Brands in 4Q15
While the company will release its 4Q15 earnings on February 3, 2016, we already know what the company will report for its China division. For the entire 4Q15 quarter, YUM’s same-store sales grew by 2%, compared to the -16% the company saw in the corresponding quarter in 4Q14 in China.
While 2% growth may appear favorable, indicating that the worst could be over, the -16% represents an easy comparison. Present levels of same-store sales growth have still not yet reached the levels the company saw prior to its plunge.
You can get exposure to Yum! Brands without investing directly in the company’s stock through the Consumer Discretionary Select Sector SPDR ETF (XLY). McDonald’s (MCD), Starbucks (SBUX), and Chipotle Mexican Grill (CMG) make up about 8% of XLY’s portfolio.
Next, we’ll look at the expectations on the company’s global same-store sales growth and three other divisions.