Posts by Nicole Sinclair

Yum CEO: We open a KFC every 8 hours, we want to open one every 5 hours

Yum China (YUMC) officially began trading today after spinning off from Yum Brands (YUM)—the fast-food operator behind Taco Bell, Pizza Hut, and KFC restaurants.

Shares of the quick-serve powerhouse were already up about 20% so far this year in anticipation of the China split, which was announced in November 2015 following activist pressure.

And the company—with over 20,000 KFC units, 16,000 Pizza Hut units, and 6,000 Taco Bell units—sees this split as a new chapter of growth, with goals to triple its store count globally.

“We’ve de-risked the business,” Yum Brands CEO Greg Creed told Yahoo Finance. “And at the same time, I think we can still unlock enormous growth potential in new brands.”

Creed said the company plans to deliver 7% system sales growth while becoming more efficient.

“Less volatility, less risk, still high growth,” he explained.

Please also see:

 

America's corporate giants have gone from de-conglomeration to re-conglomeration

The month of October marks a record for deal-making, with mergers between AT&T (T) and Time Warner (TWX), Qualcomm (QCOM) and NXP Semi (NXPI), Centurylink (CTL) and Level 3 (LVLT), along with British American Tobacco (BTI) and Reynolds American (RAI) topping the list of transactions.

But Monday’s announcement of a tie-up between industrial conglomerate General Electric (GE) and oil & gas services Baker Hughes (BHI) speaks to a broader trend underway: The re-conglomeration of American business.

Amazon shares tumble after earnings flop

Amazon (AMZN) shares slid Thursday after its third quarter report. The company posted EPS of $0.52, short of expectations for $0.82. Revenue came in at $32.71 billion, in line with estimates for $32.65 billion.

After years of uneven profits, investors have had higher expectations for the company to make money, especially after founder, chairman and CEO Jeff Bezos reported the company’s first outsized earnings beat in the first quarter of this year.

The stock ran up 21% into the quarter, also reflecting investor high expectations.

The all-important Amazon Web Services (“AWS”) continues to be an important driver for the company, with third quarter revenue for the segment coming in at $3.2 billion, up 54.5% and ahead of estimates for $3.13 billion.

As Bezos said at the Economic Club of New York on Thursday, AWS had the unique advantage of having seven years before facing a like-minded competitor. This contrasts with an already generous two-year typical first mover advantage, Bezos explained.

Please also see:

Arby's CEO: It's about being authentic

Arby’s,  the second largest quick-service sandwich chain with 3,300 restaurants worldwide, just reported a strong third quarter, posting US system same-store sales growth of 2.4%.

This result reflects continued improvement—aided by new products and strong advertising—for the restaurant chain ever since Wendy’s (WEN) sold its struggling sister company to Roark Capital in 2011, retaining a an 18.5% stake.

This quarter marked the company’s 24th consecutive quarter of same-store-sales increases and 15th consecutive quarter of industry outperformance.

CEO Paul Brown said the company’s outperformance is based on its unique position right between the quick-serve (QSR) players like McDonalds (MCD) and the fast-casual players like Darden (DRI) as it continues to emphasize unique offerings and convenience.

Please also see:

Bai CEO: 'The name is Bai, not sell'

Beverage startup Bai has gotten astronomical amounts of attention since its founding just over seven years ago.

Bai, or “pure” in Mandarin Chinese, is in the sweet spot of the beverage industry with a focus on natural and healthy products based on the coffee fruit—once a discarded byproduct in the coffee industry.

The growth of the Princeton, New Jersey-based company isn’t going unnoticed. On Wednesday, a news report said Bai was in talks with Dr. Pepper Snapple (DPS) to sell. Dr. Pepper, which has owned a minority stake in the company since last year, also has a distribution deal with the company. These rumors followed news reports from earlier in the month, citing sources that claimed Bai was exploring a potential sale with Coca-Cola (KO) or Pepsi (PEP).

Please also see:

What a Hillary Clinton presidency means for stocks

With a higher probability that Secretary Hillary Clinton will win the White House embedded in the latest polls, analysts say that overall the market is in a stronger position.

“A Clinton victory would be inflationary and supportive to higher bond yields due to a potential bounce-back in GDP growth (as corporates lose a reason to postpone capex decisions), a rise in minimum wages, and the potential for looser fiscal policy,” Credit Suisse’s Lori Calvasina said.

History is on the side of Calvasina’s assessment. Looking at data since 1928, S&P returns have been stronger under Democratic presidents than under Republicans.

However, Calvasina noted that the risk now for the markets has shifted to concern about less balance of leadership.

“In many investors’ minds, the perceived risks associated with a Trump victory in the Presidential race have been replaced with concerns about the implications of a Democratic sweep of leadership in Congress (for both the Senate and House to flip),” she said.

However, these issues could be short-lived.

Please also see:

Chipotle sales plummet 22%

Chipotle (CMG), which has fallen from darling status after an E. coli and norovirus food-safety crisis last year, reported ugly third-quarter results after the bell on Tuesday.

The all-important comparable store sales (which looks at the sales of Chipotle locations open at least one year) declined 21.9% compared to expectations for a decline of 18%. This compares to last quarter’s 23.6% decline. Over the last nine months, comparable restaurant sales decreased 24.9%.

For the fourth quarter, the company sees comparable restaurant sales declines in the low single-digits versus estimates for declines of 0.5%.

Earnings per share of $0.56 came in well below expectations of $1.62 and versus $4.59 last year. Revenue came in at $1.04 billion versus estimates for $1.09 billion.

Restaurant level operating margin was 14.1% in the third quarter, a decrease from 28.3% in the third quarter of 2015.

Please also see:

 

JPMorgan: 9 things need to happen for a market rally into year-end

The S&P 500 hasn’t moved much since July.

And JP Morgan analysts, led by Adam Crisafulli, say that a ceiling remains on the market as earnings estimates bleed lower amid mixed earnings reports in recent weeks and valuations become more stretched.

But, they also say a rally into year-end is still possible in to year-end if the following nine things happen:

First, a Democratic presidential win with a balance of power. Crisafulli wrote the “best-case” election scenario would be a Hillary Clinton win with a Republican Senate and House. But the “base-case” of a Republican House with a Democratic Senate and White House would suffice.

Two, the European Central Bank doesn’t taper, ending its quantitative easing program, especially given the still fragile and uncertain economy. Or if it does, that it doesn’t make a decision to taper until early 2017.

Fifth, the Organization of Petroleum Exporting Countries (OPEC) acts to trim output in its upcoming meeting on Nov. 30 or continues with its rhetoric of a intervention strategy that will keep oil prices afloat.

Please also see:

Dominos CEO: We got ahead of the curve in technology

Dominos (DPZ)—the global pizza chain with over 13,000 stores in over 80 markets—is knocking it out of the park.

The company posted 13% domestic same-store sales in its latest quarter, significantly above restaurant peers and even Yum Brand’s (YUM) Pizza Hut, which clocked in a negative same-store sales number in its latest quarter.

The secret sauce?

Other than the company’s new recipe rolled out in 2010, in one word: technology.

“We got into it early,” said CEO Patrick Doyle. “We decided this was clearly the place where our customers were going. We started investing heavily 6, 8 years ago now on our digital platform.”

In its latest quarter, 55% of Domino’s sales were digital, well ahead of the 20% for the restaurant industry, according to Bloomberg.

Why the cloud is the 'pervasive computing theme' of the 21st century

SAP (SAP)—the German enterprise software firm—powered higher on Friday following a strong third-quarter earnings report.

As pressure continues to mount on “old tech” software names—like SAP and others like Microsoft (MSFT)—to reshape portfolios and cater to a changing consumer, a shift to the cloud remains in focus.

“The consumer is mobile, and the enterprises that serve the consumer want to provision the best service with the most innovative solutions as quickly and inexpensively as they can,” said SAP CEO Bill McDermott. “That’s why the cloud has become the pervasive computing theme of the 21st century.”

In SAP’s third quarter, cloud subscriptions and support revenue grew 28%—a much faster clip than its core on-premise software licenses, up 5%.

And McDermott said the company’s acquisition-oriented strategy has set the company up well for growth—but that he’s not looking at anything big anytime soon.

Please also see: