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Yum China warns quarterly profit to take big hit due to Delta variant

KFC operator Yum China said on Tuesday its adjusted operating profit would take a 50 per cent to 60 per cent hit in the third quarter as the spread of the Delta variant in China led to restaurant closures and “sharply reduced sales”.

US-listed shares of Yum China fell 3 per cent in extended trading.

The company said over 500 of its restaurants in 17 provinces were closed or offered only takeaway and delivery service at the peak of the Delta variant’s outbreak in August, leading to a mid-teens percentage drop in same-store sales.

“While the outbreak has subsided in recent days and restaurant traffic is gradually recovering, our operations continue to be heavily impacted,” Yum China said, adding it expects a recovery in same-store sales “to take time”.

The company said its profit margins were also being pressured by higher commodity prices, wage inflation and an increase in promotions.

  • Reporting by Uday Sampath in Bengaluru; Editing by Krishna Chandra Eluri, of Reuters.

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