Yum's China Sales Rebounded in July

LOS ANGELES – Yum Brands Inc. (YUM), parent of the KFC, Taco Bell (search) and Pizza Hut fast-food chains, Thursday said sales at its fast-growing China unit rebounded in July following a food safety scare that had hampered customer visits to its restaurants earlier in the year.

Sales at Yum's Chinese restaurants open at least a year rose 17 percent in the four weeks ended July 31, more than the 12 percent increase the company had predicted last month, according to one analyst.

"The business appears to be rebounding," Banc of America Securities analyst Andrew Barish said in a note to clients.

In March, Yum was forced to pull New Orleans-style hot wings and other products from its KFC (search) restaurants in China after discovering they contained a dye banned from use in food because of concerns it could lead to an increased risk of cancer. The issue was resolved quickly, but negative publicity surrounding the incident continued to impact sales and Yum's China unit reported a 30 percent drop in operating profit in the second quarter.

Yum's China unit is not yet in the clear, however. The company said typhoons and tropical storms have hurt sales in both China and Taiwan in the first week of August.

In Yum's flagship U.S. business, same-store sales rose 5 percent in the four weeks ended Aug. 6 on strong performance at both KFC and Taco Bell.

Analysts had been expecting an overall rise of 3 percent to 5 percent, according to research reports.

Same-store sales were up 5 percent at KFC and 9 percent at Taco Bell, but fell 2 percent at Pizza Hut (search).

In Yum's international division, which excludes China, same-store sales rose 5 percent in the four weeks ended July 11. The increase was only 3 percent in local currency.

Yum shares rose 54 cents, or 1.1 percent, at $51.25 on the New York Stock Exchange.