Yum names activist to board, lowers profit outlook
NEW YORK (AP) — Yum Brands said it named activist investor Keith Meister to its board and lowered its full-year profit outlook, citing ongoing difficulties in its China division.
The parent company of KFC, Pizza Hut and Taco Bell also said Thursday it was close to completing a review of its strategic options, including potential changes to its corporate structure. The announcement came after Yum Brands reported disappointing quarterly results last week, citing a slower-than-expected recovery for its China business, which have seen sales plunge after two separate scares related to the quality of its food.
Meister is the founder and managing partner of Corvex Management, one of Yum’s largest shareholders with nearly 5 percent of the company’s common stock. His appointment expands the board to 14 members and is effective Friday. Meister previously worked with another well known activist investor, Carl Icahn.
Meister said in a statement that his fund has had a “constructive dialogue” with the board and management over the past several months.
Yum now expects its full-year earnings per share to be flat to up in the low-single-digit percentages. Last week, it had said it expected growth in the low-single-digit percentages. Sales at established locations in China are expected to be flat to up 4 percent. Last week, it had forecast mid-single digit growth.
The company said its updated profit outlook also reflects unfavorable currency exchange rates.
To keep investors updated on its performance in China, Yum said it will begin reporting monthly sales again for the division starting Nov. 12.
In after-hours trading, Yum shares rose 1.5 percent, or $1.04, to $70.31.