PepsiCo Sees Weak Net From Restaurant Unit
May 12, 2011
PURCHASE, N.Y. -- PepsiCo Inc. said it expects its restaurant unit to post weaker-than-expected results in the third quarter due to slower sales at Taco Bell and Pizza Hut. PepsiCo shares were off 4.6% on heavy volume Thursday on concerns about the restaurant business, as well as continuing worries over a string of problems in its overseas beverage operations that have plagued the company in recent weeks. The Purchase, N.Y.-based food and beverage giant told analysts it expects third-quarter profit at its Taco Bell and Pizza Hut restaurants would probably decline slightly from a year ago. The company had been expecting flat third-quarter profit at the restaurant chains. The company said it had been expecting third-quarter same-store sales at Taco Bell and Pizza Hut would be flat with the year-earlier period. Analysts now expect Taco Bell will report a decline of 1% to 2% in same-store sales and operating income. They expect Pizza Hut to report a decline in same-store sales and operating profit of about 5% to 6%. Pizza Hut faces difficult comparisons over last year because of last year's lucrative rollout of Stuffed Crust Pizza. As a result of the restaurant softness, many analysts began lowering their quarterly estimates for the company by 1 cent or 2 cents a share. Also Thursday, Goldman, Sachs & Co. lowered its rating on PepsiCo to market outperform from recommended list, citing pressures from the restaurant business and overseas beverages.
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