Retail - Improvement in Consumer Confidence Eludes QSRs :: Edelweiss PDF link

Please Share::

Yum! Brands, which operates Pizza Hut (386 stores), KFC (345 stores) and Taco Bell (5 stores) in India, registered 4% YoY decline in same store sales (SSG) in Q3CY14 on a base of flat growth in Q3CY13 (Q2CY14 SSG had dipped 2% YoY on a base of 2% YoY growth). Promotional intensity however, remained high in Q3CY14, particularly in pizzas. Here we highlight that though the Nielsen Consumer Confidence Index stood higher at 128 points in Q2CY14 (highest in past 13 quarters), the same has yet to reflect in better volumes for the quick service restaurants (QSRs) which are witnessing heightened competition. We expect Jubilant Foodworks’ (JFL) SSG to remain under pressure over the medium term (SSG of Domino’s is likely to dip by 3% YoY in Q2FY15 on a base of 6.6% YoY growth) but expect it to gradually recover in FY16. JFL has been seeding growth drivers to tap such potential recovery through higher expansion (addition of new stores in FY14 moved up by 26% and will further improve by 20% in FY15).

Yum! Brands’ remains steady; operating loss continues

Yum! Brands’ India division sales grew 14% YoY in Q3CY14 with 26% YoY rise in the number of stores. Yum! added 18 Pizza Hut and 4 KFC outlets in Q3CY14. Operating loss in Q3CY14 stood at USD3mn versus operating loss of USD4mn in Q3CY13.

Heightened focus on delivery by Pizza Hut worries Domino’s

Yum! has been focusing on increasing its presence in the pizza home delivery segment, which has been JFL’s forte. The number of home service stores (delivery) for Yum! spurted 55% YoY in Q3CY14, which indicates the company’s increased aggression in the delivery space (seen in one-on-one offer and 30 minutes delivery promise). In Q2CY14 as well, there was a 44% YoY surge in the number of delivery stores of Yum!. This could pose a threat to JFL’s market share in the pizza delivery space.

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
LINK
https://www.edelweiss.in/research/EdelFlash-Retail--Improvement-in-Consumer-Confidence-Eludes-QSRs/27207.html