Yum China Holdings, Inc. ( YUMC ) reported second-quarter adjusted earnings per share of 58 cents, beating the analyst consensus estimate of 57 cents.

Quarterly sales of $2.787 billion missed the Street view of $2.79 billion.

Total revenues increased 4% year-over-year, with a 4% increase excluding the impact of foreign exchange.

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A 22% year-over-year increase was recorded in delivery sales, which accounted for approximately 45% of total company sales.

Digital sales were reported at $2.4 billion, with digital ordering comprising roughly 94% of total company sales.

Savings in food and paper costs helped drove a quarterly restaurant margin of 16.1%, up 60 basis points year-over-year.

The company opened 336 net new stores in the quarter. Franchisees opened 89 net new stores, accounting for 26%.

As of June 30, a total of 16,978 stores was reached. Among these, 12,238 KFC stores and 3,864 Pizza Hut stores were included.

Operating profit increased by 14% year-over-year to $304 million, marking a second-quarter record high. Core operating profit was likewise increased by 14% year-over-year.

An operating margin of 10.9% was achieved, up 100 basis points year-over-year. This second-quarter record high margin was supported by restaurant margin expansion and G&A savings.

“We are also fortifying our end-to-end digitalization to streamline operations and elevate our customer experience,” Yum China ( YUMC ) CEO Joey Wat said.

Effective Aug. 6, Zhe (David) Wei was appointed to Yum China’s Board of Directors, expanding its membership to 13, including 11 independent directors.

As a Alibaba Group Holding Limited ( BABA ) veteran and founding partner of Vision Knight Capital, he brings extensive leadership in global consumer sectors and digital e-commerce.

His deep expertise is expected to bolster Yum China’s strategic focus on operational efficiency, innovation, and long-term shareholder value.

Dividend: The company declared a cash dividend of 24 cents per share on Yum China’s common stock, payable on Sept. 23 to shareholders of record as of the close of business on Sept. 2.

Outlook: The company plans to return $3 billion to shareholders between 2025 and 2026, in addition to the $1.5 billion it delivered to shareholders in 2024.

The company said it targets approximately 1,600 to 1,800 net new stores in 2025.

Yum China ( YUMC ) sees capital expenditures in the range of approximately $600 million to $700 million for the 2025 fiscal year, revised down from the initial target of $700 million to $800 million, mainly due to lower capital expenditures per store.

Price Action: YUMC shares are trading down by 3.9% to $47.01 at last check Tuesday.

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