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Live News: Yum China warns Covid blockade hurts worse than initial outbreak

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Yum China, owner of the KFC and Pizza Hut brands in the world’s largest consumer market, warned that the damage done by the latest wave of coronavirus was “much more serious” than the initial outbreak of the 2020 pandemic.

The food retailer, which is listed in Hong Kong and New York and has more than 400,000 employees in China, said it expects operating losses in the second quarter due to declining sales and declining profits. This comes after cities across China have been completely or partially closed as part of President Xi Jinping’s zero-fight policy with Covid.

“In light of this, we are stopping advertising and promotional activities, temporarily postponing the reconstruction of stores, negotiating to reduce rents, taking austerity measures to reduce [expenses]as well as optimizing the cost structure of raw materials, ”the company said.

The company added: “In regions hit hard like Shanghai to serve our community, we quickly launched public procurement (a new bulk order method) for all our brands, promoted new retail packaged products, significantly reduced menu offerings and reduced business hours. ».

The warning came amid deteriorating consumer sentiment and widespread disruptions in supply chains affected by the world’s second-largest economy. Official economic data released on Saturday showed that activity in production and services in April was at its lowest level in two years.

In the first quarter, Yum China reported revenue up 4 percent from the first quarter to $ 2.67 billion from $ 2.56 billion. But net income fell 44 percent to $ 191 million from $ 342 million, and quarterly sales at the same store fell 9 percent at KFC and 5 percent at Pizza Hut.

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