Yum Brands (NYSE: YUM) is just one U.S. company that is realizing the potential of overseas growth, as emerging middle classes are rising. The company has recently expanded in China and India, with double digit growth spurring on further plans.
Yum is the parent company of Taco Bell, Pizza Hut and KFC and is also taking on the form of an emerging markets play. Adam J. Crawford for The Motley Fool reports that the company is adding to its existing line of overseas restaurants with an offer for Little Sheep Group, a Chinese chain of hot pot eateries. This will add to the Chinese market share for this stock. [Resilience of Consumer ETFs Encouraging for Market: Analyst.]
China is responsible for 37% of Yum’s $2.4 billion in global revenue in the quarter ended March 19 and 54% of its $401 million in operating profit in the period, reports Jason Dean and Laurie Burkitt for The Wall Street Journal. The Yum acquisition “should leave us well-positioned to develop into an internationally recognized restaurant chain,” said Little Sheep Chairman Zhang Gang.
Yum is about 5.3% of PowerShares Dynamic Leisure and Entertainment (NYSEArca: PEJ) and accounts for 5.15% in PowerShares Dynamic Food And Beverage (NYSEArca: PBJ).
“The restaurant industry in China is highly competitive, but we are optimistic about the outlook and the opportunities,” Sam Su, chairman and chief executive of Yum’s China division about the transaction. “We are confident we can further strengthen Little Sheep’s brand, business model and market position in the industry.” This highlights the eagerness of U.S. retailers and consumer goods companies to further expand into China, reports Bettina Wassener for The New York Times. [Coffee, Food and Beverage ETFs Flat Before Starbuck’s Earnings.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.