April 7, 2004

Kentucky Fried Chicken Japan Cuts Profit Outlook On Bird Flu

Kentucky Fried Chicken Japan Ltd. Tuesday cut its sales and profit outlook for the fiscal year ending Nov. 30, citing consumer concerns over bird flu.
 
The joint venture by U.S. Kentucky Fried Chicken and trading house Mitsubishi Corp. lowered its group net profit estimate to Y480 million from Y1.2 billion. It now pegs group sales at Y72.4 billion, down from the Y74.5 billion it forecast in January.
 
The company said sales at directly-run stores tumbled 14.4% on year in January and 21.5% in February on a same-store basis.
 
Those steep declines coincided with the outbreaks of several cases of bird flu in Japan since January, the first cases in the country in 78 years.
 
Kentucky Fried Chicken Japan said costs related to advertising emphasizing its product safety, and other steps to protect its brand image, also weighed on its bottom line.
 
The company said its profitability has been hit especially hard in the first fiscal half. It slashed its group net profit outlook for that period to Y130 million from Y810 million. But the company said its same-store sales are now improving, moderating the pace of decline in its expected earnings results for the full business year.