(Adds company comment, range of 2008 estimates )
By Lisa Baertlein
LOS ANGELES, Feb 4 (Reuters) - Yum Brands Inc (YUM.N), operator of the KFC, Taco Bell and Pizza Hut chains, beat Wall Street's quarterly profit target on Monday, but forecast 2008 earnings below analysts' expectations and shares fell 2.3 percent.
An economic downturn in the United States has prompted people to spend less at restaurants and investors are jittery about the growth potential of budget-oriented, fast-food purveyors, who are seeing food and labor costs rise.
Sales at established U.S. stores rose only 1 percent in the quarter, compared with 17 percent in mainland China and 5 percent internationally.
Yum said in a statement it was raising its full- year forecast for 2008 earnings to $1.85 per share from $1.82 per share, principally due to growth in China. The company said its forecast excludes one-time items that would increase per-share earnings by 6 cents to $1.91.
Fourteen analysts polled by Reuters Estimates had 2008 targets for earnings excluding items that ranged from $1.82 to $1.91 per share. The resulting average was for full-year earnings of $1.86 per share, excluding items.
A Yum spokeswoman said she believed that some analysts' models included the one-time items excluded from the company's forecast.
RBC Capital Markets analyst Larry Miller said a lower tax rate boosted Yum's net income by 5 cents during recent fourth quarter.
He also said the company's 2008 outlook was weighing down shares.
"Certainly that's not helping," Miller added.
Net income at Louisville, Kentucky-based Yum was $231 million, or 44 cents per share, beating Wall Street's average call for per share earnings of 42 cents, according to Reuters Estimates.
The result compared with Yum's year-earlier quarterly net income of $232 million, or 42 cents per share.
Share buybacks reduced dilution in the most recent quarter, raising Yum's earnings per share results. Yum said it plans to return more than $2 billion to shareholders through dividends and share buybacks in 2008.
Yum's fourth-quarter revenue rose 8 percent to $3.26 billion, topping analyst's average call for sales of $3.16 billion.
The shares of the company, which has more than 35,000 restaurants worldwide, were up 20 percent from a year ago on a split-adjusted basis.
The stock fell to $35 in after-hours trading from its New York Stock Exchange close of $35.81. (Reporting by Lisa Baertlein; Editing by Andre Grenon, Carol Bishopric and Louise Heavens)