Shares of Yum China Holdings, Inc. (YUMC) plummeted 5.08% in Tuesday's trading session, despite the company meeting earnings expectations and announcing an expanded shareholder return program. The stock's decline came as investors seemingly focused on concerns about the company's growth prospects in the face of China's economic challenges.

Yum China reported second-quarter adjusted earnings of $0.58 per diluted share, up from $0.55 a year earlier and slightly above the FactSet consensus of $0.57. Revenue for the quarter ended June 30 came in at $2.79 billion, up from $2.68 billion a year ago and in line with analyst expectations. Same-store sales growth turned positive at 1%, indicating a modest improvement in consumer spending.

Despite the in-line results, investors appeared to be concerned about the company's future growth. Yum China revised its capital expenditure forecast downward for the year, now expecting to spend $600 million to $700 million, compared to the initial target of $700 million to $800 million. This reduction reflects a lower outlay required per store, but may also signal caution about expansion plans. The company maintains its target of opening 1,600 to 1,800 net new stores this year. In a bid to boost shareholder confidence, Yum China announced plans to return $3 billion to shareholders through 2026, doubling the $1.5 billion returned in 2024. Additionally, the company declared a quarterly cash dividend of $0.24 per share.

In other news, Yum China appointed Mr. Zhe (David) Wei to its Board of Directors, effective August 6, 2025, expanding the board to 13 members. While this move aims to strengthen the company's leadership, it did not appear to offset investor concerns about the challenging economic environment in China. The stock's significant drop suggests that market participants may be reassessing Yum China's valuation and growth prospects in light of broader economic headwinds facing the Chinese consumer market.