U.S. performance drives Tim Hortons earnings

by Eric Schroeder
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OAKVILLE, ONT. — Robust performance in the United States combined with strong growth in Canada to drive a 2% earnings gain at Tim Hortons Inc. in the second quarter. Net income in the quarter ended July 3 was C$95,549,000 ($96,181,000), equal to C$0.58 per share on the common stock, up 2% from C$94,121,000, or C$0.54 per share, in the same period a year ago. Net revenues jumped 10% to C$702,760,000 from C$639,862,000. Same-store sales grew 3.8% in Canada and 6.6% in the United States.

“Our business performed well in the second quarter with strong top-line results in both Canada and the U.S.,” said Paul House, executive chairman, president and chief executive officer. “We overcame softness early in the quarter in Canada and delivered strong same-store sales growth in both Canada and the U.S. We continue to focus on executing our strategic plan, taking advantage of market opportunities and our strengths, to grow our business and respond to our guests’ needs.”

Operating income eased 5% in the second quarter to C$143,218,000 ($144,205,000) from C$149,851,000. Tim Hortons attributed the decline to the lost contribution from Maidstone Bakeries in the comparable period results.

The U.S. segment, meanwhile, had operating income of C$4,008,000 ($4,036,000) in the second quarter, up 12% from C$3,580,000 in the same period a year ago. Net revenues in the United States rose 20% to C$36,072,000 ($36,300,000).

“Higher average check drove much of our growth, benefiting from pricing in the system, and to a lesser extent, from favorable product mix,” Tim Hortons said. “Targeted advertising and promotional efforts to increase brand awareness contributed to this strong performance.

“We continue to focus restaurant development and enhanced advertising in our core growth markets. During the second quarter we opened 10 new locations in the U.S., including a mix of standard, non-standard and self-serve kiosks.”

For the six months ended July 4, overall net income at Tim Hortons was C$176,228,000 ($177,300,000), or C$1.06 per share, up 2% from C$173,010,000, or C$0.99 per share, in the same period of fiscal 2010. Net revenues totaled C$1,346,247,000 ($1,345,239,000), up 10% from C$1,222,474,000.

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