Tim Hortons Posts 7% Drop in Quarterly Profit

Canadian coffee and doughnut chain Tim Hortons Inc. posted a 7% drop in Q1 earnings Thursday due to a higher tax rate. Revenue and operating profit both improved. Tim Hortons, a spin-off of U.S. burger chain Wendy's International, reported earnings of C$59.3 million ($53.4 million), or C$0.31/share, versus C$63.6 million (C$0.39) in the year-ago quarter. Analysts were expecting EPS of C$0.32. The tax rate in the quarter just ended went up to 34.6% from 14.8% a year ago. Revenue was up 13.9% to C$424.6 million from C$372.8 million in Q1 2006. Same-store sales rose 6.3% percent in Canada, ahead of company expectations, and 4% in the U.S., behind expectations. Operating income was up to C$94.2 million from C$83.1 million. In related news, Tim Hortons' board of directors approved a dividend of C$0.07 (US$0.06) to be paid May 30 to shareholders of record as of May 14. [N.B.: US$1=C$1.11]

Sources: Press release, MarketWatch, Forbes, Reuters
Commentary: Tim Hortons: Special Dividend On the Way? • UBS: Tim Hortons' Speedpay Plan Should Accelerate Gains • Tim Hortons: Tight Lipped On Its Shrinking Operating Margins
Stocks/ETFs to watch: Tim Hortons Inc. (THI). Competitors: McDonald's Corp. (MCD), Starbucks Corp. (SBUX)

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