Rob Black's Retail Market Roundup For May 3 (THI, GES, PETC, PNRA)

Includes: GES, PETC, PNRA, QSR
by: Rob Black

CIBC initiates Tim Hortons (THI) with a Sector Performer rating. The firm views Tim's as a best-in-class North American restaurant operator, but with a valuation that already reflects this, plus a Canadian "scarcity" premium.

Tim Hortons is an icon Canadian brand with a leading 23% share of that country's Quick Service Restaurant market. Tim Hortons has an outstanding same store sales track record and has also grown its Canadian restaurant counts to about 2,600 with a targeted goal of 3,500 to 4,000 restaurants. But the brand has struggled in the U.S. where its almost 300 units have average volumes about 65% of those achieved in Canada. The Canadian brand strength has not translated into the U.S. markets. Greater U.S. success is critical to sustaining long term growth and to the stock's valuation.

Guess (NYSE:GES) said it would delay its first-quarter earnings release because it received a comment letter from the Securities and Exchange Commission and it's in the process of responding to the comments. Guess expects to report earnings for the first quarter in a range of 30 cents to 33 cents a share while analysts, on average, were expecting it to earn 20 cents a share.

Panera Bread (NASDAQ:PNRA) said system-wide sales at bakeries open at least 18 months increased 2.8% for the four weeks ended April 25. Company-owned same-bakery sales rose 3.1% for the month, while franchise-operated sales rose 2.7%. Panera said the shift of the Easter holiday into April hurt same-bakery sales in the period by 1.5% to 2%, as normal operating hours are reduced on Easter.

Bank of America initiated PETCO (Pending:PETC) Animal Supplies with a Sell and $18 target. They believe estimates are at risk given the recent 20% surge in energy costs.

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