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Tim Hortons posts higher Q1 profit, but misses estimates, Canadian sales lag

May 12, 2011 1:12 PM ETQSR
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Tim Hortons, Canada’s biggest restaurant chain, reported higher quarterly profit on Thursday on strong sales growth at its established stores, but missed analysts' expectations of 52 cents a share.

Same-store sales rose 2% in Canada, down from 5.2% growth a year before, while sales in the US were up 4.9% due to higher prices at these locations. In the first quarter of 2010, US comparable sales rose 3%.

The Oakville-based company said Canadian same store sales growth in the quarter was significant given the impact of heavy snowfalls in key markets, and increased food and beverage prize redemptions - a result of the company's 25th anniversary of the Roll up the Rim to Win promotion.

Tim Hortons opened 11 stores across the U.S., including 5 self-serve kiosks while increasing its marketing and advertising to cement brand awareness.

Total revenue for the quarter rose 10.4% to $643.5 million, from $582.6 million a year before, which Tim Hortons attributes to the sale of new products, higher franchise revenue and distribution sales.

First quarter earnings grew to $80.7 million, or 48 cents per share, compared to $78.9 million, or 45 cents per share, a year before.

Operating income fell 1.3% to $119.7 million, which the company anticipated, it said, due to a loss from the sale of its interest in Maidstone Bakeries.

Still, Tim Hortons stood by its initial full year earnings forecast of between $2.30 and $2.40 per share.  During the quarter, the company opened 31 Canadian locations.

On Thursday in Toronto, Tim Hortons' stock traded at $46.19, down 3% as of 9:55 a.m EST.

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