Challenging operating environment weighs on Tim Hortons earnings

by Eric Schroeder
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OAKVILLE, ONT. — Net income at Tim Hortons Inc. in the quarter ended March 31 was C$86,171,000 ($85,957,000), equal to C$0.56 per share on the common stock, down 3% from C$88,779,000, or C$0.57 per share, in the first quarter of fiscal 2012. The company said the decline reflected lower operating income, which was affected significantly by corporate reorganization expenses.

Net revenues rose 1% to C$731,537,000 ($729,948,000) from C$721,284,000. Same-store sales fell 0.3% in Canada and 0.5% in the United States.

“While it was a soft quarter as expected, we are taking important steps to continue to expand and enhance our system, improve the guest experience and build value for our shareholders,” said Paul House, executive chairman, president and chief executive officer.

Operating income in the first quarter of fiscal 2013 fell 2% to C$127,917,000 from C$131,623,000.

The U.S. segment had operating income of C$910,000 in the first quarter of fiscal 2013, down sharply from C$1,654,000 in the same period a year ago. Revenues in the U.S. segment increased 16% to C$44,448,000 from C$38,429,000.

“A higher average check, due primarily to pricing, was offset by a decline in same-store transactions,” the company said. “System-wide transactions continued to increase, reflecting the ongoing development of new restaurants, which also drove system-wide sales growth of 7.8%. In the U.S., the weather had a negative effect on sales of both our cold specialty drinks and our Cold Stone Creamery products.”

Tim Hortons also announced that Marc Caira has been named president and c.e.o., effective July 2. He will succeed Mr. House, who will become non-executive chairman of the board of directors.

Mr. Caira most recently was global c.e.o. of Nestle Professional and a member of the executive board at Nestle S.A.

“We are delighted to announce Marc’s appointment as president and c.e.o.,” said Frank Iacobucci, lead director at Tim Hortons. “His knowledge and experience in the global food services and beverage industry, and his strong leadership, make him the ideal person to lead the company into the future. We are also indebted to Paul House for his significant ongoing commitment and contributions to the organization, and are pleased that he will take on the exclusive role of chairman.”

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