Sales momentum boosts Tim Hortons income

by Eric Schroeder
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OAKVILLE, ONT. — Healthy system-wide sales boosted third-quarter earnings at Tim Hortons Inc. Net income in the quarter ended Oct. 2 was C$103,631,000 ($101,875,000), equal to C$0.65 per share on the common stock, up 40% from C$73,828,000, or C$0.43 per share, in the same period a year ago.

Net revenues rose 8% to C$726,930,000 ($714,523,000) from C$670,520,000. Same-store sales grew 4.7% in Canada and 6.3% in the United States.

“Operating conditions in North America continued to be challenging and the strength of our sales performance is a great testament to our strong price-value brand position with our guests,” said Paul House, executive chairman, president and chief executive officer. “We continued to innovate in the third quarter and execute our strategic growth plans to build our business.”

Operating income increased 15% in the third quarter to C$152,806,000 ($150,196,000) from C$133,010,000. Tim Hortons said last year’s results included a C$20.9 million asset impairment charge, which compared with a charge of C$400,000 in this year’s third quarter. The 2010 third-quarter results also included C$16.5 million of contributions from Maidstone Bakeries.

The U.S. segment had operating income of C$2,900,000 ($2,851,000) in the third quarter, which compared with a loss of C$17,500,000 in the same period a year ago. The company said the gain was driven by strong system-wide sales growth in the United States, which resulted in higher rents and royalties and higher distribution income from underlying product demand.

For the nine months ended Oct. 2, overall net income at Tim Hortons was C$279,859,000 ($275,228,000), or C$1.71 per share, up 13% from C$246,838,000, or C$1.41 per share, in the same period of fiscal 2010. Net revenues totaled C$2,073,177,000 ($2,038,760,000), up 10% from C$1,892,994,000.

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