OAKVILLE, ONT. — Continued strong same-store sales growth in the United States helped drive earnings at Tim Hortons Inc. in the second quarter. Net income in the quarter ended July 1 rose 13% to C$108,067,000 ($108,960,000), equal to C$0.70 per share on the common stock, up from C$95,549,000, or C$0.58 per share, in the second quarter of fiscal 2011.
Net revenues rose 12% to C$785,581,000 ($792,124,000) from C$702,760,000. Same-store sales grew 4.9% in the United States and 1.8% in Canada.
Operating income in the second quarter of fiscal 2012 rose 11% to C$158,839,000 ($160,176,000) from C$143,218,000.
The U.S. segment had operating income of C$5,617,000 ($5,664,000) in the second quarter of fiscal 2012, up 40% from C$4,008,000 in the same period a year ago. Revenues in the U.S. segment increased 20% to C$43,217,000 from C$36,072,000.
“We experienced strong earnings growth in the second quarter although same-store sales growth in Canada reflected a challenging macro-economic environment and minimal pricing in the system,” said Paul House, executive chairman, president and chief executive officer. “We are confident about the strategic initiatives designed to grow our business and support our long-term objectives.”
The strategic initiatives to which Mr. House referred include a new organizational structure and executive management appointments, as well as Tim Hortons entrance into the single-serve, on-demand North American coffee market.
The new structure includes the establishment of a business unit with accountability for all of the company’s operating businesses.
“The Canadian business has developed significant scale, and we have important strategic initiatives in place designed to support future growth in this market,” Tim Hortons said. “At the same time, our U.S. business, which is a key future growth engine for the company, has become more established and has also grown in scale. We are also seeding growth internationally. The new structure facilitates strategy execution and decision-making across our operating businesses.”
Among the personnel changes, David Clanachan has been named chief operating officer of Tim Hortons Inc., with executive accountability for all of the company’s operating businesses, including Canada, the U.S. and International. Roland Walton has been named president of Tim Hortons Canada, with accountability for the Canadian business, while Mike Meilleur will take over as executive vice-president of Tim Hortons U.S., with accountability for the U.S. business.
The company’s board also announced it is continuing with an external search for the position of president and c.e.o. to lead the entire team under the new organizational structure.
In addition to the organizational changes, the company said it has reached a North American-wide agreement with Kraft Foods Inc. to enter the single-serve, on-demand coffee market, leveraging Tim Hortons premium coffee and Kraft’s Tassimo system. Under the terms of the agreement, Tim Hortons premium-blend coffee, decaf coffee, and lattes, in a single-serve format, will be sold in Tim Hortons restaurants in Canada and the United States, and on-line, using the Tassimo T Disc on-demand beverage platform.
Tim Hortons and Kraft Foods Inc. are planning to launch the new Tim Hortons single-serve T Discs in time for the 2012 holiday season.