Tim Hortons profit jumps 40 pct in tough market
TORONTO (Reuters) - Profits jumped at Tim Hortons Inc THI.TO in the third quarter despite increased competition in the company's core coffee business and declining traffic at some stores.
Canada's No. 1 restaurant chain reported a 40 percent rise in profit on Thursday on strong sales, but it said North American operating conditions were challenging.
Desjardins Securities analyst Keith Howlett said the company has made great strides in overcoming the 2010 sale of its bakery division.
"Tim Hortons has passed through the challenging period of being without the contribution of the divested Maidstone Bakeries," he wrote in a research note.
The company is facing tough competition from McDonald's Corp (MCD.N: Quote), which has been aggressively promoting its coffee, introducing espresso-based drinks, and renovating Canadian stores.
For its part, Tim Hortons has beefed up its menu with items such as lasagna casserole, and will roll out espresso drinks this month.
Howlett said he expects the new drinks to help same-store sales in 2012.
The company earned C$103.6 million, or 65 Canadian cents a share, in the third quarter, up from C$73.8 million, or 42 Canadian cents a share, a year earlier. Revenue rose more than 8 percent to C$726.9 million.
Excluding asset impairment charges and the impact of the Maidstone sale, adjusted earnings rose 10 percent. Continued...