UPDATE 4-Tim Hortons profit up but shares fall as traffic slips

Thu Nov 8, 2012 12:57pm EST
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* Q3 profit C$0.68/share vs analyst view C$0.72

* Revenue up 10.3 pct at C$802.0 million

* Traffic lower in Canada and the United States

TORONTO, Nov 8 (Reuters) - Tim Hortons Inc reported an increase in quarterly profit and sales on Thursday, but its share price fell as the results showed traffic in Canada and the United States was hit by a tougher economic environment.

Sales at established stores rose by 1.9 percent in Canada, where Tim Hortons is the dominant coffee-and-snacks chain, and by 2.3 percent in the United States in the third quarter as customers spent more during each visit, but those figures were lower than in previous quarters.

"I'm not overly concerned, but definitely we would like to see same-store sales...re-accelerate back to that kind of 3 percent plus level, longer term," Edward Jones analyst Brian Yarbrough said of the Canadian numbers.

Same-store traffic dropped as fragile consumer confidence held back discretionary spending, the company said, noting that "the challenging economic conditions led to an intensified competitive environment".

The comments recalled competitor McDonald's Corp's last quarterly earnings report, when t he U.S. chain's chief executive attributed weak sales growth to a tough battle for customers in a fragile economy. On Thursday, McDonald's reported its first decline in monthly same-store sales since 2003.