UPDATE 2-Tim Hortons sees tough market as Canadian traffic slips

Thu Feb 21, 2013 11:43am EST
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* Same-store sales rise, traffic slips in Canadian shops

* Competition expected to weigh on same-store sales growth

* Quarterly dividend and dividend payout target raised

* Shares drop 3.5 percent on Toronto Stock Exchange

* Slowing growth profile in Canada disappoints, analyst says

By Allison Martell

TORONTO, Feb 21 (Reuters) - Tim Hortons Inc said on Thursday that customer traffic in its established Canadian coffee shops dropped for a third consecutive quarter, sending its shares lower even as the company boosted its quarterly dividend.

Analysts have been watching Tim Hortons' Canadian traffic closely, trying to gauge whether the chain can keep growing in its home market, where it is already a coast-to-coast fixture.

"We're seeing a slowing growth profile in Canada, a more competitive environment," said Canaccord Genuity analyst Derek Dley.   Continued...