Tim Hortons profit rises, but growth concerns linger
TORONTO (Reuters) - Tim Hortons raised its dividend 30 percent on Thursday as it reported a jump in quarterly results, but its shares fell as it failed to live up to sales expectations and analysts worried about the Canadian coffee shop chain's strategy in the United States.
For all of 2009, same-store sales in Canada increased 2.9 percent. This was slightly below its targeted range of 3 percent to 5 percent.
Overall, Tim Hortons earned C$91 million ($86.1 million), or 51 Canadian cents a share for the quarter that ended January 3, up from C$69.1 million, or 38 Canadian cents a share for the same time a year earlier.
Revenue rose 9.2 percent to C$615.3 million as same-store sales rose 3.4 percent in Canada and 2.1 percent in the United States.
Analysts, on average, had expected earnings of 52 Canadian cents a share, excluding items, and revenue of C$629.4 million, according to Thomson Reuters I/B/E/S.
"This was another good, solid quarter but we continue to sit on it with a 'hold' rating because we have concerns about the U.S. and what happens longer term," said Brian Yarbrough, an analyst at Edward Jones in St. Louis, Missouri.
Analysts have said they want Tim Hortons to define its U.S. strategy more sharply, including spelling out the number of stores it could open there. Many estimate it has less than five years of growth left in Canada before it has fully saturated its home market.
The company did not provide any update on its strategy on Thursday, but is expected to provide details when it hosts an investor day next week.
Its shares were down 0.8 percent at C$31.77 by midmorning on the Toronto Stock Exchange. Continued...