May 7, 2009 / 4:14 PM / 9 years ago

UPDATE 2-Tim Hortons profit rises but shares drop

* EPS C$0.37 vs C$0.33

* Revenue rises 10.2 percent to C$507.2 million

* Shares down 1.2 pct

(Adds background and analyst comments)

TORONTO, May 7 (Reuters) - Tim Hortons Inc THI.TO, operator of the iconic Canadian coffee shop chain, said on Thursday quarterly profit rose, but its shares dipped on lackluster customer traffic in its home market.

Canada’s largest restaurant chain said it earned C$66.4 million ($56.7 million), or 37 Canadian cents a share for the quarter ending March 29, up 7.5 percent from C$61.8 million, or 33 Canadian cents a share for the same time last year.

Revenue rose 10.2 percent to C$507.2 million.

Analysts had expected earnings of 37 Canadian cents a share, excluding items, and revenue of C$489.5 million, according to Reuters Estimates.

The company said same-store sales, which tracks the performance of its locations opened for more than a year, rose 3.4 percent in its Canadian stores, compared with 3.5 for the same time last year, while it posted 3.2 percent growth in its U.S. stores, compared with 1 percent last year.

Last quarter, the company said it expected 2009 same store sales to be in the range of 3 percent to 5 percent in Canada and nil to 2 percent in the United States.

Unlike 2008, Good Friday and Easter fell outside the quarter, a positive for customer traffic, which normally slows on those holidays.

“Factoring out the positive impact of not having Easter in the quarter and the positive impact of pricing, same-store sales growth was a mere 0.2 percent,” said David Hartley, an analyst at BMO Capital Markets. “This continues a negative trend for traffic in Canada for Tim Hortons.”

The shares, which have fallen more than 15 percent so far this year, were down 1.2 percent at C$29.59 on the Toronto Stock Exchange.

The company also said it completed its plans to reorganize as a Canadian public company to take advantage of a better tax rate, but said the timing would be contingent on shareholder approval.

$1=$1.17 Canadian Reporting by Scott Anderson; Editing by Frank McGurty

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