Tim Hortons Hits Record After Profit Beats EstimatesJaime Myslik
Tim Hortons Inc. reached a record high as sales of frozen hot chocolate, crispy chicken sandwiches and breakfast-combos helped Canada’s largest coffee merchant beat second-quarter earnings estimates.
The shares surged 7.4 percent to C$64.52 at the close in Toronto. Earlier today the chain reported profit rose to 92 cents a share from 81 cents a year earlier. Analysts had projected 86 cents on average.
The company, which has about 4,500 restaurants, of which 3,600 are in Canada, is now focusing in the U.S. on lunch menus, Chief Executive Officer Marc Caira said on an analyst conference call. After catching the breakfast crowd, Tim Hortons is looking to gain more loyalty, Caira said.
“We’re selling a lot more combos at breakfast than we have in the past,” he said. “We’re going to do the same thing at lunch.”
Sales jumped to C$874.3 million ($798.7 million), topping analysts’ C$839 million average estimate, as U.S. same-store sales rose 5.9 percent, the most in more than two years, and twice as fast as the 2.6 percent gain in Canada.
In its statement, the company said it will be adding 25 locations in Richmond County, New York, and Middlesex County, New Jersey, over the next 10 years. Caira signaled on the call that growth may mean even more Tim Hortons locations in the U.S. in the future.
“There isn’t a lack of interest in signing area of development agreements and we’re going to do that but we’re going to be very pragmatic and very responsible,” he said. “I can get lots of partners that want to do business with us but we’re going to make sure it’s the right partners.”
The company, based in Oakville, Ontario, expects that earnings per share for fiscal 2014 will exceed or be at the high end of the target range of C$3.17 to C$3.27, according to the statement.