TORONTO (Reuters) - Canada's Tim Hortons Inc
The company said it expects first-quarter same-store sales to grow at a slower pace than last year, when the metric rose 5.2 percent in Canada and 8.5 percent in the United States.
The company blamed the expected sales slowdown on weak economic conditions, stepped-up competition and unfavorable weather.
In Canada, the number of transactions at established stores fell in the fourth quarter, ended December 30, but same-store sales rose 2.6 percent as customers spent more during each visit. Same-store sales in the United States grew 3.2 percent.
Analysts have been watching Tim Hortons' Canadian traffic closely, trying to gauge whether the chain - a coast-to-coast fixture in its home country - can hold off competitors and keep growing there.
Tim Hortons claims it sells eight of every 10 cups of coffee sold in Canada, but as it expands its food offerings, especially at lunch, it is increasingly going head to head with fast-food brands such as McDonald's Corp
At the same time, McDonald's is challenging Tim Hortons' domain, promoting its coffee and remodeling its Canadian restaurants into something more coffee house than burger joint, with softer seating and even fireplaces in some outlets.
McDonald's Canadian chief told Reuters in October that his division is stepping up its expansion after holding back for more than five years.
ADJUSTED EARNINGS RISE
Tim Hortons said fourth-quarter net income slipped to C$100.3 million ($98.84 million), or 65 Canadian cents a share, from C$103.0 million, or 65 Canadian cents, a year earlier. Earnings per share were boosted by share buybacks.
Costs associated with a corporate reorganization announced last year reduced earnings per share by about 5 Canadian cents. Excluding those costs and other non-operating items, adjusted operating income rose 4.4 percent to C$157.4 million.
Analysts, on average, had been expecting earnings of 71 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 4.1 percent to C$811.6 million, weaker than the consensus forecast of C$829.5 million.
The company boosted its dividend to 26 Canadian cents a share from 21 Canadian cents and said its board has approved a higher payout target.
Tim Hortons will aim to pay out between 35 and 40 percent of the prior year's normalized net income, up from 30 to 35 percent previously.
($1 = $1.01 Canadian)
(Reporting by Allison Martell; editing by John Wallace)
Source: http://news.yahoo.com/tim-hortons-adjusted-earnings-rise-sees-tough-market-141605457--finance.html
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