The Second Cup Ltd. reported slightly lower revenue in the first quarter as system-wide sales for the coffee and pastry chain remained relatively flat, partly as a result of a 2.3 per cent decline in same-store sales.
The Mississauga, Ont.,-based franchisor said quarterly earnings were not directly comparable with 2010 as a result of its conversion from a trust to a public corporation and accounting changes under the new International Financial Reporting Standards.
It listed first-quarter net earnings of $7.8-million or 78 cents per diluted share for the 13 weeks ended April 2, compared with $2-million or 21 cents in the quarter ended March 31, 2010. However, adjusted net earnings as a result of various accounting changes - including a deferred income tax recovery due to its conversion of $6.8-million - were $996,000 or 10 cents a share.
Total revenue for the period was $5.4-million, down from $5.9-million. System-wide sales were $45.6-million, including new store sales, up from $45.3-million.
"Same-cafe sales were largely impacted by the long harsh winter, which adversely affected street front locations, as well as increased competitive activity," president and CEO Stacey Mowbray said in a release.
In response, the chain has introduced a number of promotional initiatives and increased prices approximately two per cent in April in response to the significant increases in commodity prices.
"Consistent with our growth strategy, we opened five new cafes in the first quarter to give us 352 cafes, an increase of 10 from the first quarter a year ago," Ms. Mowbray added.
Second Cup stock was down eight cents at $7.65 Friday morning on the Toronto Stock Exchange.