Tim Hortons Inc. served investors another quarter of revenue growth, although its profit shrank compared with the same time last year due to $23.1-million in costs associated with its conversion into a Canadian legal entity.
The iconic coffee, doughnut and sandwich chain said Friday its revenue increased to $563.6-million in the third quarter ended Sept. 27, up 10.7 per cent from just under $509-million in the comparable quarter of 2008.
The biggest increase was at Tim's Canadian stores, which brought in $492-million, up $50-million from the third quarter of 2008.
But U.S. stores also increased total sales, which grew by $7.8-million or nearly 25 per cent to $38.9-million.
Same-store sales, which measures performance of locations open for at least a year, increased 3.1 per cent in Canada and 4.3 per cent in the United States.
Despite the sales growth, net income fell to $61.2-million or 34 cents per share in the quarter, down 22.3 per cent from a year ago.
Tim Hortons said the lower profit was due to $23.1-million in costs associated with reorganizing the company into a Canadian legal entity. It had formerly been a subsidiary of the Wendy's hamburger chain and was previously registered as a U.S. company.
Operating income increased 5.4 per cent to $129.2-million in the third quarter compared to $122.6-million in the prior year.
Adjusted operating income, excluding $3.2-million in professional advisory fees and shareholder-related transaction costs associated with the reorganization, was up 8.0 per cent to $132.4-million.
Analysts estimates compiled by Thomson Reuters, which usually excludes unusual items and the impact of currency fluctuation, had been for revenue of $552-million and 43 cents per share of earnings.
"The underlying performance of our business was healthy in the third quarter and our results continue to demonstrate the strength and resilience of our brand," Don Schroeder, Tim Hortons president and CEO, said in a statement.
"Operating conditions continued to be challenging in the third quarter but we remained focused on executing our growth initiatives and responding to the needs of our customers."
Tim Hortons shares closed Thursday at $31.79 on the Toronto Stock Exchange.