First comes the tasty Timbits snack – then, a more weighty offering.
Tim Hortons Inc. will unveil its fourth-quarter results Thursday, but more substantial food for thought will arrive five days later, when the coffee chain hosts an investor day at which chief executive officer Marc Caira and his team are expected to lay out a long-term strategy for the company.
On Thursday, watch for Tims to announce a dividend increase, as it often does with its year-end results. The current dividend is 26 cents a quarter, or $1.04 a year. There will also be an update on same-store sales growth in Canada and the United States.
The main course is the show-and-tell for investors on Feb. 25. Tim Hortons has been under pressure, trying to fend off fierce competition from Starbucks Corp. and McDonald’s Corp. while also working to reverse a slow-growth trend in its Canadian stores.
Mr. Caira is a food industry veteran and long-time Nestlé SA executive with no direct experience in retailing, restaurants or franchising who took over the top job last July.
RBC Dominion Securities analyst Irene Nattel said the investor day will likely cover how the company intends to ease long lineups, boost same-store sales through innovation and pricing initiatives, accelerate store renovations and simplify the offering.
In its U.S. division, Tim Hortons’ key issues include focusing on core markets; striking partnerships with deep-pocketed potential franchisees; and trimming capital expenditures.
Ms. Nattel expects that in its 2014-17 strategic plan, the company will aim for earnings-per-share growth of high single digits to low double digits, improved profitability in its U.S. operations and a continuation of its share buyback plan, once capital expenditures and dividends are accounted for.
This year, she anticipates a 13-per-cent dividend increase, to 29.5 cents per quarter or $1.18 annually. Canaccord Genuity analyst Derek Dley said in a research note that he expects the company to outline plans for menu innovation, plus strategies to lure more customers outside the traditional breakfast and morning-snack segments of the day.
For the fourth quarter, Mr. Dley’s earning-per-share estimate is 76 cents, while Ms. Nattel expects 77 cents.
The analysts’ consensus estimate is 77 cents.