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Second Cup store manager Jonathan Rich works at his Brampton store, December 23, 2010.J.P. MOCZULSKI/The Globe and Mail

Cafe operator Second Cup Ltd. reported Friday its third-quarter profits fell to $1.7-million from a year-earlier $2.6-million, due in part to income tax charges booked during the period.

The Mississauga-based company said its earnings amounted to 17 cents per share, compared to 26 cents in the year-earlier period. Included in the most recent quarter's results was a net tax charge of $443,000.

System sales increased slightly to $46.4-million from $45.6-million. Same-cafe sales, sales at locations open at least a year, were down 0.1 per cent.

"Same cafe sales have remained relatively flat given the continued intense competition in the category and the recent effects of the economy," president and CEO Stacey Mowbray said in a statement.

The company maintained its quarterly dividend at 15 cents per share.

The total number of Second Cup cafes at the end of the quarter was 359, up from 345 at the end of the third quarter of 2010.

"The Second Cup business continues to operate in a highly competitive market place and a challenging consumer environment," the company said.

"For 2011, management is targeting to regain growth with positive same-cafe sales, and the addition of net new cafes. The focus will be on driving traffic into cafes through external messaging, sampling and product news."

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