Oakville / CA. (prn) Tim Hortons Inc. announced its results for the first quarter ended March 29, 2009. «Sales growth in both our Canadian and U.S. markets was quite strong in the first quarter considering the challenging economic circumstances that continued to persist. Sales accelerated through the quarter after a slow start in January, supported by active menu and marketing programs and previous pricing in the system. We also continued to execute our growth agenda, opening new restaurants in targeted U.S. markets and throughout Canada», said Don Schroeder, president and CEO.
Consolidated Results: First quarter systemwide sales grew 6,6 percent on a constant currency basis. Total revenues were 507,2 million CAD in the first quarter, up 10,2 percent compared to 460,3 million CAD in the same period of 2008. Systemwide sales growth drove higher rents, royalties and distribution revenues. Total revenues also benefited from a positive impact of approximately 1,8 percent from foreign exchange translation. These factors were partially offset by lower revenues from Company-operated and FIN 46R restaurants.
Sales, consisting primarily of warehouse sales, increased 10,8 percent in the first quarter compared to last year. Higher sales reflect new products managed through the supply chain including expansion in the grocery store channel, higher prices on coffee and other commodities, as a result of higher underlying costs, and systemwide sales growth. Significant changes in foreign exchange rates also contributed to the growth. Rents and royalties rose 8,3 percent in the first quarter, consistent with systemwide sales growth. Franchise fees increased 13,9 percent year-over-year, due to higher revenue from restaurant resales and replacements, a higher number of renovations and foreign exchange.
Same-store sales increased 3,4 percent in Canada and 3,2 percent in the United States, and progressively strengthened during the quarter. Same-store sales were driven by active menu and marketing initiatives. Foreign exchange negatively impacted individual cost structure line items by more than two percent on average in the first quarter, more than offsetting the positive impact of foreign exchange on revenues.
Canada: Canadian same-store sales in the first quarter increased by 3,4 percent, of which approximately 2,8 percent was due to previous pricing in the system. Operating income in the Canadian segment was 115,4 million CAD, increasing 8,3 percent compared to 106,5 million CAD in the first quarter of 2008. A total of 20 restaurants were opened in Canada during the quarter.
United States: The U.S. segment had strong sales performance with a 3,2 percent increase in same-store sales, reversing declines the past two quarters. Sales in the U.S. business also progressively strengthened during the quarter. Previous pricing in the system contributed approximately 3,2 percent to the same-store sales increase, which also benefited by approximately 0,7 percent from the timing of Easter compared to the same quarter last year, an impact that will reverse in the second quarter. The U.S. segment had an operating loss of 0,6 million CAD in the first quarter, a significant improvement compared to a loss of 2,9 million CAD in the same quarter last year. Approximately 1,4 million CAD of the earnings improvement was related to benefits from the impairment and restaurant closure charge taken in the fourth quarter of 2008. Currency translation raised both U.S. segment revenues and costs by approximately 19 percent during the quarter compared to the same period in 2008. A total of eight locations were opened in the U.S. during the quarter.
Ireland / U.K.: Internationally, in the Republic of Ireland and the United Kingdom, there are now 299 licensed locations primarily in the convenience store channel under the Tim Hortons brand.
