Tim Hortons Inc. reported Thursday that its third-quarter net income grew 2 percent, but the restaurant chain said its business was hampered by the weak economy. Its profit missed market expectations and shares fell in trading Thursday.
The Canadian restaurant chain sells coffee, donuts and light food offerings at stores across North America.
Tim Hortons got a boost from a lower tax rate and customers spending more each visit. However, it also faced higher administrative costs and interest expenses during the period.
The company reported net income of $105.7 million Canadian dollars ($107.4 million), or 68 cents Canadian (69 cents) per share, for the quarter that ended Sept. 30. That compared with net income of $103.6 million ($105.3 million), or 65 cents per share (66 cents), last year. It also was helped by fewer shares this year, which improves its per-share performance.
Tim Hortons total revenue increased 10 percent to $802 million ($815.2 million) on higher sale and franchise fee revenue.
Analysts polled by FactSet were expecting the company to earn 72 cents per share (73 cents) on revenue of $791.8 million ($798.2 million).
The company incurred $8.6 million ($8.7 million) in expenses during the quarter tied to a reorganization that it announced in August, as it shifted management and realigned its structure to try and improve its business.
Tim Hortons said that the company made strong gains despite the tough economy and stiff competition. The company said that revenue from its stores open at least a year increased 1.9 percent in Canada and 2.3 percent in the U.S.
U.S.-traded shares of Tim Hortons fell $1.82, of 3.7 percent, to $47.90. Its shares are at the low end of its 52-week trading range of $46.44 to $58.47.
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