TORONTO — Making his formal debut as president and CEO of Tim Hortons, Marc Caira yesterday released the results for the chain’s second-quarter, ended June 30.
“We delivered solid profitability in the quarter and progression in same-store sales,” said the newly installed executive, while speaking to analysts via a conference call.
“Although the operating environment remains challenging, we are focused on building our market leadership to drive top-line growth.” Caira spoke of the company’s plans to take advantage of its “considerable financial strength and the historic low interest-rate environment by adding $900 million in incremental leverage to repurchase shares.”
Among the highlights released by Tim’s, the company reported that system-wide sales increased 5.0 per cent on a constant currency basis with growth coming from new restaurant development both in Canada and the U.S., through the addition of 233 units system-wide, and from same-store sales growth of 1.5 per cent in Canada and 1.4 per cent in the U.S. Total revenues for the second quarter were $800.1 million compared to $785.6 in the same period last year for year-to-date totals of $1.5 billion. Interestingly, total costs and expenses declined by 0.5 per cent in the second quarter, due to the lower cost of sales and general and administrative expense, partly driven by the addition of U.S. restaurants.
Growing the U.S. business continues to be a hot topic for the company executives. “The U.S. business is an important part of our strategy. It’s a huge area of potential growth for the company, a must-win. We believe the U.S. market has the potential to significantly contribute to the company’s long-term earnings growth, and we are committed to driving market success,” said Caira. “Our sales progression in many U.S. markets mirrors that of many of our Canadian market in their early development stages. However, overall sales volumes in our newer U.S. markets do not yet match our larger, more developed markets in the U.S., and, as a result, do not generate a strong return.”
After a disappointing first quarter, Caira is encouraged by the progress made during this period, but he stressed that more work needs to be done. He says the company’s success will be driven by innovation. But “It’s not just innovation,” he explained, “it’s differentiating innovation. To me, it’s about [asking if] you have the right platform to innovate. “At the end of the day, it’s about providing the ultimate guest experience, a battle that’s won at the store level.”
Among the changes Tim’s is looking to institute speedier service, both with the drive-thru platform and the in-store model. ‘Some of our issues are self-inflicted,” said Caira. “Customers are not willing to wait in line [for long periods].” Tim’s will be addressing this issue through double drive-thrus and by potentially simplifying its menu boards. “In some cases, maybe there are too many products,” said Caira, adding, “there are no sacred cows. Innovation is the key to growing your business, and Tim’s has always been good at that.”
In addition to announcing its first-quarter results, the company also appointed Sherri Brillon and Thomas V. Millroy to its Board of Directors, bringing considerable financial expertise and leadership to the Board.
