Tim Hortons Sees 180-200 New Stores In 2006: Execs

NEW YORK (Monday, March 20, 2006) - Tim Hortons Inc. is aiming to open up to 200 new coffee-and-donut stores in Canada and the United States and said it expected Canadian same-restaurant sales to grow 4 percent to 5 percent, slightly off its recent pace, executives told potential investors on Monday.

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The Canadian icon, which also plans on opening a store in Afghanistan where many Canadian troops are stationed, is preparing to offer about $551 million in shares, representing a 15 percent stake in the company, this week in an initial public offering, as No. 3 U.S. burger chain Wendy's International Inc. prepares to spin it off.

The shares are expected to price Thursday night for a Friday debut, according to Dealogic.

"We have significant new restaurant expansion opportunities in both Canada and the areas where we have established the brand in the United States," Paul House, the Oakville, Ontario-based chain's president and chief executive officer, said in the road show presentation, seen at RetailRoadshow.com

The company currently has 2,885 locations, with the bulk in Canada and 288 in the Northeastern United States.

House said the company expects to add 1,000 to 1,500 new Canadian locations by 2013, primarily in western Canada and the province of Quebec. He added that the chain wants to have 500 U.S. locations by the end of 2008.

In terms of immediate growth, Chief Financial Officer Cynthia Levine said the chain plans to open 140 to 150 Canadian locations and 40 to 50 U.S. locations this year.

"Our goal in 2006 is to be at the high end of that range," she said.

Levine said the company is aiming for 4 percent to 5 percent same-restaurant sales growth in Canada and 6 percent to 7 percent same-restaurant sales growth in the U.S.

According to a filing with the U.S. Securities and Exchange Commission, Canadian same-store sales were up 5.2 percent in 2005 and 7.4 percent in 2004, with U.S. same-store sales up 7 percent in 2005 and 9.8 percent in 2004.

Same-store sales growth peaked in 1999, when they rose 10.5 percent in Canada and 13.9 percent in the United States.

House said the company is looking to drive growth by increasing its sales of sandwiches, soup and other lunch items, where they will face strong competition from No. 1 fast food chain McDonald's Corp.

Meanwhile, its expansion into the U.S. will face stiff competition from privately owned Dunkin' Donuts, which is strong in New England, and North Carolina based Krispy Kreme Doughnut Corp, which has seen its shares stumble in the past year to less than the cost of a dozen donuts, before recovering a bit. Its shares were up 4.52 percent in early afternoon trade to $9.02 on the New York Stock Exchange.

Tim Hortons recorded profits of C$191.1 million on sales of C$960.3 million last year. The company plans to list its shares on the New York Stock Exchange and Toronto Stock Exchange under the symbol "THI."

Tim Hortons was founded in 1964 by hockey great Miles Gilbert "Tim" Horton, who played for the Toronto Maple Leafs and the New York Rangers. He was inducted into the Hockey Hall of Fame in 1977, three years after he died in a car crash.

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