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Thursday, April 29, 2010

Bad Winter Weather Hurts Burger King 3Q Profit

Associated Press

Burger King Holdings Inc. said its fiscal third-quarter profit fell 13 percent on a higher tax rate and bad winter weather that crimped sales, but the performance still managed to narrowly top Wall Street's forecast.

Cautious about signs of an improving economy - as unemployment remains high - the burger chain is working to provide menu items that appeal to both value-driven customers and those who are ready to spend a bit more.

Burger King earned $41 million, or 30 cents per share, compared with $47.1 million, or 34 cents per share, a year earlier. Analysts surveyed by Thomson Reuters, whose estimates usually remove one-time items, predicted a profit 29 cents per share.

Revenue for the quarter ending March 31 dipped 1 percent to $596.9 million from $599.9 million. Wall Street expected $597.7 million.

The burger chain continued to push its $1 quarter-pound double cheeseburger during the quarter, while also launching its pricier Steakhouse XT burger line in February.

Chairman and CEO John Chidsey said in a statement that harsh winter weather in January and February hurt its restaurants, but that its U.S. restaurants saw better traffic in March and sequential improvement in average checks, which benefited from the Steakhouse XT burgers.

The Miami company said that an important sales measure dropped during the quarter, with sales at U.S. and Canadian restaurants open at least a year down 6.1 percent - about 3 percentage points of the decline was blamed on winter weather. Worldwide, sales at restaurants open at least a year fell 3.7 percent.

This figure is a key indicator of a restaurant operator's performance because it measures results at existing restaurants rather than newly opened ones.

Last week, rival McDonald's reported rising sales.

Burger King hopes to capitalize on promotions with anticipated summer blockbusters "Iron Man 2" and "The Twilight Saga: Eclipse" during the fourth quarter. The company also says it will continue to roll out products for budget-conscious diners and those spending more.

The burger chain plans to debut its BK Breakfast Muffin and Buck Double, while also adding the more expensive BK Breakfast Bowl and the BK Fire-Grilled Ribs.

"In the near term, we are excited about our product line-up that includes a balance of value and premium products that take full advantage of our game-changing broiler," Chidsey said.

Burger King added 37 new restaurants during the quarter. It runs more than 12,000 restaurants in all 50 states and in 74 countries and U.S. territories worldwide.