UPDATE 4-Burger King profit tops Street, shares rise

* Q3 EPS 30 cents vs Street view 29 cents

* Q3 revenue slips 0.5 pct to $596.9 mln

* North America same-restaurant sales down 6.1 pct

* Burger King shares up 3.6 percent
(Rewrites first paragraph to include sales trends; adds menu
moves, outlook for same-restaurant sales; updates shares)

By Lisa Baertlein

LOS ANGELES, April 29 (BestGrowthStock) – Burger King Holdings Inc
(BKC.N: ) said sales trends were improving in a bumpy economic
recovery and posted quarterly profit that edged past Wall
Street estimates, sending its shares up 3.3 percent.

The second-biggest U.S. hamburger chain after McDonald’s
Corp (MCD.N: ) was hit hard by severe weather in the central and
eastern United States during the first three months of the
year. Once weather conditions improved, restaurant traffic did
as well, it said.

Chief Executive John Chidsey said U.S. same-store sales
increased in March and were slightly better in April, though
still down from a year earlier.

Executives expect worldwide same-store sales in the current
fiscal fourth quarter to improve from the third quarter, but
they remained guardedly optimistic due to the bumpy economic
recovery.

“High levels of unemployment and underemployment will
remain our industry’s biggest headwind,” Chidsey said.

On Thursday, new data showed U.S. jobless claims fell
slightly less than expected, suggesting the labor market was
only improving gradually. [ID:nN29243362]

Burger King is still feeling the pinch of shifting to more
low-price menu items such as a limited-time $1 Double
Cheeseburger, $1 BK Breakfast Muffin Sandwiches and Buck Double
hamburgers.

That strategic move makes Burger King more competitive with
McDonald’s, but it has lowered its customers’ average purchase
in dollar terms versus a year ago when such menu items were not
available.

Still, the company is expecting a boost from its roll-out
of Starbucks Corp’s (SBUX.O: ) Seattle’s Best Coffee this summer
and tie-ins in the fourth quarter with the summer films “Iron
Man 2” and “The Twilight Saga: Eclipse”.

SALES, PROFITS SLIP

Worldwide sales at restaurants open at least 13 months were
down 3.7 percent for the fiscal third quarter that ended March
31, driven by a 6.1 percent decline in the United States and
Canada.

Over the same period, McDonald’s global sales at
established restaurants were up 4.2 percent, and up 1.5 percent
in the United States. [ID:nN21173035]

Burger King, known as the home of the Whopper, had net
income of $41 million, or 30 cents a share, for its fiscal
third quarter. That was down from $47.1 million, or 34 cents a
share, a year earlier.

Robert W. Baird analyst David Tarantino said Burger King’s
per-share profit in the latest quarter was a penny better than
consensus and 3 cents better than his own estimate. Other
analysts confirmed the company’s 1-cent beat.

Tarantino said in a client note that March same-store sales
were down 2 percent in the United States and Canada — far
better than a more than 8 percent drop for January through
February — driven by sales of the company’s higher-priced and
higher-profit “premium” Steakhouse XT burgers and better
weather.

Revenue fell 0.5 percent to $596.9 million.

Globally, restaurant margins fell 0.4 percentage points to
11.3 percent, with lower food, paper and product costs
mitigating the effect of the sales drop.

Bernstein Research analyst Sara Senatore noted that margins
at U.S. & Canadian company-owned restaurants had a margin of
12.9 percent, better than her estimate by 202 basis points.

The company, which operates about 12,000 restaurants
worldwide, said it opened 37 net new restaurants during the
quarter. About 90 percent of Burger King locations are run by
independent franchisees.

Shares of Burger King were up 74 cents to $21.43 in early
afternoon trade.

Stock Market Money

(Additional reporting by Phil Wahba in New York; Editing by
Maureen Bavdek and Tim Dobbyn)

UPDATE 4-Burger King profit tops Street, shares rise