April 29, 2010 / 11:32 AM / in 9 years

Burger King profit, sales drop

NEW YORK (Reuters) - Burger King Holdings Inc BKC.N reported a smaller quarterly profit on Thursday and said severe winter storms during the period weakened sales in North America.

The second-biggest U.S. hamburger chain after McDonald’s Corp (MCD.N) had warned in March that bad weather in the central and eastern United States kept diners away during the quarter and it expected lower revenue and restaurant margins for the period.

At the time, it said 75 percent of its North American restaurants were in the regions hit hardest by the storms.

Worldwide sales at restaurants open at least 13 months were down 3.7 percent for the quarter, 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.

Burger King, known as the home of the Whopper, had net income of $41 million, or 30 cents a share, for the third quarter that ended March 31. That was down 13 percent from $47.1 million, or 34 cents a share, a year earlier.

Revenue during the quarter slipped 0.5 percent to $596.9 million, just short of the $598.1 million expected by analysts, according to Thomson Reuters I/B/E/S.

Chief Executive John Chidsey said that U.S. dining traffic increased in March, but he warned the economy’s recovery was still halting.

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

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.

Chidsey is also betting the fast-food chain’s roll-out of Starbucks Corp’s (SBUX.O) Seattle’s Best Coffee this summer will help results, along with tie-ins in the fourth quarter with the summer films “Iron Man 2” and “The Twilight Saga: Eclipse”.

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.

Its shares were up 31 cents in premarket trading from a close of $20.69 on Wednesday on the New York Stock Exchange.

Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles; Editing by Maureen Bavdek

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