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The Canadian Press - ONLINE EDITION

A&W Revenue Royalties Income Fund has lower second-quarter net income

VANCOUVER - A&W Revenue Royalties Income Fund said Tuesday its second-quarter profit fell to $4.1 million, but total sales were up about 12 per cent as the fast food chain repositions its brand with beef raised without the use of hormones.

The burger franchise (TSX:AW.UN) earned $5.6 million in the same quarter last year.

Excluding non-cash gains and losses on interest rate swaps, the fund said it earned nearly $5 million in its latest quarter, up from $4.2 million a year ago.

Total sales reported by A&W restaurants in the royalty pool for the quarter were $221 million, an increase of 11.9 per cent from sales of $197.3 million year-over-year.

The number of restaurants in the royalty pool increased to 790 from 760 in the same period last year.

Last September, A&W announced that its Canadian outlets would no longer selling beef from cattle that received steroid or hormone injections in its burgers.

"Our move to beef raised without the use of hormones and steroids continues to generate excellent consumer response," said Paul Hollands, president and CEO of A&W Food Services of Canada Inc.

"Overall, we are pleased with the success of our strategic initiatives to reposition, strengthen and expand the A&W brand."

Same-store sales, stores open for at least a year, for the second quarter of 2014 were up seven per cent compared with growth of 0.4 per cent a year ago.

Year-to-date sales were $404.5 million, an increase of 10.2 per cent from sales of $367.1 million for 2013 year-to-date. The increase in sales was due to higher sales from the 30 net new restaurants added to the royalty pool on January 5, 2014 and the same store sales growth.

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