UPDATE 2-Tim Hortons profit rises but shares drop

* EPS C$0.37 vs C$0.33

* Revenue rises 10.2 percent to C$507.2 million

* Shares down 1.2 pct

(Adds background and analyst comments)

TORONTO, May 7 (Reuters) - Tim Hortons Inc (THI.TO: Quote, Profile, Research), operator of the iconic Canadian coffee shop chain, said on Thursday quarterly profit rose, but its shares dipped on lackluster customer traffic in its home market.

Canada's largest restaurant chain said it earned C$66.4 million ($56.7 million), or 37 Canadian cents a share for the quarter ending March 29, up 7.5 percent from C$61.8 million, or 33 Canadian cents a share for the same time last year.

Revenue rose 10.2 percent to C$507.2 million.

Analysts had expected earnings of 37 Canadian cents a share, excluding items, and revenue of C$489.5 million, according to Reuters Estimates.

The company said same-store sales, which tracks the performance of its locations opened for more than a year, rose 3.4 percent in its Canadian stores, compared with 3.5 for the same time last year, while it posted 3.2 percent growth in its U.S. stores, compared with 1 percent last year.