Canadian Tire profit up 11% on strong sales
Canadian Tire Corp. saw its profit climb by 11 per cent to $145.5 million in the third quarter, as strong sales across all its retail banners helped it handily beat analyst expectations.
The strong results came as the company appointed Michael Medline as president, reporting to CEO Stephen Wetmore. Medline was most recently the president of FGL Sports and the Mark's retail chain.
Medline has led all of the company's acquisitions in the last 11 years, including Mark's, FGL Sports and Pro Hockey Life.
Canadian Tire said the strong results were due to a boost in sales across all its banners, including Canadian Tire; Mark's (formerly known as Mark's Work Wearhouse) and FGL Sports. For the quarter, the retailer said it saw more people buying from its automotive, seasonal and kitchen categories, from its Sport Check brand and filling up at its gas stations.
Canadian Tire store sales up 2%
Same-store sales at its Canadian Tire stores were up two per cent, while same-store sales at Mark's were up 4.3 per cent. FGL Sports same-store sales were up 6.3 per cent.
"This has been a particularly strong quarter for our retail businesses. Performances in our sports and apparel businesses continue to show strength and I'm encouraged by the continued sales momentum in our automotive business," Wetmore said.
Sales continue strong despite a very competitive retail environment, with Target and Wal-Mart expanding their presence in Canada.
The retailer reported Thursday its latest quarterly earnings amounted to $1.79 per diluted share, up from $131.4 million, or $1.61 per diluted share, a year ago.
It also announced that it will increased its dividend by 25 per cent, to 43.75 cents per quarter, up from 35 cents, starting next year.
Revenue for the three months ended Sept. 28, was $2.96 billion, up from $2.83 billion year-over-year.
Expectations were for earnings of $142.6 million, or $1.77 per diluted share and revenue of $2.9 billion, according to analysts surveyed by Thomson Reuters.
Growth in credit card
The chain also noted that earnings before income taxes from its financial services sector jumped to $80 million in the third quarter, compared with $73.7 million from a year ago, as it saw more growth in its credit card area. Revenue in this business also climbed by five per cent to $262.1 million.
Canadian Tire announced plans earlier this year to create a real estate investment trust that would acquire a majority of the company's real estate, including 255 retail properties and one distribution centre.
CT Real Estate Investment Trust completed its initial public offering last month and raised $303 million.
Canadian Tire holds an 83.1 per cent effective interest in the trust.
Canadian Tire has over 1,700 retail and gasoline outlets across the country including Canadian Tire stores as well as Mark's and various banners under FGL sports, including Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport and Atmosphere.