Canadian Tire Corp. reported an impressive 22 percent increase in third quarter profit, mainly driven by strong sales across all of its banners stores.
The company has nearly 1,700 retail stores and gasoline outlets across Canada.
In an analyst call on Thursday, incoming CEO Michael Medline, said that “clearly, we have a great deal of momentum and the Tire is on a roll right now — pun intended,”
Michael Medline will be replacing Stephen Wetmore as CEO of the Canadian retailer on December 1.
Canadian Tire posted net income of $178.2 million for the quarter ($2.17 per share), a big increase over the $145.5 million net income ($1.79 per share) that the company posted in the same quarter last year.
According to Thomson Reuters, the earnings beat estimates of $2.01 per share.
Revenue increased to $3.07 billion, up versus $2.96 billion a year ago.
Quarterly sales for the Canadian retailer gained 3.7 percent, boosted by back-to-school promotions and automotive.
FGL Sports, which operates the Sport Chek and Pro Hockey Life stores, reported a 13 percent increase in sales. Mark’s saw a 6.5 percent bump in sales as it launched a new focus on denim to attract a younger demographic.
Same-store sales increased across all banners. Canadian Tire reported same-store sales growth of 3.2 per cent, Sport Check was up 11.2 percent, and Mark’s experienced an increase of 6.8 percent.
Medline said:
“We have planned and executed on the basis that we have to make our own good fortune here… we are prepared for some competitors, especially if they believe that they’re struggling, to make it quite competitive and we’re ready for that.”
The company recently launched a digital version of its Canadian Tire Money loyalty program. The retailer says that there are growth opportunities to target consumer shopping habits, as its e-commerce efforts have matured, with customers going online and buying merchandise to pick up at their nearest store.
However, meddling has said that he doesn’t believe e-commerce will be a “meaningful part” of the business for at least a couple of years.
He said:
“We see all the things we’re not doing right and all the opportunities that we still have out there. We have a heck of a lot of opportunities than what we’ve already taken advantage of,”
“We haven’t even started to exploit data or e-commerce yetà We’re way closer to the beginning of the path than at the end of the path.”
A Canadian Tire store in Oakville, Ontario.
Canadian Tire also announced that it will be increasing its annual dividend to $2.10 per share. On March 1 the company will begin to pay the new quarterly dividend of 52.5 cents per share.
Irene Nattel, an analyst with RBC Capital Markets, wrote in a note:
“The nature of CTC’s offering means that top line should always benefit from favourable seasonal weather patterns, but the company has been working hard to weatherproof its offering such that it can deliver strong SSS (same-store sales) regardless of whether or not Mother Nature cooperates,”