Canadian Tire Corporation Reports Second Quarter 2024 Results

CNW Group
18 min read

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TORONTO, Aug. 8, 2024 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A) (CTC or the Company) today released its second quarter results for the period ended June 29, 2024.

Canadian Tire store located in Ottawa, Ontario, Canada (CNW Group/CANADIAN TIRE CORPORATION, LIMITED - INVESTOR RELATIONS)
Canadian Tire store located in Ottawa, Ontario, Canada (CNW Group/CANADIAN TIRE CORPORATION, LIMITED - INVESTOR RELATIONS)

  • Consolidated comparable sales1 were down 4.6%, as consumers continued to prioritize essential spending in Canadian Tire Retail (CTR)'s most discretionary quarter.

  • Diluted and Normalized Earnings Per Share1 (EPS) were $3.56, compared to $1.76 and $3.08 on a normalized basis in Q2 2023.

"We delivered well in the quarter, as top-line pressures were balanced by strong margin and cost control, improving our retail profitability," said Greg Hicks, President and CEO, Canadian Tire Corporation. "In a quarter that traditionally skews heavily to discretionary purchases, consumers remained cautious and weather conditions compounded declines. Yet, Canadians continued to turn to our banners for new products, seasonal favourites, and innovative Triangle Rewards campaigns – with categories and regions of our business providing us positive signals."

"Looking to the second half of the year, we are well positioned with the right assortment and inventory to meet the needs of Canadians and are confidently leveraging investments to strengthen our connection with customers, online and in stores."

SECOND QUARTER HIGHLIGHTS

  • Consolidated comparable sales were down 4.6%. The consumer demand environment remained challenging, compounded by cold and wet weather, contributing to sales declines in all regions outside Atlantic Canada.

    • CTR comparable sales1 were down 5.6%, compared to growth of 0.1% in Q2 2023. Automotive grew, offset by declines in other divisions.

    • SportChek comparable sales1 were down 0.9%, helped by strong sales of footwear, while cycling and casual clothing experienced the most marked decline.

    • Mark's comparable sales1 were down 0.8%. Outerwear categories grew, while sales of men's shorts and accessories and industrial wear were down compared to 2023.

  • Loyalty sales outperformed non-loyalty sales, with record penetration rates at each banner. Innovative incremental Triangle promotions across CTC banners and the Company's strong Petro-Canada partnership were competitive differentiators. These resulted in elevated loyalty traffic, engagement, and new customer acquisition, driving strong electronic Canadian Tire Money (eCTM) issuance and redemption.

  • In-store net promoter score (NPS) was up for the fourth and thirteenth consecutive quarters, respectively, at SportChek and Mark's; store investments and a focus on strong in-stock availability of key brands drove positive customer sentiment.

  • Retail gross margin rate (excluding Petroleum)1 remained strong, up 36 bps to 36.0%. Margin improvement at CTR and Helly Hansen offset higher promotional intensity. Favourable freight rates also contributed to the improvement.

  • Consolidated income before income taxes (IBT) was $295.8 million, compared to $173.9 million and $281.8 million on a normalized basis1 in the prior year:

    • Retail IBT was $170.1 million, up $84.5 million or $9.9 million on a normalized basis1. Significant supply chain reductions and tighter cost control led to lower operating expenses, which more than offset lower Retail revenue and margin dollars.

    • Financial Services IBT was $88.5 million, compared to $55.4 million or $88.7 million on a normalized basis1 in the prior year. Higher revenue was offset by lower gross margin, with net impairment losses and funding costs trending higher, as expected. Gross Average Accounts Receivable1 (GAAR) was up 3.2%, mainly due to higher average account balances1, which were up 3.4%, while card spend and average accounts were down slightly.

  • CTC continues to make solid progress on the key areas within its Better Connected strategy to enhance the customer experience and drive efficiencies, including:

    • Prioritizing the integration of in-store technology and improving access to assortment through the refresh, expansion, or replacement of approximately 20% of CTR stores since March 2022, including 18 in Q2 2024. CTC has also opened new Pro Hockey Life stores in four key Ontario hockey communities and seven new Mark's stores across Ontario, Alberta, and British Columbia.

    • Completing the supply chain rollout of goods-to-person automation at the Company's Calgary and Montreal Distribution Centres by the end of Q3 2024.

    • Enhancing broadband connectivity at over 800 retail locations, or over half the Company's retail store network, improving IT resiliency and security.

    • Building traction with key Owned Brands such as MotoMaster, Vida by Paderno, Sherwood, and Forward with Design, to offset discretionary category headwinds and hold market share, while maintaining the gross margin differential relative to National Brands.

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