Canadian Tire Corporation, the parent of retailer SportChek and the Helly Hansen brand, reported first-quarter Retail revenue was CN$3.34 billion, a decrease of 4.8 percent compared to the prior-year period. Retail revenue (excluding Petroleum) was down 5.0 percent. Excluding the favorable impact of the change in accounting estimate, Retail revenue (excluding Petroleum)1 decreased CN$201.4 million.

Retail sales, excluding Petroleum, and consolidated comparable sales were both down 2.5 percent against strong comparatives in the prior-year quarter in a more challenging consumer demand environment, driven by the impact of a mild winter and late arrival of spring.

  • CTR retail sales were down 4.9 percent and comparable sales were down 4.8 percent over the prior-year period;
  • SportChek retail sales increased 3.9 percent over the Q1 period last year, and comparable sales were up 3.7 percent;
  • Mark’s retail sales increased 5.0 percent versus Q1 last year, and comparable sales were up 4.8 percent; and
  • Helly Hansen revenue was up 22.9 percent compared to the comparable period in 2022.

Retail gross margin was down 2.5 percent compared to the first quarter of 2022, or down 2.1 percent excluding Petroleum. Retail gross margin rate (excluding Petroleum) increased 103 basis points to 35.2 percent. Excluding the favorable change in accounting estimate, Retail gross margin rate (excluding Petroleum) was down 17 basis points despite higher promotional intensity.

Retail loss before income taxes was CN$79.3 million, compared to retail income before income taxes of CN$148.8 million in the prior year; normalized retail loss before income taxes was CN$11.6 million in Q1 2023.

Retail Return on Invested Capital (ROIC) calculated on a trailing twelve-month basis, was 11.3 percent at the end of the first quarter, compared to 13.8 percent at the end of the first quarter of 2022, due to the decrease in earnings and the increase in Average Retail Invested Capital over the prior period.

“Our Q1 financial results were impacted by a number of factors. Our Retail segment was impacted by the fire at our A.J. Billes distribution center, as well as unseasonably mild winter weather and a slow start to spring in several regions of Canada,” said Greg Hicks, president and CEO, Canadian Tire Corporation. “The Financial Services business historically makes a significant contribution to Canadian Tire Corporation’s performance in the first quarter, and this quarter was no different. The strength of our teams and our diligent focus on our Better Connected strategy leaves us confident in our ability to deliver long-term returns for shareholders and value to our customers,” added Hicks.

Total company revenue was CN$3.71 billion in Q1, compared to CN$3.84 billion in the comparable period last year. Excluding the change in accounting estimate, Revenue (excluding Petroleum) decreased 4.9 percent. Financial Services segment revenue growth partially offset the Retail segment decline, mainly due to the anticipated lower revenue at Canadian Tire Retail.

Consolidated income before income taxes was CN$66.6 million, a decrease of CN$228.3 million compared to the prior-year period, due in part to costs of CN$67.7 million relating to the distribution center fire. Normalized income before income taxes was CN$134.3 million.

Diluted EPS was CN$0.13 in the quarter compared to CN$3.03 in the prior-year period. Normalized diluted EPS was CN$1.00, down CN$2.06, or down CN$2.72 excluding the CN$0.66 favorable impact of the change in accounting estimate2, mainly attributable to a decline in earnings in the Retail segment.

Photo courtesy Helly Hansen