Canadian Tire Corporation, the parent company of SportChek, Helly Hansen and Sports Experts, among others, posted retail sales growth of 9.3 percent (excluding Petroleum) in the second quarter ended June 27 despite approximately 80 percent of its total store network operating under closures and restrictions for much of the quarter. CTC reported that it continued to accelerate its digital and e-commerce efforts across all banners with e-commerce sales reaching CN$600 million in the quarter, far exceeding full-year e-commerce sales in 2019.

“This quarter we drove extraordinary retail sales growth, particularly at our core Canadian Tire Retail (CTR) banner, further reinforcing the relevancy of our unique, multi-category assortment to our customers,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “With a significant percentage of our store network closed for much of the quarter, customers turned to our online platforms and we saw eCommerce sales surge across all banners by 400 percent. Our strong results in CTR clearly demonstrate the advantage of our Dealer model and our ability to quickly adapt to the local market and customer needs.”

“We continue to fulfill our deep-rooted purpose of being there for life in Canada, no matter what life may look like. I am incredibly proud of the contributions of our dedicated frontline store, distribution center and contact center employees, as well as our Associate Dealers, who place the customer at the heart of everything we do,” Hicks continued.

Consolidated retail sales increased CN$72 million, or 1.7 percent, in the second quarter. Excluding Petroleum, consolidated retail sales were up CN$346 million, or 9.3 percent, over the comparable period last year. Consolidated revenue decreased CN$524.8 million, or 14.2 percent. Excluding Petroleum, consolidated revenue decreased CN$253.6 million, or 8.0 percent in the quarter, primarily due to store closures at SportChek, Mark’s and Helly Hansen. Diluted EPS were CN33 cents, normalized diluted EPS were CN25 cents, compared to normalized diluted EPS of CN$2.97 in the prior year, due to COVID-19 and its effect on consumer purchasing behavior and the global economy.

The company said in a release that it remains committed to its Operational Efficiency program and continues to make progress towards its previously stated CN$200+ million target in annualized savings by 2022.

Financial Services was said to be in a “strong financial position.” The business is well capitalized with access to multiple sources of liquidity and has an experienced management team and proven credit risk capabilities. The bank remains comfortable with the level of risk in its portfolio.

Second-quarter Financial Services revenue decreased CN$19.4 million or 5.9 percent over the prior year, due to lower credit charges resulting from a decline of 3.6 percent in gross average credit card receivables, reflecting lower credit card sales. An increase, compared to last year, of CN$27.4 million of net allowance for expected credit losses, reflecting Management’s expectations of increases in future delinquencies and account defaults. Income before income taxes decreased 46.6 percent in the second quarter to CN$51.0 million

Overall CTC operating capital expenditures were CN$52.0 million in the second quarter, down from CN$116.1 million in the second quarter of 2019. Total capital expenditures decreased CN$55.1 million in Q2 2020, to CN$71.4 million.

The company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of CN$1.1375 per share payable on December 1, 2020 to shareholders of record as of October 31, 2020. The dividend is considered an “eligible dividend” for tax purposes.

On November 7, 2019, the company announced its intention to repurchase a further CN$350 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of fiscal 2020. Purchases of Class A Non-Voting Shares pursuant to the 2020 Share Repurchase Intention were paused after March 13, 2020 and continued to be paused during the second quarter.

Photo courtesy SportChek