Canadian Tire Corporation Limited reported earnings dipped in the first quarter due to accelerated depreciation expense but consolidated same-store sales grew 5.2 percent in the quarter and retail gross margins improved.
- Consolidated same store sales up 5.2 percent in the first quarter:
- Financial Services GAAR growth up 9.4 percent, revenue up 8.6 percent
- Retail gross margin rate, excluding Petroleum, increased 74 bps
- Financial services segment contributed Canadian (CDA)$97.1 million and 73.7 percent of consolidated IBT
- Diluted earnings per share (EPS) was CDA$1.18 , down 5.3 percent, including a one-time accelerated depreciation expense of CDA$0.19 per share in the quarter
- Net earnings declined 8.1 percent to CDA$99.1 million
“I am pleased with the continued momentum in the topline and margin performance of our retail businesses. The first quarter is traditionally our smallest and we delivered results on plan as we invest in key initiatives for long-term growth,” said Stephen Wetmore, president and CEO, Canadian Tire Corporation. “For more than a year, we have been aligning our banners, assets and capabilities to operate as one company to serve the needs of a common customer and prepare them for the jobs and joys of life in Canada. Last month, through exceptional collaboration, we successfully launched Triangle Rewards, the evolution of our loyalty and credit card program. This exciting new program is an important step in uniting our banners and rewarding our customers for shopping across our family of companies, now and in the future.”
“Finally, as a proud Canadian company, we were delighted to support our Paralympic and Olympic athletes as they competed in the PyeongChang 2018 Olympic Winter Games,” Wetmore added.
CTC announced that it has entered into an agreement to purchase the company, controlled by the Ontario Teachers’ Pension Plan, which owns and operates the Helly Hansen brands and related businesses.
- Consolidated retail sales increased CDA$164.4 million or 6.4 percent in the first quarter. Excluding Petroleum, consolidated retail sales were up 5.1 percent over the same period last year.
- Consolidated revenue increased CDA$93.5 million , or 3.4 percent, which includes a CDA$51.1 million increase in Petroleum revenue resulting from higher per litre gas prices. Excluding Petroleum, consolidated revenue increased CDA$42.4 million , or 1.8 percent in the quarter.
- Diluted EPS was CDA$1.18 in the quarter, a decrease of CDA$0.06 per share, or 5.3 percent, including a one-time accelerated depreciation expense of CDA$0.19 per share in the quarter.
The following financial results reflect Q1 2018 performance compared to Q1 2017.
- Retail segment revenue increased 2.8 percent. Excluding Petroleum, retail segment revenue increased 0.8 percent.
- Retail margin rate excluding Petroleum increased 74 bps.
- Income before income taxes decreased CDA$21.4 million, or 48.1 percent.
- Canadian Tire saw retail sales increase 6.0 percent and same store sales were up 5.8 percent.
- FGL’s retail sales increased 2.5 percent and same store sales increased 3.9 percent.
- Mark’s retail sales grew 3.6 percent and same store sales increased 3.4 percent.
CT REIT Overview
As disclosed in the Q1 2018 CT REIT earnings release on May 8, 2018 , CT REIT announced four new investments, totalling CDA$35 million.
Financial Services Overview
In Q1 2018, gross average credit card receivables (GAAR) was up 9.4 percent over the prior year.
Income before income taxes decreased 0.6 percent in the first quarter to CDA$97.1 million.
Operating capital expenditures were CDA$45.4 million in the first quarter, down from CDA$68.1 million in the first quarter of 2017.
The company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of CDA$0.90 per share payable on September 1, 2018 to shareholders of record as of July 31, 2018 . The dividend is considered an “eligible dividend” for tax purposes.
On November 9, 2017 , the company announced its intention to repurchase CDA$550 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of fiscal 2018. As at March 31, 2018 , CDA$216 million of such shares had been repurchased under this intention.