Canadian Tire Corporation Limited released second quarter results for the period ended June 30, 2018.

“In the second quarter, we significantly advanced our strategic agenda to strengthen our retail operations and financial services business, and set a foundation for our international growth,” said Stephen Wetmore, president and CEO, Canadian Tire Corporation. “The launch of Triangle Rewards, our new loyalty program, the introduction of Canada’s best credit card offering, Triangle World Elite and the completion of our international brand acquisition, Helly Hansen, are all critical cornerstone investments for our future. These investments, along with the continued development of our digital, owned brands and online capabilities, reflect our commitment to the longterm success of CTC, and are evident in our results for the quarter.”

“While our expectations for growth in the quarter were much higher, it is a testament to the strength of our brands that we grew our retail sales on a year-over-year basis, despite all of our retail businesses being affected by one of the coldest months of April on record,” added Wetmore.

Consolidated Overview 

  • Consolidated retail sales increased $147.0 million, or 3.6 percent, in the second quarter. Excluding Petroleum, consolidated retail sales were up 1.6 percent over the same period last year.
  • Consolidated revenue increased $106.7 million, or 3.2 percent, which includes a $79.5 million increase in
  • Petroleum revenue resulting from higher per litre gas prices. Excluding Petroleum, consolidated revenue increased $27.2 million, or 0.9 percent, in the quarter.
  • On an adjusted basis, earnings declined 12.9 percent to $170 million, or $2.61 a share, from $195.2 million, or $2.82, a year ago.
  • Net earnings were down 19.6 percent to $174.4 million, or $2.38 a share, from $217 million, or $2.81, a year ago.

Retail Overview 

The following financial results reflect Q2 2018 performance compared to Q2 2017.

  • Retail segment revenue increased $93.7 million, or 3.0 percent. Excluding Petroleum, retail segment revenue increased 0.5 percent.
  • Retail margin rate excluding Petroleum was flat with a decrease of 3 bps.
  • Normalized income before income taxes decreased $24.6 million or 13.4 percent.
  • Canadian Tire Retail saw retail sales increase 2.3 percent and comparable sales were up 2.0 percent.
  • FGL’s retail sales were down 1.9 percent and comparable sales decreased 0.3 percent.
  • Mark’s retail sales grew 1.6 percent and comparable sales increased 1.3 percent.

CT Reit Overview 

  • As disclosed in the Q2 2018 CT REIT earnings release on August 1, 2018, CT REIT announced four new investments in its quarterly results at an estimated cost of $24 million .

Financial Services Overview

  • Normalized income before income taxes decreased 16.1 percent in the second quarter to $84.9 million due primarily to the adoption of IFRS 9 accounting.
  • Net write-off rate of 5.62 percent was flat to last year, reflecting the health of the portfolio and continued strong credit risk management.

Capital Expenditures 

Operating capital expenditures were $101.0 million in the quarter, up from $70.7 million in the second quarter of 2017.