Canadian Tire Corp. reported same-store sales at its FGL Sports segment grew 5.8 percent, Same store sales at Sport Chek were up 7.2 percent.
Companywide, Canadian Tire Corp. reported second-quarter earnings rose 8.1 percent on a 2.9 percent sales gain.
“I am pleased to see strong second quarter results across all retail banners and our teams continue to execute well as we head into the second half of the year,” said Stephen Wetmore, President and CEO, Canadian Tire Corporation. “Building on the Company’s current initiatives , the collective strength of our brands, coupled with our leadership in and commitment to product innovation today, and for tomorrow, represent an incredible opportunity for growth,” continued Wetmore.
Consolidated retail sales increased $121.1 million or 3.1 percent in the second quarter, including a 5.3 percent decline in petroleum retail sales due to lower gas prices. Excluding petroleum, consolidated retail sales were up 4.5 percent over the same period last year.
Excluding petroleum, consolidated revenue increased $126 million or 4.5 percent in the quarter, primarily due to higher shipments at Canadian Tire and increased sales at FGL Sports and Mark’s. Consolidated revenue increased 2.9 percent over the same period last year.
Diluted EPS was $2.46 in the quarter, an increase of 31 cents per share, or 14.5 percent, over the second quarter of 2015.
Retail segment revenue increased 4.8 percent excluding petroleum in the quarter. Retail segment revenue increased 3.0 percent in Q2 compared to last year. Retail gross margin rate, excluding petroleum, increased 55 basis points.
Income before taxes in the retail segment was $173.1 million, up $20.3 million or 13.3 percent in the second quarter of 2016 over 2015.
Canadian Tire Retail saw retail sales increase 4.2 percent and same-store sales up 2.9 percent in the quarter over Q2 2015.
FGL Sports’ retail sales were up 5.7 percent and same-store sales were up 5.8 percent in the second quarter of 2016. Same-store sales at Sport Chek increased 7.2 percent.
Mark’s retail sales grew 4.4 percent and same store sales increased 4.6 percent compared to Q2 2015.
CT REIT Overview
As disclosed in the Q2 2016, the CT REIT release issued August 2, 2016 announced five additional investments, including two developments and three property intensifications for a total investment of $24 million.
Additionally, during the second quarter, CT REIT completed the acquisition from Canadian Tire Corporation of the previously announced sale and leaseback transaction involving the new 1.4 million-square-foot Canadian Tire distribution center in Bolton, ON. Construction is expected to be completed in Q4 2016 with rent to commence in Q1 2017.
Financial Services Overview
Income before taxes decreased 7.9 percent in the second quarter to $90.1 million. In Q2 2016, GAAR increased 0.5 percent over the prior year.
Financial services continues to invest in the acquisition of new accounts through traditional marketing and in-store financing programs to drive GAAR growth and sales at Canadian Tire Retail.
Operating capital expenditures were $126.7 million in the second quarter, up from $112.4 million in the prior year. Capital expenditures for CT REIT were $116.9 million, up $102.8 million in the second quarter, largely due to the acquisition of the Sears distribution center in Calgary, AB.
As previously disclosed in Q3 2015, operating capital expenditures for 2016 are expected to be in the range of $625 million and $650 million, reflecting increased investments in the retail network expansion and continued investments in digital and technology initiatives. Distribution capacity capital expenditures for 2016 are expected to be in the range of $150 million to $175 million.
The company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of 57.5 cents per share, payable on December 1, 2016 to shareholders of record as of October 31, 2016. The dividend is considered an “eligible dividend” for tax purposes.
On November 12, 2015, the company announced its intention to repurchase a further $550 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of 2016. As of July 2, 2016, the company had repurchased $330 million, leaving $220 million to be repurchased in fiscal 2016.