SportChek’s same-store sales grew 10.2 percent in the first quarter, boosted by a return to playing hockey and strong demand for skiing. Greg Hicks, Canadian Tire’s president and CEO, said on a call with analysts, “SportChek delivered its strongest Q1 on record, with comparable-store sales up significantly as families returned to organized sport, namely hockey as well as skiing.”
Outerwear and casual clothing also performed well.
He added that traditionally, the first quarter is “a lighter quarter” for SportChek. But the segment “contributed significantly to the tremendous year-over-year improvement in the profitability of our retail segment.”
The SportChek segment includes stores that operate under the SportChek, Sports Experts, Atmosphere, Sports Rousseau, and Hockey Experts banners.
The 10.2 percent same-store gain came on top of an 18.7 percent gain in the same period last year. Total sales at SportChek were up 4 percent with the difference from the 10 percent comp gain reflecting the closure of National Sports in Q321.
Gregory Craig, EVP and CFO, said about SportChek, “Over 70 percent of the categories grew, but the standouts were hockey where sales were almost double last year, as well as in winter apparel, skis and snowboards as Canadians got outside to enjoy winter in the arenas and on the ski slopes. Having a fully open store network helped in Ontario, as did well-stocked stores. Our strong vendor relationships and supply chain capabilities ensured we had a good breadth of inventory in the right categories.”
Craig added about SportChek, “We also continue to benefit from improvements we’re making around inventory and promo management, selling a better mix of regular priced product, which is driving better productivity and profitability.”
SportChek’s net sales, including owned and franchised stores, were Canadian $408.8 million against $396.7 million a year ago.
At Helly Hansen, which Canadian Tire acquired in 2018, revenue in the quarter grew 24.4 percent to C$169.6 million with broad-based growth.
Craig said sport, workwear and the Musto sub-brand all experienced double-digit growth for Helly Hansen. He added, “Within sport, direct-to-consumer sales were strong, up 42 percent compared to last year. Apart from Russia, where our operations remain temporarily paused, we saw growth across our geographies as we continue to proactively manage supply chain to get product to customers, with the USA and Canada seeing the strongest uptick in demand, followed by Europe.”
Across the company, its brand sales penetration was 36 percent in the quarter. While down slightly compared to last year, this was primarily attributable to the mix due to the slower growth in the quarter for its seasonal categories, including backyard living and cycling, which have higher own brand penetration. Added Craig, “We did see strong growth in CTR brands like MotoMaster and Certified, along with SportChek brands such as Ripzone, Woods and Sherwood.”
Companywide, Canadian Tire’s consolidated comparable sales grew 6.4 percent and EPS gained 23 percent. The company also announced a 25 percent increase in its quarterly dividend.
“Q1 reinforced the fact that our ability to make life in Canada better is not weather dependent,” said Hicks. “Although we didn’t have the warm weather we had last year in Q1, we made gains in other categories which speaks to the strength of our highly relevant, unique, multi-category assortment across our banners.”
At its flagship, Canadian Tire chain, growth in the quarter was led by automotive as Canadians began driving more. Hockey’s resurgence helped boost sales at the Canadian Tire chain, which saw hockey category sales climb over 30 percent. Pro Hockey Life saw sales surge over 90 percent in the quarter.
Mark’s, Canadian Tire’s workwear chain, continued its momentum from a record 2021, achieving growth across all categories in national and owned brands
Looking ahead, Hicks said Canadian Tire continues “to see healthy demand signals from the customer, even against the strong comps of last year when we benefited from pent-up demand as restrictions finally eased and we achieved our strongest quarter ever in terms of e-commerce penetration. There’s no question we continue to operate in an environment where inflation is real, and global supply chains continue to be challenged.”
Addressing China’s zero COVID policy, Hicks noted that the ports in Shanghai and Beijing are not shut down and supply chains overall out of China are functioning better than they were a year ago.
“As I’ve mentioned in recent quarters, we’ve secured sufficient shipping capacity and flexibility through our existing contractual arrangements and the use of a dedicated charter to ensure we can transport our goods,” said Hicks. “Although we’re not immune to the global supply chain challenges, our previous and continued investments in this critical capability have enabled us to weather the storm better than most.”
Hicks said the company continues to adjust lead times, ordering early for spring and summer, and as a result, the firm’s quarter-end inventory is above that of last year.
“To remain well-positioned to continue to meet customer demand throughout 2022, we’re now turning our attention to our fall and winter inventory to ensure delivery for those seasons,” said Hicks. “And while we’ve yet to see it, we’re mindful that an environment where consumers may be looking to trade down, our use of demand elasticity drivers and our Triangular Rewards program remain critical to delivering choice and value to customers. In this environment, the fact that we can remain well-stocked with a wide range of products across price points, combined with our ability to provide real value through our Triangle Rewards loyalty program, is our differentiator, a differentiator that helps us fulfill the needs of all Canadians and ultimately drives our success.”