<span style="color: #a1a1a1;">Canadian Tire Corp. reported Sport Chek’s comparable sales growth declined 1.4 in the third quarter. The decline was attributed to fewer promotional events, a slower back-to-school season and a decline in hockey and team sports compared to the prior year.
Total sales at Sport Chek, including contributions from franchises, were C$533.2 million against C$543.3 million a year ago, down 1.9 percent.
On a conference call with analysts, Greg Hicks, Canadian Tire’s president and CEO, noted that Sport Chek was facing its strongest comparable sales quarter of 2019. Sales momentum was seen in June as stores reopened carried into July with sales up 17 percent versus 2019.
“However, it tapered off with softer demand in back-to-school categories, which led to us dialing down our promotional activity to focus on full-price sell-through, which improved our gross margins and optimized our profitability,” said Hicks. “This is in contrast to how we manage the second quarter in which we prioritize top-line sales through cash conversion of on-hand inventory.”
Virtual schooling, the postponement of hockey, and the cancellation of many organized sports and activities also resulted in lower demand for kid’s footwear, bags, athletic clothing, and hockey equipment.
Hicks further noted that the company transferred its bicycle inventory from Sport Chek to its flagship Canadian Tire banner during the second quarter, which negatively impacted Sport Chek’s sales in the quarter. Finally, 55 percent of Sport Chek’s stores operate within malls, which continue to be subject to restricted operating hours and less foot traffic. Said Hicks, “The headwind is likely to remain.”
Sales for Sport Chek were strong in categories like hiking and camping as well as golf and fitness.
A bright spot continues to be e-commerce, which accelerated further with sales up 90 percent in the quarter. Hicks also noted that Sport Chek accelerated engagement with over 5 million customers receiving unique category-specific offers through the deployment of one-on-one bonus offers sent to members of its Triangle loyalty program.
The Sport Chek segment includes Sport Chek, Sports Experts, Atmosphere, Pro Hockey Life, National Sports, Sports Rousseau, and Hockey Experts. The business includes more than 400 retail locations across Canada.
Sport Chek’s inventory as the quarter’s end “is materially lower, which sets us up well to be fresh next year. And the teams have ramped up their purchasing efforts for Q4. Stephen Brinkley has jumped right into the operations of the business, and I’m quite pleased with Sport Chek’s performance in the quarter.”
Brinkley was promoted to president Sport Chek in August. He was formerly SVP of operations at Sport Chek and joined Canadian Tire from Save-A-Lot in October 2019.
Helly Hansen’s Q3 Sales Dip
Helly Hansen’s net revenue in the quarter was C$155.4 million, a decrease of 2.5 percent. On a constant-currency basis, Helly Hansen’s revenue decreased 0.9 percent.
Hicks said that while sales of Helly Hansen, acquired in July 2018, were down slightly, the company saw encouraging signs of a rebound in key areas of the business.
“Helly is managing the e-commerce shift effectively, with the business delivering solid results in the direct-to-consumer channel at plus 26 percent,” said Hicks. “E-commerce mix within BTC was up 82 percent in the quarter. Helly Hansen’s workwear category, which represents almost 1/4 of their business, continues to be a resilient and strong performer. And the Helly team continues to focus on the future, recently signing partnership agreements to be the official head to toe apparel partner for all Canadian Ski Patrol members and the official supplier of the Norwegian National Alpine ski team. These deals are a testament to Helly’s status as the leading apparel brand for ski professionals and their dedication to the development of high-performance apparel.”
Companywide, consolidated retail sales increased 13.1 percent in the third quarter, to C$4.41 billion. Excluding Petroleum, consolidated retail sales were up C$635 million or 19.1 percent over the same period last year
Among its non-sport banners, CTR led the way in the quarter, delivering 25.1 percent comparable sales growth, reflecting strong demand across all product categories and owned brands sales growth of 28 percent. Mark’s delivered solid comparable sales growth of 5.7 percent, driven primarily by growth in industrial wear.
Diluted EPS was C$4.84, normalized diluted EPS was C$4.93 — a growth of 42.5 percent over the prior year.
Canadian Tire doesn’t provide forward guidance but Hicks said the retailer overall is taking a more cautious approach with its Q4 promotional calendar in order to maintain safe levels of traffic across its stores. Hicks continues to expect accelerated online growth in the holiday quarter and remains upbeat about prospects.
“Regardless of how COVID-19 progresses, we’re confident that Canadians will still find ways to celebrate the seasons, and we expect that decorating their house will be one of our customers’ biggest joys this Christmas,” said Hicks. “Believe it or not, Christmas sales are already quite strong at CTR. And the early snow in the West drove our outerwear business at both Mark’s and Sport Chek.”
Photo courtesy Sport Chek
