Canadian Tire reported sales its FGL Sports segment were up 0.5 percent in the third quarter with same-store sales were up 0.4 percent. Same-store sales at Sport Chek were up 0.4 percent.
Companywide, consolidated retail sales increased $179.5 million , or 5.1 percent, in the third quarter. Excluding Petroleum, consolidated retail sales were up 4.3 percent over the same period last year.
Consolidated revenue increased $175.5 million , or 5.6 percent, which includes a $47.6 million increase in Petroleum revenue resulting from higher per litre gas prices. Excluding Petroleum, consolidated revenue increased $127.9 million , or 4.7 percent, in the quarter.
Consolidated EBITDA increased by 3.8 percent in the quarter. Diluted EPS was $2.59 in the quarter, an increase of $0.15 per share, or 5.9 percent, despite $0.14 reduction in EPS due to commencement of operations of our replacement distribution centre, over the third quarter of 2016.
“Our confidence in the company’s future is evidenced by the significant increase in our dividend, our updated three-year aspirations and the continuation of our share repurchase program through 2018,” said Stephen Wetmore , President and CEO, Canadian Tire Corporation. “We delivered exceptional topline growth at Canadian Tire Retail and another solid quarter of earnings performance while absorbing the planned financial impact from the successful commencement of operations of our $500 million replacement distribution centre in Caledon, Ontario .”
“Over the past year, we have made significant progress in aligning our Management responsibilities to operate as one company to gain operating efficiencies and a single view of our customer across all retailing banners. Today, we are taking a further step towards our one customer approach with Allan MacDonald adding to his responsibilities oversight of marketing, merchandising and store operations for FGL and Mark’s,” continued Wetmore.
- Financial results reflect Q3 2017 performance compared to Q3 2016.
- Retail segment revenue increased $155.8 million , or 5.5 percent. Excluding Petroleum, retail segment revenue increased 4.5 percent.
- Canadian Tire Retail saw retail sales increase 5.3 percent and same store sales were up 4.7 percent.
- FGL Sports’ retail sales were up 0.5 percent and same store sales were up 0.4 percent. Same store sales at Sport Chek were up 0.4 percent.
- Mark’s retail sales grew 5.2 percent and same store sales increased 4.6 percent.
- Income before income taxes decreased $1.9 million , or 1.2 percent.
CT REIT OVERVIEW
- As disclosed in the Q3 2017 CT REIT earnings release on November 6, 2017, CT REIT announced four investments with an estimated cost of $27 million .
- CT REIT also announced an increase in the annual rate of distribution to $0.728 per unit, an increase of 4.0 percent, commencing with the January 2018 payment.
FINANCIAL SERVICES OVERVIEW
- Income before income taxes increased 4.3 percent in the third quarter to $100.2 million .
- Gross average credit card receivables (GAAR) was up 8.0 percent over the prior year.
- The company announced financial aspirations for fiscal years 2018-2020. These include consolidated same store sales growth (excluding Petroleum) of 3 percent or more annually; return on invested capital for the Retail segment of 10 percent or more by 2020; and average annual diluted EPS growth of 10 percent or more over the three-year period.
- Operating capital expenditures were $99.2 million in the quarter, down from $146.8 million in the third quarter of 2016.
- For fiscal 2017, the company expects annual operating capital expenditures to be at the low end of the previously announced range of $400 million to $425 million .
- For the three year period of 2018–2020, the company expects the average annual operating capital expenditures to be within the range of $450 million to $500 million .
- The company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of $0.90 per share, an increase of $0.25 per share on its quarterly dividend, payable on March 1, 2018 to shareholders of record as of January 31, 2018 . The annual dividend increases $1.00 per share from $2.60 to $3.60 .
- The dividend is considered an “eligible dividend” for tax purposes.
- The company has a consistent record of increasing its annual dividend and has historically targeted a payout ratio of 25 percent to 30 percent of prior year normalized earnings. The company has increased the dividend payout ratio target to approximately 30 percent to 40 percent of prior year normalized earnings, after giving consideration to the period end cash position, future cash flow requirements, capital market conditions, and investment opportunities.
- The company has announced its intention to repurchase $550 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of 2018, subject to regulatory approval.
- The company has completed its previously announced ( November 2016 ) $550 million share repurchase.