Canadian Tire Corp. reported SportChek’s comps were up 2.5 percent in the fourth quarter and 2.0 percent for the full year

Companywide, highlights include:

  • Consolidated comparable sales up 0.8 percent in the fourth quarter, and 2.2 percent for the full year:
  • Canadian Tire up 0.2 percent in Q4 and 2.1 percent for the full year
  • SportChek up 2.5 percent in Q4 and 2.0 percent for the full year
  • Mark’s up 1.8 percent in Q4 and 2.8 percent for the full year
  • Financial Services GAAR growth up 11.6 percent in Q4 and 10.7 percent for 2018
  • Fourth quarter diluted earnings per share (EPS) was $4.78, an increase of 16.6 percent, normalized; full year diluted EPS was $11.95, an increase of 12.0 percent, normalized

“2018 was an exceptional year for Canadian Tire. We maintained our leading brand position in Canadian retail, while investing for our future,” said Stephen Wetmore, President and CEO, Canadian Tire Corporation.

“We succeeded in advancing our One company strategy by creating Canada’s fastest growing credit card and loyalty offering with Triangle Rewards. Adding Helly Hansen to our family has strengthened our owned brands offering while providing a platform for international expansion. At CTR, our largest retail banner, eCommerce offerings, including click and collect and home delivery, are receiving exceptional customer satisfaction scores and the strength of our operations allowed us to increase our dividend for the ninth consecutive year,” continued Wetmore.

“Today we are also announcing that Dean McCann, Executive Vice President and Chief Financial Officer, has informed us of his intention to retire from his role as of December 31, 2019. Dean has been with Canadian Tire since 1996, was appointed CFO in 2012 and in 2015, was named CFO of the Year. Over the years, Dean’s assistance to me and his many contributions to the company have been invaluable. He has been instrumental to the growth of Canadian Tire,” said Wetmore.

“I am extremely pleased to announce that post-retirement, Dean has agreed to remain on the Boards of Canadian Tire Bank and CT REIT,” added Wetmore.

Consolidated Overview

Fourth Quarter

  • Consolidated retail sales increased $38.4 million in the fourth quarter, or 0.8 percent over the same period in 2017. Excluding Petroleum, consolidated retail sales were up 1 percent over the same period last year.
  • Consolidated revenue increased $216.2 million, or 5.5 percent in the fourth quarter. Excluding Petroleum, consolidated revenue increased 6.5 percent.
  • Normalizing item in the quarter reflects a $50.0 million increase in the fair value of the redeemable financial instrument arising from the Financial Services transaction with Scotiabank.
  • Consolidated normalized EBITDA increased by 5.4 percent in the quarter.
  • Diluted EPS was $3.99 in the quarter, down $0.11 per share, or 2.7 percent, compared to the prior year. Normalized diluted EPS in the quarter was $4.78, an increase of $0.68 per share or 16.6 percent.

Full Year

  • Consolidated retail sales increased $514.0 million, or 3.4 percent, over the prior year. Excluding Petroleum, consolidated retail sales increased 2.2 percent.
  • Consolidated revenue increased $782.0 million for the full year, or 5.9 percent, over the prior year.
  • Excluding Petroleum, consolidated revenue increased 5.1 percent.
  • Diluted EPS was $10.64, a decrease of $0.03 per share, or 0.3 percent, over the prior year.
  • Normalized diluted EPS of $11.95 increased 12.0 percent.

Retail Segment Overview

Fourth Quarter

  • Financial results reflect Q4 2018 performance compared to Q4 2017.
  • Retail segment revenue increased $192.4 million, or 5.3 percent. Excluding Petroleum, retail segment revenue increased 6.4 percent.
  • Canadian Tire Retail saw retail sales increase 0.6 percent and comparable sales were up 0.2 percent.
  • Retail and comparable sales at SportChek were up 1.9 percent and 2.5 percent respectively.
  • Mark’s retail sales increased 1.8 percent and comparable sales were up 1.8 percent.
  • Helly Hansen revenue in the quarter was $165.9 million.
  • Income before income taxes increased $26.4 million, or 8.7 percent.

Full Year

  • Financial results reflect 2018 performance compared to 2017.
  • Retail segment revenue increased $692.1 million, or 5.7 percent. Excluding Petroleum, retail segment revenue was up 4.8 percent.
  • Canadian Tire Retail sales increased 2.4 percent and comparable sales increased 2.1 percent.
  • SportChek’s retail sales increased 1.1 percent and comparable sales increased 2.0 percent.
  • Mark’s retail sales increased 3.0 percent and comparable sales were up 2.8 percent.
  • Helly Hansen revenue for 2018 was $347.6 million.
  • Income before income taxes decreased $22.3 million or 3.2 percent. Normalized income before income taxes increased by $9.2 million or 1.3 percent.

CT REIT Overview

As disclosed in the Q4 and year-end 2018 CT REIT earnings release on February 11, 2019, CT REIT invested $142 million and added over 680,000 square feet of gross leasable area (GLA) in 2018, including approximately 110,000 square feet of GLA in the fourth quarter.

Financial Services Overview

  • Income before income taxes increased $2.6 million, or 2.8 percent in the fourth quarter, and increased $4.0 million, and 1.0 percent, for the full year over 2017. Normalized income before income taxes increased 4.5 percent for the full year.
  • Revenue grew 10.2 percent in the quarter, and 8.9 percent full year over the prior year.
  • Gross average credit card receivables (GAAR) was up 11.6 percent in Q4 and for the full year GAAR was up 10.7 percent over 2017.

Capital Allocation

Capital Expenditures

Total operating capital expenditures were $448.4 million for the year, up from $384.2 million in 2017, and slightly below the previously disclosed range of $450 million to $500 million.
For fiscal 2019, the company expects annual operating capital expenditures to be within the range of $475 million to $550 million.