Canadian Tire Inc. reported sales in its SportChek segment decreased 13.1 percent while comparable sales decreased 1.8 percent. Helly Hansen’s revenue in the quarter was $121.5 million, a decrease of 7.3 percent. On a constant currency basis, Helly Hansen revenue grew 0.6 percent.
The results are in Canadian dollars.
Companywide, consolidated retail sales decreased $75.7 million or 2.7 percent in the first quarter. Excluding Petroleum, consolidated retail sales were down 2.3 percent over the same period last year. Consolidated revenue decreased $46.1 million, or 1.6 percent. Excluding Petroleum, consolidated revenue decreased $24.9 million, or 1.0 percent in the quarter.
Diluted EPS was a loss of 22 cents a share, normalized diluted EPS was a loss of 13 cents compared to earnings of $1.12 cents in the prior year.
EPS performance in the quarter was impacted by the following factors:
- Decrease in revenue at SportChek, Mark’s and Helly Hansen banners due to store closures;
- A $44.9 million or 43 cents EPS incremental increase in the allowance for loans receivable; comprised of $30 million to reflect the shift in the macroeconomic environment and $14.9 million resulting from the increased probability of cardholder default;
- A $41.8 million or 44 cents EPS net expense due to the significant decline in CTC’s share price over the course of the first quarter, resulting in a mark-to-market adjustment on the Company’s equity hedges related to share-based compensation awards; and
- A $7.1 million or 9 cents EPS non-operational foreign exchange loss at Helly Hansen due to the significant drop in the Norwegian Krone.
Canadian Tire said has taken aggressive action to ensure a strong cash position and financial flexibility, including:
- Leveraging our Canadian banks and our high standing in capital markets to secure an additional $650 million credit facility from four Canadian Financial Institutions, in addition to the existing funding channels available to CTC and its related entities;
- Pausing the repurchase of shares;
- Implementing a plan to prudently manage working capital and operating costs across the enterprise;
- Deferring certain 2020 planned capital expenditures in all categories of projects, while maintaining our investment in key strategic initiatives such as eCommerce;
- CTC dramatically accelerated its digital and eCommerce efforts across all banners in response to rapidly shifting customer behavior;
- eCommerce sales grew 44 percent in the quarter, led by close to 80 percent growth at CTR;
Implemented Curbside Pick Up nationally in all CTR stores, resulting in the majority of Click & Collect orders designated as
- Curbside Pick Up; and
- eCommerce daily average order volumes at CTR grew from 5k pre-COVID-19 to over 80k in April as website stability measures were implemented.
- Implemented significant safety measures, including installing plexiglass cashier shields and floor decals, enhancing store cleaning procedures, reducing hours at Canadian Tire stores, introducing Curbside Pick Up and closing non-essential banners;
- Introduced a special support payment for frontline workers;
- Launched $5 million COVID-19 Response Fund to support frontline healthcare and community workers with essential products and PPE; and
- Associate Dealers donated over 300,000 masks, 200,000 pairs of gloves, and 20,000 liters of hand sanitizer to local hospitals, nursing homes, and community organizations in need.
“A company’s true values take over at a time like this. For CTC, this means being there for Canadians no matter what challenges they face. For close to a century, we have risen to the challenge of an ever-changing retail landscape and this time will be no different. We are a resilient company, built on a unique business model, supported by a strong Associate Dealer network, a multi-category assortment, our iconic Triangle Loyalty program and a proven Financial Services business,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “I am incredibly proud of how quickly we adapted and all that we have accomplished over the past several weeks, including the contributions of our Associate Dealers and our brave frontline workers.”
“To date, we have seen a quantum leap in our eCommerce performance across all of our banners and we have accelerated our planned investments in our digital capabilities to meet our customers’ increased desire to shop online. I am very encouraged by early results in the second quarter, and I am confident that we will continue to successfully operate in this new normal and excel over the long-term,” continued Hicks.
Canadian Tire’s full statement is here.
Photo courtesy SportChek