Revenues at FGL Sports increased 0.7 percent in the second quarter ended June 29, to Canadian $337.4 million (U.S. $326.8 mm), according to the financial report of its parent, Canadian Tire Inc.
The small gain reflect over 80 fewer stores as a result of the company's banner rationalization initiative last year. FGL had 413 in the latest period, down from 501 at the same time a year ago.
At Sport Chek, FGL’s core corporate sporting goods banner, sales were up 16 percent with same-store sales ahead 10 percent. Canadian Tire said sales across FGL Sports banners were strong across the country, especially in athletic apparel, running and training shoes and in sports equipment.
Its other banners include: Hockey Experts, Sports Experts, National Sports, S3 and Atmosphere.
On a conference call with analysts, Stephen Wetmore, Canadian Tire’s president and CEO, the FGL Sports, picked up with the acquisition of Forzani Group in August 2011, “continues to out-perform all our expectations.”
Wetmore added, “We saw traffic increases in stores, and launched innovative and effective advertising campaigns, which helped to drive the impressive top line results. As such, we continue to focus on our growth strategy and the related network expansion of our core Sport Chek and atmosphere banners.”
Michael Medline, president of FGL Sports, said the FGL Sports saw strength across equipment, across apparel and in footwear, further noting that “we've seen over the last two years strength in all of them.” While all three categories have room to grow, apparel has the most potential, he said. As
FGL continues “to improve our brand image” and builds on its recent push to enhance customer service, “we're attracting more and more brands that we weren't able to attract before.” He pointed to he addition of Roxy and Quiksilver as examples.
Medine also achieved over C$30 million of synergies from the FGL merger, surpassing its goal of C$25 million. Regarding expansion, Medline said Sport Chek is on plan to grow its store base by 50 percent over the next five years.
“We are making great progress with very strong real estate team we have here at Canadian Tire Corporation to find very good real estate for the new stores going on,” said Medine. “We specially have room to grow in Ontario and urban markets, so as we go forward, we'll continue to look to see whether we can speed that up and get those stores in the market, quickly because we are performing well.”
Medline also noted that while on a small base, online for FGL is seeing “very good growth” with “very aggressive plans” to expand. A new on-line platform will roll out in late 2014.
Companywide, Canadian Tire’s earnings rose 15.8 percent to C$154.9 million ($150.3 mm), or C$1.91 per diluted share, which was C14 cents higher than Wall Street’s average estimate. Revenue grew 1.0 percent to C$3.02 billion ($2.9 bn).
Canadian Tire also said it would seek a financial partner for its C$4.4 billion ($4.2 billion) credit-card portfolio. The company said it wants to reduce the financing risk associated with the credit-card assets, while still reaping the benefits of the portfolio, one of the largest retail credit-card portfolios in Canada. The company added that “the strong performance of its portfolio” and existing market conditions will make it attractive to potential suitors.
