Canadian Tire Corp. CTC-A-T reported reported its profits grew by 8.3 per cent in the third quarter, beating analyst expectations, even as a weak consumer environment led to continuing sales declines.
The Toronto-based retailer reported on Thursday that comparable sales – an important metric that tracks sales growth at existing stores that have been open for more than a year – fell by 1.5 per cent in the quarter ended Sept. 28.
While sales have been softer, Canadian Tire has been cutting costs across its retail operations, and profit margins have been improving. In a statement released on Thursday, president and chief executive officer Greg Hicks noted that sales trends are beginning to improve.
“We continue to control costs and manage margins carefully, in order to balance lingering consumer and economic headwinds,” Mr. Hicks said.
The company also announced a dividend increase, to $7.10 per share on an annualized basis, up from $7 per share previously.
At the flagship Canadian Tire store chain, declines in sales across categories such as gardening, toys and home décor led to a 2.2-per-cent decrease in comparable sales compared to the same period the year before. Over the past two years, the company has noted that discretionary purchases have been falling as people manage their budgets carefully, although they continue to spend on essential products and services, particularly in the automotive category.
Mark’s sales fell by 2.3 per cent. The stores saw growth in sales of men’s shorts and T-shirts, as well as children’s clothing – a new category at Mark’s. Those gains failed to make up for declines in sales of industrial wear.
At Sport Chek, by contrast, sales were up by 2.9 per cent, marking the first quarter of sales growth in more than a year. The company noted that product promotions and an improved experience at the stores helped to drive better sales in categories such as athletic footwear and hockey gear.
Revenue in the company’s financial services segment grew by 1.5 per cent to $399.1-million, but profits fell amid higher net write-offs and an increase in operating costs.
Canadian Tire reported its net income grew to $220.7-million or $3.59 per share, compared to normalized earnings of $203.8-million or $2.96 per share in the same period the previous year. The normalized figure excluded a $328-million charge in the previous year related to the company’s deal to buy back a minority stake in its financial services division from Bank of Nova Scotia. It also excluded a $96.4-million insurance recovery related to a fire in March of 2023 at one of its largest distribution centres.
The company’s total revenue fell by 1.4 per cent to $4.19-billion. Excluding petroleum sales, revenue was down by 0.4 per cent to $3.6-billion. Sales at the company’s fuel stations were affected by lower gas prices, and the volume of gas sold also decreased.
The results surpassed analyst expectations of $4.18-billion in revenue and $3.04 per share for normalized earnings.