Canadian Tire taking ‘cautious approach' to holiday promotions to help manage store traffic amid pandemic

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As the annual Black Friday sales period approaches, Canadian Tire Corp. Ltd. is taking a “more cautious approach” about holiday promotions, saying that it needs to smooth out surges in traffic to maintain physical distancing in stores.

The Toronto-based retailer signalled that others in the industry are likely to take the same approach, to try to mitigate the intensity of holiday shopping patterns around the end of November. It is one more sign of a Christmas shopping season that will be unusual for stores: Both retailers and package carriers such as Canada Post have implored people to shop early as they brace for a glut of e-commerce ordering this year. Canadian Tire, like others, has been readying its website for the surge in traffic. But managing store traffic will be another challenge, as shopping behaviour increases while public health authorities are continuing to battle the spread of the COVID-19 pandemic.

“We can’t handle the traffic patterns into the store effectively and safely, even at last year’s numbers … the lineups would be completely out the door,” Canadian Tire president and chief executive Greg Hicks said on a conference call Thursday to discuss the company’s earnings.

While the company is planning to be “very competitive” during the holidays, Mr. Hicks added that “big-demand events” will be staggered over longer periods of time, rather than concentrated in the four- to five-day period around the popular Black Friday and Cyber Monday sales events.

“I don’t expect you’re going to see anything different from our competition,” Mr. Hicks said.

Holiday sales have already begun to ramp up, Mr. Hicks said.

Canadian Tire has benefitted from sales trends during the global pandemic, as Canadians forced to stay at home have been spending money to spruce up their backyards and gardens; cooking at home more; and shopping for camping gear, bicycles and exercise equipment.

The retailer reported its third quarter revenue grew by 9.6 per cent to nearly $4-billion, driven by strong sales increases at its flagship stores and e-commerce demand.

Comparable sales – an important metric that tracks sales growth not counting the impact of store openings – grew 18.9 per cent in the 13 weeks ended Sept. 26.

Canadian Tire’s seasonal business was strong this year, as shoppers unable to travel during the summer spent more on gardening and backyard items, as well as camping gear. Kitchen wares and tools also remained strong, contributing to 25.1-per-cent comparable sales growth at the flagship stores.

Mark’s stores had comparable growth of 5.7 per cent, largely driven by growth in industrial wear. SportChek’s performance was hurt by a decline in team sports and a slower-back-to-school season, driving down comparable sales by 1.4 per cent. The company’s Helly Hansen brand experienced a 2.5-per-cent revenue decrease, to $155.4-million.

E-commerce demand has continued to grow. So far this year, Canadian Tire Corp’s e-commerce sales have reached $1-billion, representing $700-million more than the same period last year. While e-commerce growth has slowed somewhat since the surge in demand earlier in the pandemic, it was still up by 132 per cent in the third quarter.

Canadian Tire’s financial services business declined as people charged less to their credit cards, pushing receivables down by 7.1 per cent in the quarter. Customers have been paying down their credit card balances through COVID-19. However, purchases have begun to ramp up again: in September, credit card sales were roughly flat compared with the same month last year, for the first time since the pandemic began affecting consumer habits in March.

The retailer reported net income of $326.3-million, or $4.87 a share in the third quarter, compared with $227.7-million or $3.20 a share in the same period last year.

The company has been paying down debt, and continues to cut costs, saying it is on track with a previously announced program to find more than $200-million in annual cost savings by 2022.

Canadian Tire increased its annual dividend paid to shareholders by 3.3 per cent, to $4.70 from $4.55 a share.

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