Canadian Tire Q2 profit falls, revenue up but below analyst estimates

TORONTO — Canadian Tire Corp. executives said April weather put a damper on the business and proved so dismal that it caused the retailer’s second-quarter profit to plunge by about 20 per cent when compared with the year before.

The Toronto-based company that also owns Mark’s and Sport Chek said bad weather in April — which included ice storms in some parts of the country — cut into sales of cycling, spring outerwear and camping products and prompted its net income attributable to shareholders to fall to $156 million or $2.38 per share, down from $195.2 million or $2.81 per share a year earlier and far lower than the $3.06 per share that analysts expected, according to Thomson Reuters Eikon.

However, the company rebounded quickly enough for it to report $3.48 billion in revenue, a 3.2 per cent increase from the year before.

“We turned in good results, but we could have turned in extremely good results had the weather been on our side…Sport Chek wasn’t able to recapture lost sales in April,” admitted Allan MacDonald, the company’s executive vice-president of retail.

“Q2’s recovery after a dismal April, and I can’t spell dismal with enough capital letters, demonstrated the value of investing to build non-weather dependent categories.”

Many of the retailers wares — from tires to outdoor furniture to sporting goods — are highly seasonal and merchandise is overhauled depending on the season, so weather is often a topic in its earnings discussions, but this quarter proved much more “complex” than any other chief executive officer Stephen Wetmore said he could remember.

On top of a shorter spring selling season that meant the company was “not a happy place for the first four or five weeks of the quarter,” he said Canadian Tire was dealing with the launch of its Triangle customer loyalty and credit card programs and the purchase of sportswear maker Helly Hansen for $985 million.

Wetmore indicated there was work to do in expanding the assortment of Helly products, establishing a distribution network for the brand and growing the company in the U.S. and Europe.

Shoppers won’t start seeing Helly items in stores until the fall of 2019, he said.

Wetmore appeared optimistic about a deal that was announced after the quarter ended on June 30 for Canadian Tire to become the exclusive Canadian retailer for U.S. brand Petco’s animal food.

Executives also said they would closely watch tariffs Canada placed on some goods being imported from the U.S., some of which Canadian Tire’s brands stock.

So far, the effects of the tariffs have been “not material in the grand scheme of things,” but executives said they were mindful of the possibility that the situation could continue to escalate and affect the business’ performance.

Following the release of Canadian Tire earnings on Thursday, shares closed down about eight per cent at $168.08.

Shares hit a record intraday high on Wednesday before closing at $182.40, giving the company a market value of nearly $11 billion.

Companies in this story: (TSX:CTC, TSX:CTC.A)

Just Posted

Sunny weather improves farmers’ prospects

A harvester kicking up dust. It’s a picture that will bring a… Continue reading

Rural transit pilot project being considered

Penhold, Innisfail and Red Deer County councils to decide whether to go ahead with project

Red Deer fire station up for sale

Home sweet home at Fire Station 4

Most surveyed Innisfail residents give urban chickens the thumbs up

Town of Innisfail will discuss whether to allow backyard chickens on Monday

‘Mom I’m in trouble:’ Canadian, Brit face 10 years in jail for alleged graffiti

GRANDE PRAIRIE, Alta. — The mother of a Canadian who was arrested… Continue reading

Coyote on the prowl near Penhold

This coyote was out on the prowl in a field just west… Continue reading

Sky’s the limit as Calgary opens testing area for drones and new technologies

CALGARY — The sky’s the limit as the city of Calgary opens… Continue reading

Hi Mickey, ‘Bye Mickey: 6 Disney parks on 2 coasts in 1 day

ORLANDO, Fla. — Heather and Clark Ensminger breathed sighs of relief when… Continue reading

Court weighs ‘Apprentice’ hopeful’s suit versus Trump

NEW YORK — President Donald Trump’s lawyers hope to persuade an appeals… Continue reading

StarKist admits fixing tuna prices, faces $100 million fine

SAN FRANCISCO — StarKist Co. agreed to plead guilty to a felony… Continue reading

Annual pace of inflation slows to 2.2 per cent in September: Statistics Canada

OTTAWA — The annual pace of inflation slowed more than expected in… Continue reading

Jury finds Calgary couple guilty in 2013 death of toddler son

CALGARY — A jury has convicted a Calgary couple in the death… Continue reading

Most Read