Canadian Tire seeks to cut more than $200M in annualized costs, raises dividend

TORONTO — Canadian Tire Corp. shares rose Thursday as the company announced it plans to cut more than $200 million in annual costs by 2022.

The more commonly traded class-A shares in the company rose $5.10, or 3.53 per cent, to $149.29 in early afternoon trading on the Toronto Stock Exchange.

The rise came as the company released its third-quarter financial earnings and announced an operational efficiency program that targets more than $200 million in annualized savings by 2022.

“We expect the market will adopt a ‘wait and see’ attitude before incorporating (the cost-savings initiative) into earnings forecasts,” wrote Irene Nattel, an RBC Dominion Securities Inc. analyst, in a note.

However, with “solid” third-quarter financial results and plans for future growth, RBC views Canadian Tire’s valuation “as ripe for re-rating,” she said, with key catalysts being solid same-store sales and revenue performance, as well as the realization of cost reductions.

The cost-cutting program’s focus areas include eliminating duplicate systems and processes, decommissioning legacy infrastructure and continuing to reduce internal and external expenses.

Management expects to record one-time costs for items like severance, retraining and real estate related closure costs, the company said.

In the third quarter, it recorded $19.8 million for severance, store closure and other related expenses, it said, while on a year to date basis it has recorded $27.9 million.

The cost-cutting measures were announced as the company also said it would raise its quarterly dividend for the eleventh time in a decade.

Canadian Tire will now pay a quarterly dividend of $1.1375 per share, an increase of 10 cents.

The retailer reported a profit attributable to shareholders of $197.2 million or $3.20 per diluted share for its third quarter. That compared with a profit attributable to shareholders of $203.8 million or $3.15 per diluted share in the same quarter last year when the company had more shares outstanding.

Canadian Tire’s normalized earnings per share amounted to $3.46 per diluted share for the quarter, down from $3.47 per diluted share a year ago, due to an accounting changes at its financial services business.

Revenue totalled $3.64 billion, up from $3.63 billion a year ago.

Comparable sales at Canadian Tire stores were up 2.4 per cent, while SportChek comparable sales were up 4.6 per cent. Mark’s comparable sales increased 1.2 per cent.

“Our business is performing well and as one of Canada’s largest ecommerce retailers … we are exceptionally well-positioned as we head into our customers’ biggest spending season,” said CEO Stephen Wetmore in a statement.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

California is ready to pull the plug on gas vehicles

The first state with such a mandate

Liberals plan fund to spur green technology, jobs

Plans to spend on building retrofits, clean energy and production of electric vehicles

Parliament resumes full operations today with debate on throne speech

Opposition parties will respond to Wednesday’s speech

Central zone has 20 active cases of COVID-19

Province identified 143 new cases across Alberta on Wednesday

Liberals vow wage-subsidy extension to 2021, revamp of EI system in throne speech

Canadian labour market was hammered by pandemic, when lockdowns in the spring led to a loss of 3 million jobs

Games go on, but many traditions on hold in college football

Some traditions dating to the 19th century

Canadian international Quinn hopes to start conversation, help young trans folk

People can do to be better allies to the trans community

Beverley McLachlin remembers Ruth Bader Ginsburg in award-winning memoir

Trump and Senate Republicans charge forward with plans to fill the court vacancy

Actor Ryan Reynolds looking to invest in Welsh soccer club

Talks to start with Reynolds and fellow actor Rob McElhenney

Former Wales star Rob Howley returns to rugby with Canadian national team

Former Wales star Rob Howley returns to rugby with Canadian national team

Back to work: NBA’s non-Disney clubs start team workouts

Back to work: NBA’s non-Disney clubs start team workouts

“We refused to play,” Henry blasts team as Impact lose 3-1 to Revolution

“We refused to play,” Henry blasts team as Impact lose 3-1 to Revolution

4-nation Rugby Championship to be played as 6 doubleheaders

4-nation Rugby Championship to be played as 6 doubleheaders

Most Read