- Consolidated comparable sales up 2.7% in the third quarter,
3.4% year to date
- Financial Services gross average credit card receivables (GAAR)
up 7.0%
- Diluted earnings per share (EPS) was $3.20, an increase of 1.5%; normalized diluted
EPS was $3.46
- Normalized EPS growth was 10.2% when adjusted for accounting
changes at Financial Services, totalling $36.4 million, in the prior year
- Dividend to be increased 9.6% to $4.55 per share
- Intention to repurchase a further $350
million of Class A Non-Voting Shares by the end of 2020
- Operational Efficiency program announced to target $200+
million in annualized savings by 2022
Focus areas include:
-
- Eliminating duplicate systems and processes across our multiple
banners as we begin operating as One Company
- Driving enterprise-wide efficiencies by decommissioning legacy
infrastructure
- Continuing our extensive program targeting internal and
external expense reduction
TORONTO, Nov. 7, 2019 /CNW/ - Canadian Tire
Corporation, Limited (TSX:CTC, TSX:CTC.A) today released third
quarter results for the period ended September 28, 2019.
"Our business is performing well and as one of Canada's largest eCommerce retailers, having
generated more than $500 million in
sales in the last 12 months, we are exceptionally well-positioned
as we head into our customers' biggest spending season," said
Stephen Wetmore, President and CEO,
Canadian Tire Corporation. "Operating as One Company across our
multiple banners focused on serving One Customer has driven
significant investments in our loyalty program, organizational
structure and our data and digital infrastructure. We have been
confidently focused on securing CTC's long-term competitive
positioning. Our ability to operate as One Company, having built
the foundation supporting the most critical parts of our strategy,
now positions us to focus on our Operational Efficiency
program. I am pleased to announce that we have set our target at
$200+ million in annualized savings by 2022."
"We are also announcing our eleventh dividend increase in ten
years and the continuation of our share repurchase program, now in
its eighth consecutive year, both of which are further evidence of
our ongoing investment in our Company and confidence in its
long-term growth," continued Wetmore.
CONSOLIDATED OVERVIEW
- Consolidated retail sales increased $39
million, or 1.0%, in the third quarter. Excluding Petroleum,
consolidated retail sales were up 2.7% over the same period last
year.
- Consolidated revenue increased $5.4
million, or 0.1%. Excluding Petroleum, consolidated revenue
increased 1.7%.
- Normalizing items in the quarter include costs incurred related
to the acquisition of Party City and related to the Company's
Operational Efficiency program; and for costs incurred related to
the acquisition of Helly Hansen in the prior year.
- Diluted earnings per share (EPS) was $3.20, an increase of 1.5%; normalized diluted
EPS was $3.46, a decrease of
$0.01 per share, or 0.3%. EPS growth
was 10.2% when adjusted for accounting changes at Financial
Services, totalling $36.4 million,
made in the prior year.
RETAIL OVERVIEW
- Financial results reflect Q3 2019 performance compared to Q3
2018.
- Retail segment revenue decreased $13.6
million, or 0.4%. Excluding Petroleum, retail segment
revenue increased 1.2%.
- Canadian Tire Retail sales increased 2.7% and comparable sales
were up 2.4%.
- SportChek retail sales were up 3.8% and comparable sales were
up 4.6%.
- Mark's retail sales grew 0.9% and comparable sales increased
1.2%.
- Helly Hansen revenue in the third quarter was $211.7 million, up 16.5%.
- Results normalized for costs incurred related to the
acquisition of Party City related to the Company's Operational
Efficiency program in the quarter and for costs incurred related to
the acquisition of Helly Hansen in the prior year.
- Income before income taxes increased $3.9 million, or 2.3%. Normalized income before
income taxes increased by $3.6
million, or 1.9%.
CT REIT OVERVIEW
- As disclosed in the Q3 2019 CT
REIT earnings release on November 4,
2019, CT REIT announced seven new investments with an
estimated cost of $66 million.
- CT REIT also announced an increase in the annual rate of
distribution to $0.787 per unit, an
increase of 4.0%, beginning in January
2020.
FINANCIAL SERVICES OVERVIEW
- Gross average credit card receivables was up 7.0% over the
prior year.
- Revenue grew 5.3% over the prior year.
- Income before income taxes decreased 17.4% in the third quarter
to $108.9 million, reflecting the
impact of accounting changes at Financial Services, totalling
$36.4 million, made in the prior
year. Excluding the impact of these changes, Financial Services
income before income taxes grew by 14.0%.
CAPITAL EXPENDITURES
- Operating capital expenditures were $112.2 million in the quarter, down from
$140.1 million in the third quarter
of 2018.
- For fiscal 2019, the Company expects annual operating capital
expenditures to be on the lower end of the previously disclosed
range of $475 to $550 million.
- For fiscal 2020, the Company expects annual operating capital
expenditures to be within the range of $450
million to $500 million.
DIVIDEND
- In November 2019, the Company
announced an increase in its annual dividend from $4.15 to $4.55 per
share and declared dividends payable to holders of Class A
Non-Voting Shares and Common Shares at a rate of $1.1375 per share, an increase of $0.10 or 9.6% per share payable on March 1, 2020 to shareholders of record as of
January 31, 2020. The dividend is
considered an "eligible dividend" for tax purposes.
- The Company has a consistent record of increasing its annual
dividend and has targeted a payout ratio of approximately 30% to
40% of prior year normalized earnings.
SHARE REPURCHASE
- On November 8, 2018, the Company
announced its intention to repurchase a further $300 to $400
million of its Class A Non-Voting Shares, in excess of the
amount required for anti-dilutive purposes, by the end of fiscal
2019. As at September 28, 2019,
$316.5 million of such shares had
been repurchased. The Company intends to repurchase a further
$350 million of its Class A
Non-Voting Shares, in excess of the amount required for
anti-dilutive purposes, by the end of fiscal 2020, subject to
regularly approval of the renewal of its normal course issuer
bid.
To view a PDF version of Canadian Tire Corporation's full
quarterly earnings report please see:
https://mma.prnewswire.com/media/1024808/CANADIAN_TIRE_CORPORATION__LIMITED_Canadian_Tire_Corporation_Del.pdf
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking information that
reflects management's current expectations related to matters such
as future financial performance and operating results of the
Company. Forward-looking statements are provided for the purposes
of providing information about management's current expectations
and plans and allowing investors and others to get a better
understanding of our anticipated financial position, results of
operations and operating environment. Readers are cautioned that
such information may not be appropriate for other purposes.
Certain statements other than statements of historical facts
included in this press release may constitute forward-looking
information, including but not limited to, statements concerning
the Company's Operational Efficiency program, including the
targeted annualized savings, the Company's intention to repurchase
Class A Non-Voting Shares in excess of the amount required for
anti-dilutive purposes by the end of 2020 under the heading "Share
Repurchase" and the Company's expectations with respect to its
capital expenditures for fiscal 2019 and 2020 under the heading
"Capital Expenditures".
By its very nature, forward-looking information requires us to
make assumptions and is subject to inherent risks and
uncertainties, which give rise to the possibility that the
Company's assumptions, estimates, analyses, beliefs and opinions
may not be correct and that the Company's expectations and plans
will not be achieved. Management's expectations with respect to the
Operational Efficiency program are based on a number of assumptions
relating to anticipated cost savings and operational efficiencies.
Although the Company believes that the forward-looking information
in this press release is based on information, assumptions and
beliefs which are current, reasonable and complete, this
information is necessarily subject to a number of factors, risks
and uncertainties that could cause actual results to differ
materially from management's expectations and plans as set forth in
such forward-looking information.
For more information on the risks, uncertainties and assumptions
that could cause the Company's actual results to differ from
current expectations, refer to section 2.8 (Risk Factors) of our
Annual Information Form for fiscal 2018 and to sections 7.2.4
(Retail Segment Business Risks), 7.3.2 (CT REIT segment business
risks), 7.4.3 (Financial Services Segment Business Risks) and 12.0
(Risks and Risk Management) and all subsections thereunder of
our Management's Discussion and Analysis for the year ended
December 29, 2018, as well as the
Company's other public filings, available at www.sedar.com and at
https://investors.canadiantire.ca. For more information on the
risks and uncertainties that could cause the Company's actual
results to differ from management's expectations with respect to
the Operational Efficiency program, refer to section 14.0
(Forward-Looking Statements and Other Investor Communication) of
our Management's Discussion and Analysis for the period ended
September 28, 2019 available at
www.sedar.com and at https://investors.canadiantire.ca.
The forward-looking statements and information contained herein
are based on certain factors and assumptions as of the date hereof
and do not take into account the effect that transactions or
non-recurring or other special items announced or occurring after
the statements are made have on the Company's business. The Company
does not undertake to update any forward-looking information,
whether written or oral, that may be made from time to time by it
or on its behalf, to reflect new information, future events or
otherwise, except as is required by applicable securities laws.
CONFERENCE CALL
Canadian Tire will conduct a
conference call to discuss information included in this news
release and related matters at 8:00 a.m.
ET on November 7, 2019. The
conference call will be available simultaneously and in its
entirety to all interested investors and the news media through a
webcast at
https://investors.canadiantire.ca/English/investors/default.aspx.
ABOUT CANADIAN TIRE CORPORATION
Canadian Tire
Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or "CTC", is a family
of businesses that includes a Retail segment, a Financial Services
division and CT REIT. Our retail business is led by Canadian Tire,
which was founded in 1922 and provides Canadians with products for
life in Canada across its Living,
Playing, Fixing, Automotive and Seasonal & Gardening divisions.
PartSource and Gas+ are key parts of the Canadian Tire network. The
Retail segment also includes Mark's, a leading source for casual
and industrial wear; Pro Hockey Life, a hockey specialty store
catering to elite players; SportChek, Hockey Experts, Sports
Experts, National Sports, Intersport and Atmosphere, which offer
the best active wear brands; and Party City Canada, a leading,
one-stop shopping destination for party supplies and seasonal
celebrations. The more than 1,700 retail and gasoline outlets
are supported and strengthened by CTC's Financial Services
division and the tens of thousands of people employed across
Canada and around the world by the
Company and its local dealers, franchisees and petroleum retailers.
In addition, CTC owns and operates Helly Hansen, a leading global
brand in sportswear and workwear based in Oslo, Norway. For more information, visit
Corp.CanadianTire.ca.
SOURCE CANADIAN TIRE CORPORATION, LIMITED