- Consolidated comparable sales up 18.9%
- Year to date eCommerce sales reach $1
billion, a 211% increase
- Diluted Earnings Per Share (EPS) were $4.84; normalized EPS grew 42.5%
- Annual dividend to be increased 3.3% to $4.70 per share, reflecting 11 years of
consecutive increases
TORONTO, Nov. 5, 2020 /CNW/ - Canadian Tire Corporation,
Limited (TSX:CTC) (TSX: CTC.A) ("CTC" or the "Company") today
released its third quarter results for the period ended
September 26, 2020.
"I am extremely proud of our third quarter performance – a true
testament to the relevancy of our brand and unique multi-category
assortment which continues to resonate with our customers both
in-store and across our digital platforms. Our impressive retail
capabilities and agility have contributed to our market share
growth across the categories in which we compete. Both frequency of
visits and spend levels of our Triangle members, particularly our
active family segment, increased significantly in the quarter and
we are well-positioned heading into the holiday season," said
Greg Hicks, President and CEO,
Canadian Tire Corporation.
"My deep appreciation goes out to our Associate Dealers and all
of our employees for their passion and extraordinary commitment to
serving our customers in the midst of the ongoing pandemic, and for
meeting their needs no matter how they choose to shop with us,"
continued Hicks.
HIGHLIGHTS
- With strong in-store and eCommerce performance, CTC
delivered exceptional comparable sales growth of 18.9% in the
quarter
-
- CTR led the way in the quarter, delivering 25.1% comparable
sales growth, reflecting strong demand across all product
categories and compelling Owned Brands sales growth of 28%
- Existing Triangle members drove traffic and larger basket size
both digitally and in-store, and approximately 400,000 new Triangle
members were acquired in the quarter
- Mark's delivered solid comparable sales growth of 5.7%, driven
primarily by growth in industrial wear. SportChek's comparable
sales growth declined 1.4%
- eCommerce sales reached $1
billion year to date, an increase of $700 million, or 211%, compared to 2019. In the
quarter:
-
- eCommerce sales grew 132%, led by CTR with 178% growth
- eCommerce penetration rates more than doubled 2019 levels
- Digital visits across all banners grew by over 40% to 200
million visits
- Strong sales and Dealer demand contributed to significant
improvement in EPS performance in the quarter
-
- Diluted EPS were $4.84;
normalized diluted EPS were $4.93, a
growth of 42.5% over the prior year
- The Retail segment delivered strong earnings with normalized
income before taxes increasing by 73.2% in the quarter
-
- At CTR, record-level shipments contributed to revenue growth of
28%
- Operating expense leverage improved in the quarter, reflecting
expense controls and operational efficiency benefits
- The Financial Services credit card portfolio continued to
demonstrate strong operational metrics in the quarter:
-
- Aging metrics improved mainly due to strong customer
payments
- Allowance for expected credit losses was flat to the second
quarter
- Consistent with industry trends and Q2 performance, cardholder
sales and receivables volume were lower, contributing to a decrease
in income before taxes of 16.9%
- CTC is in a strong liquidity position and continues its
focus on ensuring a strong cash position and financial flexibility.
In the quarter, the Company:
-
- Repaid the $250 million Series E
unsecured medium-term notes
- Continued to pause the repurchase of shares
- Prudently managed working capital, operating costs and capital
expenditures across the enterprise
- In the quarter, within the Financial Services segment:
-
- Repaid $700 million under its
Financial Services' note purchase facility with
Scotiabank
- Repaid $500 million of term notes
at maturity and issued $480 million
of term notes that have an expected repayment date of September 22, 2025
- As a result, the Company ended the quarter with $1.7 billion in cash and marketable securities,
and $2.5 billion, $2.3 billion and $294
million in available committed credit at its Retail,
Financial Services and CT REIT segments, respectively
- The Company approved a 3.3% increase in its annual dividend
from $4.55 to $4.70 per share, reflecting 11 years of
consecutive increases
CONSOLIDATED OVERVIEW
- Consolidated retail sales increased $510.1 million or 13.1% in the third quarter.
Excluding Petroleum, consolidated retail sales were up $635 million or 19.1% over the same period last
year
- Consolidated revenue increased $349.7
million, or 9.6%. Excluding Petroleum, consolidated revenue
increased $479.6 million, or 15.3% in
the quarter
- Diluted EPS were $4.84;
normalized diluted EPS were $4.93, a
growth of 42.5% over the prior year
- The Company continued to focus on executing against its
Operational Efficiency program and remains committed and on track
to deliver its targeted $200+ million in annualized savings by
2022
- Refer to the Q3 MD&A section 4.1.1 for information on
normalizing items, and to section 3.0 in the MD&A for each of
Q1, Q2 and Q3 for additional details on events that have impacted
the Company year to date
RETAIL OVERVIEW
- The following financial results reflect Q3 2020 performance
compared to Q3 2019:
-
- Retail segment revenue increased 11.8%. Excluding Petroleum,
Retail segment revenue increased 18.6%
- Canadian Tire retail sales increased 25.7%
- SportChek retail sales decreased 1.7%
- Mark's retail sales were up 4.9%
- Helly Hansen revenue in the quarter was $155.4 million, a decrease of 2.5%. On a constant
currency basis, Helly Hansen revenue decreased 0.9%
- Normalized income before income taxes increased 73.2%
- Refer to the Q3 MD&A section 4.1.1 for information on
normalizing items, and to section 3.0 in the MD&A for each of
Q1, Q2 and Q3 for additional details on events that have impacted
the Company year to date
FINANCIAL SERVICES OVERVIEW
- Financial Services is in a strong financial position. The
business is well capitalized with access to multiple sources of
liquidity and has an experienced Management Team and proven credit
risk capabilities. The credit card portfolio continues to
demonstrate strong operational metrics, including ending the
quarter with improved aging, mainly due to strong customer
payments
- Allowance for expected credit losses was flat to the second
quarter
- In the quarter, gross margin decreased 11.2% due primarily to a
revenue decline of 12.2% over the prior year, due to lower credit
charges resulting from a decline of 7.1% in gross average credit
card receivables, reflecting lower credit card sales consistent
with industry trends and Q2 performance
- Income before income taxes decreased 16.9% in the third quarter
to $90.5 million
- Refer to section 3.0 in the MD&A for each of Q1, Q2 and Q3
for additional details on events that have impacted the Company,
including Financial Services, year to date
CT REIT OVERVIEW
- As disclosed in the Q3 2020 CT
REIT earnings release on November 2,
2020, CT REIT announced three new investments, totalling
$77.2 million
- Year to date, CT REIT has announced five new investments,
totalling $96.2 million
- 99.1% of tenants fulfilled their October
1, 2020 rent obligations
CAPITAL EXPENDITURES
- Operating capital expenditures were $58.3 million in the third quarter, down from
$112.2 million in the third quarter
of 2019
- Total capital expenditures decreased $50.1 million in the quarter, to $81.2 million
QUARTERLY DIVIDEND
- The Company approved a 3.3% increase in its annual dividend
from $4.55 to $4.70 per share, reflecting 11 years of
consecutive increases
- In November, the Company declared dividends payable to holders
of Class A Non-Voting Shares and Common Shares at a rate of
$1.175 per share, an increase of
$0.15 or 3.3% per share payable on
March 1, 2021 to shareholders of
record as of January 31, 2021. The
dividend is considered an "eligible dividend" for tax
purposes.
SHARE REPURCHASE
- On November 7, 2019, the Company
announced its intention 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 ("2020 Share Repurchase Intention"). Purchases
of Class A Non-Voting Shares pursuant to the 2020 Share Repurchase
Intention were paused on March 13,
2020 as a result of the COVID-19 pandemic and at present,
the Company does not expect any further purchases other than for
anti-dilutive purposes.
FORWARD-LOOKING STATEMENTS
Certain statements made in this press release may constitute
forward-looking information under applicable securities laws. These
statements are being 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. Although CTC 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, including as a result of
COVID-19, 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 CTC's actual
results to differ from current expectations, refer to section 2.8
(Risk Factors) of our Annual Information Form for fiscal 2019 and
to section the Key Risks and Risk Management sections of our
Management's Discussion and Analysis for the quarters ended
March 28, 2020,June 27, 2020 and September 26, 2020, as well as CTC's other public
filings, available at www.sedar.com and at
https://investors.canadiantire.ca. CTC 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 5, 2020. 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 and will be available
through replay at this website for 12 months.
To view a PDF version of Canadian Tire Corporation's full
quarterly earnings report please see:
https://mma.prnewswire.com/media/1327261/CANADIAN_TIRE_CORPORATION__LIMITED___INVESTOR_RELATIONS_Canadian.pdf
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. Party City, 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; and
SportChek, Hockey Experts, Sports Experts, National Sports,
Intersport and Atmosphere, which offer the best active wear brands.
The more than 1,740 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 CTC 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.
FOR MORE INFORMATION
Media: Jane Shaw, (416)
480-8581, jane.shaw@cantire.com
Investors: Lisa Greatrix, (416)
480-8725, lisa.greatrix@cantire.com
SOURCE CANADIAN TIRE CORPORATION, LIMITED - INVESTOR
RELATIONS