News Releases
Strong Retail Sales and Productivity Gains Drive Canadian Tire Corporation's Second Quarter Results
  • Same store sales up in all retail banners:
    • 3.2% at Canadian Tire
    • 4.8% at FGL Sports (8.6% at Sport Chek)
    • 2.9% at Mark's
  • Financial Services income before taxes up 5.8%
  • Diluted EPS was $2.15, up 1.3%, despite an $0.18 reduction due to the Financial Services transaction in 2014

TORONTO, Aug. 13, 2015 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.a) today released second quarter results for the period ended July 4, 2015.

"Our sales performance this quarter demonstrates the strength in our business and our continued momentum. Canadian Tire is operationally stronger than a year ago, but our solid sales and productivity gains are masked by the dramatic fall of the Canadian dollar and impacted by certain one time items that benefitted us in 2014," said Michael Medline, President and CEO, Canadian Tire Corporation. "I'm pleased that our operating performance and productivity initiatives have gained significant traction and are generating tangible results, which will continue to serve us well over the long term."  

CONSOLIDATED OVERVIEW

  • Excluding Petroleum, consolidated revenue increased $166.1 million, or 6.3%. Despite lower gas prices, consolidated revenue increased 2.9% or $91.6 million versus the prior year.  
  • Gross average credit card receivables grew 4.4% over the same period last year.
  • Diluted EPS was $2.15, up 1.3%, and reflects an $0.18 reduction due to the Financial Services transaction in 2014.  After normalizing for the premium related to the early redemption of corporate medium term notes in the prior year, diluted EPS would have been down 4.9%.

RETAIL OVERVIEW

  • Excluding Petroleum, Retail segment revenue increased 6.4% over the same period last year primarily due to increased product shipments to Dealers at Canadian Tire and higher retail sales at FGL Sports and Mark's.  Including Petroleum, Retail segment revenue increased 2.6% in the quarter.
  • Income before income taxes in the Retail segment was $152.8 million, up 2.2% over the second quarter last year.  Normalizing for the early redemption of the medium-term notes in the prior year, income before income taxes would have been down 7.2%.
  • Canadian Tire Retail saw retail sales increase 7.1%, bolstered by strong sales at the Canadian Tire Showcase store in South Edmonton Commons which opened June 1, 2015, and same store sales were up 3.2% over the same period last year. 
  • FGL Sports' retail sales and same store sales grew 6.8% and 4.8% respectively, over the same period last year. Same store sales at Sport Chek were up 8.6% in the second quarter, reflecting recent investment and expansion of the Sport Chek banner.
  • Mark's retail sales grew 2.4% and same store sales were up 2.9%.

CT REIT OVERVIEW

  • As disclosed in the Q2 2015 CT REIT release issued August 11, 2015, CT REIT completed four previously announced property investments, one development land investment and five intensifications in the second quarter at a total cost of $73.1 million.
  • CT REIT also announced a further five investments in acquisitions, development and property intensifications, all of which are properties which will ultimately include Canadian Tire stores and will require an estimated total investment of $45.2 million.

FINANCIAL SERVICES OVERVIEW

  • Financial Services posted second quarter gross average credit card receivables growth of 4.4%.
  • Income before income taxes rose 5.8% to $97.7 million.

CAPITAL EXPENDITURES

  • Capital expenditures were $161.5 million in the second quarter, up 22% over the prior year. The increase in capital expenditures is largely due to spending on distribution capacity relating to the Bolton DC, for which construction began in the spring of 2014.
  • Operating capital expenditures in 2015 are expected to be within a range of $600 million to $625 million, primarily due to increased spending on the retail network expansion, including the FGL Sports growth strategy, and significant investments in digital and technology initiatives. The Company expects capital expenditures for additional distribution capacity to be in the range of $175 million to $200 million in 2015. These amounts do not include acquisitions of third-party properties by CT REIT as part of its growth strategy.

Capital Expenditure Guidance Update

  • While the Company remains on track to meet its previously disclosed 2015 capital expenditures within the range of $600 million to $625 million, the Company now expects its three-year average annual operating capital expenditures between fiscal 2015 and 2017 to increase from $575 million to between $600 million and $625 million as a result of increased capital project spending relating to the acquisition of 12 real estate leases, formerly held by Target Canada, during the quarter. 

QUARTERLY DIVIDEND

  • The Company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of $0.525 per share payable on December 1, 2015 to shareholders of record as of October 31, 2015. The dividend is considered an "eligible dividend" for tax purposes.

SHARE REPURCHASE

  • On October 9, 2014, the Company announced that it intended to repurchase $400 million of its Class A Non-Voting Shares in excess of the amount required for anti-dilutive purposes through to the end of 2015. As at July 4, 2015 the Company had repurchased $244.3 million towards this commitment, leaving $155.7 million remaining to be repurchased by the end of the year.

For additional information, refer to the Company's Q2 2015 Management's Discussion and Analysis.

To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: http://files.newswire.ca/116/CTC_Q2_MDA_FS_Notes.pdf

FORWARD-LOOKING STATEMENTS

This document 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.

All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements concerning the Company's expectations with respect to its operating capital expenditures including expenditures for additional distribution capacity for 2015 under the headings "Capital Expenditures" and "Capital Expenditure Guidance Update", the Company's intention regarding the repurchase of its  Class A Non-Voting Shares under the heading "Share Repurchase" and other statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Forward-looking information is based on the reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such information is provided.

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. Although the Company believes that the forward-looking information in this document 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 2.10 (Risk Factors) of our Annual Information Form for fiscal 2014 and to sections 6.4.1.3 (Retail segment business risks), 6.4.2.3 (CT REIT segment business risks), 6.4.3.3 (Financial Services segment business risks) and 10.0 (Enterprise Risk Management) and all subsections thereunder of our 2014 Management's Discussion and Analysis, as well as the Company's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.

Statements that include forward-looking information 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. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. 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 12:00 p.m. ET on August 13, 2015. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://corp.canadiantire.ca/EN/investors, and will be available through replay at this website for 12 months.

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 categories. 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, and FGL Sports (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere), which offers the best active wear brands. The nearly 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across the Company. For more information, visit Corp.CanadianTire.ca.

SOURCE CANADIAN TIRE CORPORATION, LIMITED

PDF available at: http://stream1.newswire.ca/media/2015/08/13/20150813_C2388_PDF_EN_477061.pdf

For further information: Media: Sandra Buckler, 416-480-3559, sandra.buckler@cantire.com; Investors: Lisa Greatrix, 416-480-8725, lisa.greatrix@cantire.com