Canadian Tire Corp. Ltd. CTC-A-T +6.50%increase reported sales growth in its third quarter, even amid concerns about softening consumer spending, while expenses related to a major restructuring plan led to a decline in profits.
The Toronto-based retailer reported on Thursday that sales increased across its store banners. Sales growth was slowest at the flagship Canadian Tire chain, which saw stronger demand in Ontario and Quebec, offset by weaker sales in Alberta.
Consumer demand also shifted, with growth in discretionary purchases – such as seasonal and entertainment products – outpacing the growth of essential purchases for the first time since 2021. Shoppers have been more conservative about non-essential spending in recent years, as inflation and concerns about the health of the economy have led many households to cut back.
The company’s SportChek banner had the strongest growth in the quarter ended Sept. 27, which was boosted by back-to-school shopping and hockey equipment purchases. Mark’s stores benefited from demand for workwear, jeans and fall seasonal products.
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Comparable sales – which measures growth at stores open for more than a year, to monitor growth not driven by new store openings – increased by 1.8 per cent compared to the same period last year. Sales at the company’s retail stores grew by 3.2 per cent in total. Not including sales at the company’s gas stations, retail sales were up 5.9 per cent.
Canadian Tire reported that net income attributable to shareholders fell to $169.1-million or $3.13 in diluted earnings per share in the third quarter, compared to $198.5-million or $3.55 per share a year ago.
The dip in earnings was largely attributed to expenses related to the company’s True North strategy – a $2-billion plan to strip out inefficiencies in the business, reorganize the operations, expand the Triangle loyalty program, update stores, and improve digital performance. Not including that and other factors, normalized net income attributable to shareholders grew to $204.3-million or $3.78 in normalized diluted earnings per share.
As part of that strategy, Canadian Tire cut an unspecified number of corporate jobs during the quarter. On Thursday, the company reported that it expects to see its first quarter of cost savings from its restructuring in the fourth quarter.
The company announced a dividend increase to $7.20 per share on an annualized basis, up from $7.10.
Consolidated revenue grew by 3 per cent year-over-year to $4.1-billion.
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