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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Canadian Tire Corporation, Limited    CTC.A   CA1366812024

CANADIAN TIRE CORPORATION, LIMITED

(CTC.A)
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Canadian Tire : One-stop shoppers drive sales growth at Canadian Tire amid pandemic

11/05/2020 | 06:51am EST

Canadian Tire Corp. Ltd. reported a ramp up in sales in its third quarter Thursday, when pandemic-inspired cooking, home improvement and staycations drove shoppers to the company's eponymous stores.

The chain, a fixture of Canada's retail landscape with products ranging from cookware and auto parts to tools and outdoor living, recorded a 25.7 per cent rise in sales compared with the same quarter in 2019.

While brick-and-mortar stores saw an increase in foot traffic and an expansion of curbside pickup services, the retailer also saw online sales growth of 178 per cent.

"With ongoing travel restrictions and limited entertainment options in Q3, families came to us to enable their creative summer vacation plans such as backyard staycations, camping and road trips," Canadian Tire president and CEO Greg Hicks told an investor call.

"This drove sales across all the seasonally relevant categories."

He said COVID-19 has also encouraged more one-stop shopping and a larger "basket size" as shoppers stock up to avoid multiple trips to the store.

"We believe that the macro trend with respect to the one-stop shop is here to stay, at least over the winter and while the pandemic is ongoing," Hicks said.

Indeed, he said the retailer is seeing strong momentum heading into its busiest sales period, despite scaling back some of its usual holiday promotions in order to maintain safe levels of traffic at stores.

"Believe it or not, Christmas sales are already quite strong," Hicks said. "And the early snow in the West drove our outerwear business at both Mark's and SportChek."

Canadian Tire is a family of businesses that includes financial services, real estate and retail – its best-known segment.

The company's brands include its Canadian Tire stores, sports equipment and clothing retailer SportChek, clothing store Mark’s, and sportswear and workwear brand Helly Hansen.

SportChek sales fell 1.7 per cent, which the company in part attributed to the restricted opening hours and lower foot traffic at the malls where more than half its stores are located.

The retailer also recorded softer back-to-school sales and a decline in demand for hockey and sports equipment due to the cancellation of many organized sports and activities. Sales were also negatively impacted by the decision to move bicycle inventory from SportChek to Canadian Tire stores in the second quarter.

Still, SportChek saw strong sales in categories related to outdoor recreation, such as hiking, camping, golf and fitness.

Meanwhile, the company said retail sales at Mark's stores rose 4.9 per cent compared with a year ago. Hicks said workwear has emerged as a "highly resilient" retail category during the pandemic.

Helly Hansen, based in Oslo, Norway, recorded a revenue drop of 2.5 per cent in the quarter.

Yet Helly Hansen remains focused on the future, Hicks said, noting that the subsidiary has signed partnerships to be the official apparel supplier for Canadian Ski Patrol members and the Norwegian national alpine ski team.

"These deals are a testament to Helly's status as the leading apparel brand for ski professionals and dedication to the development of high-performance apparel," he said.

The retailer raised its dividend as it reported higher profit and revenues, saying it will pay a quarterly dividend of $1.175 per share, up from $1.1375 per share.

The increased payment to shareholders came as Canadian Tire reported a profit attributable to shareholders of $296.3 million or $4.84 per diluted share, up from $197.2 million or $3.20 per diluted share a year ago.

Revenue totalled $3.99 billion, up from $3.64 billion.

Hicks called the company's third-quarter performance "a true testament to the relevancy of our brand and unique multi-category assortment."

On a normalized basis, Canadian Tire says it earned $4.93 per diluted share in its most recent quarter, up from $3.46 per diluted share in the third quarter of 2019.

This report by The Canadian Press was first published Nov. 5, 2020.

Companies in this story: (TSX:CTC.A)

© 2020 The Canadian Press. All rights reserved., source Canadian Press DataFile

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Financials
Sales 2020 14 815 M 11 661 M 11 661 M
Net income 2020 661 M 520 M 520 M
Net Debt 2020 6 215 M 4 892 M 4 892 M
P/E ratio 2020 15,5x
Yield 2020 2,68%
Capitalization 10 493 M 8 258 M 8 259 M
EV / Sales 2020 1,13x
EV / Sales 2021 1,11x
Nbr of Employees 22 439
Free-Float 98,7%
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Mean consensus OUTPERFORM
Number of Analysts 12
Average target price 171,75 CAD
Last Close Price 170,66 CAD
Spread / Highest target 23,1%
Spread / Average Target 0,64%
Spread / Lowest Target -18,0%
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Managers and Directors
NameTitle
Greg Hicks President, Chief Executive Officer & Director
Maureen Joanne Sabia Non-Executive Chairman
Gregory Craig Chief Financial Officer & Executive Vice President
Rex William Lee Chief Information Officer & Senior Vice President
Owen G. Billes Non-Independent Director
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