Canadian Tire Corp. reported retail sales at SportChek increased 4.5 percent in the first quarter, and comparable sales were up 10.2 percent over the same period last year. Helly Hansen’s sales were up 24 percent. Canadian Tire’s consolidated comparable sales, excluding petroleum, grew 6.4 percent in the first quarter.
Diluted Earnings Per Share (EPS) were up 23 percent to $3.03. Normalized diluted EPS was $3.06, up 19 percent compared to the first quarter of 2021; and
“We delivered a strong first quarter against exceptional results in Q1 last year. Our growth in sales continues to be driven by our highly relevant, unique multi-category assortment across our banners. Comparable store sales were up significantly, with outstanding performances at SportChek, as more families returned to hockey and skiing and at Mark’s, which achieved growth across all categories in both national and owned brands. Additionally, our Financial Services business saw growth in new accounts and receivables as Canadians spent more on travel and entertainment,” said Greg Hicks, president and CEO, Canadian Tire Corp.
“As we execute on our Better Connectedstrategy, we are bolstering our omnichannel capabilities and enhancing the integration of our banners, brands and channels to create a better customer experience, an even stronger competitive position and continued long-term growth,” continued Hicks.
First Quarter Highlights
- CTC’s multi-category assortment drove strong topline growth across its banners. Consolidated retail sales were up 9.7 percent and consolidated comparable sales, excluding Petroleum, were up 6.4 percent compared to the first quarter of 2021;
- CTC is executing on its Better Connected strategy outlined at its March 2022 Investor Day;
- Diluted EPS growth was 23 percent and 19 percent on a normalized basis driven by Retail segment performance; and
- Quarterly dividend rate will increase starting September 2022 to $1.625 per share, up 25 percent, reflecting CTC’s continued focus on a balanced capital allocation approach, which includes returns to shareholders through dividends and share repurchases and investing in the growth of the business.
- Retail sales were $3,421.4 million, up $303.6 million or 9.7 percent, compared to the first quarter of 2021. Consolidated comparable sales, excluding Petroleum, increased 6.4 percent;
- Revenue increased $514.5 million to $3,837.4 million, up 15.5 percent. Revenue, excluding Petroleum, increased 12.1 percent over the same period last year;
- Consolidated IBT was $294.9 million, up 15.9 percent compared to the first quarter of 2021 and up 12.8 percent on a normalized basis;
- Diluted EPS was $3.03, compared to $2.47 in the prior year, an increase of $0.56 per share, or 22.7 percent. Normalized diluted EPS in the quarter was $3.06, an increase of $0.49 per share, or 19.1 percent; and
- Retail Return on Invested Capital (ROIC), calculated on a trailing twelve-month basis, was 13.8 percent at the end of the first quarter, compared to 12.2 percent at the end of the first quarter of 2021.
Retail Segment Overview
- Retail revenue increased $481.7 million to $3,504.5 million, or 15.9 percent, compared to the prior year. Excluding Petroleum, Retail revenue increased 12.2 percent;
- Retail sales, excluding Petroleum, were up 5.6 percent;
- CTR retail sales increased 4.5 percent in the first quarter, and comparable sales were up 4.5 percent over the same period last year;
- SportChek’s retail sales increased 4.5 percent in the first quarter, and comparable sales were up 10.2 percent over the same period last year;
- Mark’s retail sales increased 17.4 percent in the first quarter, and comparable sales were up 17.1 percent over the same period last year;
- Helly Hansen’s revenue was up 24.4 percent compared to the same period in 2021;
- Retail Gross margin for the first quarter was up 12.1 percent, or 11.7 percent, excluding Petroleum;
- Income before income taxes was $148.8 million, an increase of $46.3 million compared to $102.5 million in the prior year. Normalized income before income taxes was $150.9 million, an increase of $39.7 million versus the prior year.
Financial Services Overview
- Gross average accounts receivable were up 11.8 percent relative to the prior year due to increased cardholder activity with average active accounts up 7.8 percent compared to the first quarter of 2021;
- Credit card sales growth was 26.0 percent in the quarter;
- Gross margin improved by $9.9 million, or 4.8 percent, reflecting higher revenue offset by higher net impairment losses due to a release of ECL allowance in Q1 2021;
- Income before income taxes was $125.3 million, a decrease of $1.1 million compared to the prior year.
CT REIT Overview
- As disclosed in the Q1 2022 CT REIT earnings release, CT REIT’s annual rate of distribution will increase by 3.4 percent to $0.86784 per unit beginning with the July 2022 distribution;
- CT REIT announced five new investments, which will require an estimated total investment of $60 million to complete and which will add approximately 286,000 square feet of incremental gross leasable area to the portfolio; and
- CT REIT delivered 1.8 percent growth in Adjusted Funds From Operations (AFFO) per unit on a diluted basis in the first quarter.
- Capital Expenditures — Operating capital expenditures were $142.0 million in the quarter, compared to $85.8 million in the first quarter of 2021. Total capital expenditures were $154.3 million, compared to $89.3 million in the first quarter of 2021.
- Quarterly Dividend — The company declared a quarterly dividend payable to holders of Class A Non-Voting Shares and Common Shares at a rate of $1.625 per share, representing an increase of 25 percent compared to the $1.300 quarterly per share amount paid in the first quarter of 2022. The increased dividends will be payable on September 1, 2022 to shareholders of record as of July 31, 2022. The dividend is considered an “eligible dividend” for tax purposes.
- Share Purchases — On November 11, 2021, the company announced its intention to purchase up to $400 million of its Class A Non-Voting Shares (Shares), in excess of the amount required for anti-dilutive purposes, by the end of fiscal 2022. As at April 2, 2022, the company had purchased $225.6 million of the $400 million.