Canadian Tire Corporation Delivers Strong Third Quarter, Increases Dividend and Continues its Share Repurchase Program

  • Same store sales up in all core retail banners:
    • 3.5% at Canadian Tire Retail
    • 7.7% at Sport Chek
    • 4.3% at Mark's
  • GAAR growth for Financial Services up 2.0%
  • Third quarter diluted earnings per share was $2.44. Prior year diluted earnings per share was $2.62 which included a real estate gain of $0.33 per share 
  • 13.0% increase in the annual dividend to $2.60 per share on each Common and Class A Non-Voting share
  • Intention to repurchase an additional $550 million of Class A Non-Voting shares by the end of 2017

TORONTO, Nov. 10, 2016 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.A) today released third quarter results for the period ended October 1, 2016.

"I am extremely encouraged by the strong performance in each of our core retail banners this quarter. Our unique assortments and product development capabilities are allowing us to bring our customers the products they need for the jobs and joys of a lifetime in Canada. I'm also pleased with our ongoing efforts to improve efficiencies in our operations across all banners," said Stephen Wetmore, President and CEO, Canadian Tire Corporation. "Our strong performance has again enabled us to raise the dividend in the quarter and to continue our share repurchase program through 2017," continued Wetmore.

CONSOLIDATED OVERVIEW

  • Consolidated retail sales increased $115.5 million, or 3.4% in the third quarter including a 7.8% decline in Petroleum retail sales due to lower gas prices. Excluding Petroleum, consolidated retail sales were up 5.5% over the same period last year.
  • Excluding Petroleum, consolidated revenue increased $48.1 million or 1.8% in the quarter and was up 3.5% year to date. Consolidated revenue increased 0.1% over the same period last year and was up 1.6% year to date. 
  • Diluted EPS was $2.44 in the quarter, a decrease of $0.18 per share, or 6.7% versus the prior year which included a real estate gain of $0.33.

RETAIL OVERVIEW

  • Retail segment revenue increased 1.8% excluding Petroleum in the quarter and was up 3.9% year to date. Retail segment revenue decreased 0.1% in Q3 compared to last year and was up 1.7% year to date.
  • Retail gross margin rate, excluding Petroleum, increased 114 basis points.
  • Income before income taxes in the Retail segment was $162.2 million, down $20 million, or 11% in the third quarter of 2016, over 2015.
  • Canadian Tire Retail saw retail sales increase 4.9% and same store sales up 3.5% in the quarter over Q3 2015.
  • FGL Sports' retail sales were up 8.5% and same store sales were up 6.2% in the third quarter of 2016. Same store sales at Sport Chek increased 7.7%.
  • Mark's retail sales grew 4.4% and same store sales increased 4.3% compared to Q3 2015.

CT REIT OVERVIEW

  • As disclosed in the Q3 2016 CT REIT release issued November 1, 2016, CT REIT announced five additional investments, four acquisitions and one property intensification, for an estimated total investment of $74 million.
  • Additionally, CT REIT announced an increase in the annual rate of distribution to $0.70 per unit, an increase of 3.0%, commencing with the January 2017 payment date.

FINANCIAL SERVICES OVERVIEW

  • Income before income taxes increased 0.6% in the third quarter to $96.1 million.
  • In Q3 2016, GAAR increased 2.0% over the prior year.
  • Financial Services continues to invest in the acquisition of new accounts through marketing and in-store financing programs to drive GAAR growth and sales at Canadian Tire Retail. 

CAPITAL EXPENDITURES

  • Operating capital expenditures were $146.8 million in the third quarter, down from $181.9 in the prior year. 
  • The Company previously announced that it expected annual operating capital expenditures to be within the range of $625 million to $650 million for fiscal 2016.  The Company now expects operating expenditures for fiscal 2016 to be $475 million to $500 million.
  • For 2017, the Company expects annual operating capital expenditures to be within the range of $400 million to $425 million

QUARTERLY DIVIDEND

  • The Company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at an increased rate of $0.65 per share payable on March 1, 2017 to shareholders of record as of January 31, 2017. The dividend is considered an "eligible dividend" for tax purposes.

SHARE REPURCHASE

  • On November 12, 2015, the Company announced its intention to repurchase $550 million of its Class A Non-Voting Shares, in excess of the amount of shares to be purchased for anti-dilutive purposes, by the end of 2016. As at October 1, 2016, the Company had repurchased $440 million, leaving $110 million intended to be repurchased during the remainder of fiscal 2016.
  • The Company intends to repurchase a further $550 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of fiscal 2017, subject to regulatory approval.

To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: http://files.newswire.ca/116/CTC_MDA_&_FS_Q3_2016.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 investments in its Financial Services business under the heading "Financial Services Overview", the Company's expectations with respect to its annual operating capital expenditures for fiscal 2016 and 2017 under the heading "Capital Expenditures", the Company's intention to repurchase Class A Non-Voting Shares in excess of the amount required for anti-dilutive purposes by the end of 2016 and 2017 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 2015 and to sections 7.2.4 (Retail segment business risks), 7.3.3 (CT REIT segment business risks), 7.4.3 (Financial Services segment business risks) and 12.0 (Enterprise Risk Management) and all subsections thereunder of our 2015 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 1:00 p.m. ET on November 10, 2016. 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 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 country by the Company and its local dealers, franchisees and petroleum retailers. For more information, visit Corp.CanadianTire.ca.

SOURCE CANADIAN TIRE CORPORATION, LIMITED

PDF available at: http://stream1.newswire.ca/media/2016/11/10/20161110_C7861_PDF_EN_814677.pdf

For further information: Media: Jane Shaw, 416-480-8581, jane.shaw@cantire.com; Investors: Lisa Greatrix, 416-480-8725, lisa.greatrix@cantire.com

RELATED LINKS
http://www.canadiantire.ca

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