- Consolidated comparable sales up 1.6% in the second quarter:
- Canadian Tire up 2.0%; Mark's up 1.3%; FGL down 0.3%
- Financial Services drove industry leading receivable growth of 10.4%, reaching a significant milestone of 2 million active credit card accounts
- Retail gross margin rate (excluding Petroleum) maintained at Q2 2017 level
- Second quarter diluted earnings per share (EPS) was $2.38
- Second quarter normalized diluted EPS was $2.61, down 7.2%, after adjusting for costs associated with the launch of Triangle Rewards® and Helly Hansen acquisition
- CTC closed acquisition of Helly Hansen on July 3, 2018
"In the second quarter, we significantly advanced our strategic agenda to strengthen our retail operations and financial services business, and set a foundation for our international growth," said Stephen Wetmore, President and CEO, Canadian Tire Corporation. "The launch of Triangle Rewards®, our new loyalty program, the introduction of Canada's best credit card offering, Triangle World Elite and the completion of our international brand acquisition, Helly Hansen, are all critical cornerstone investments for our future. These investments along with the continued development of our digital, owned brands and online capabilities reflect our commitment to the long term success of CTC and are evident in our results for the quarter."
"While our expectations for growth in the quarter were much higher, it is a testament to the strength of our brands that we grew our retail sales on a year over year basis, despite all of our retail businesses being affected by one of the coldest months of April on record," added Wetmore.
- Consolidated retail sales increased $147.0 million, or 3.6%, in the second quarter. Excluding Petroleum, consolidated retail sales were up 1.6% over the same period last year.
- Consolidated revenue increased $106.7 million, or 3.2%, which includes a $79.5 million increase in Petroleum revenue resulting from higher per litre gas prices. Excluding Petroleum, consolidated revenue increased $27.2 million, or 0.9%, in the quarter.
- Normalized diluted EPS was $2.61 in the quarter, a decrease of $0.20 per share, or 7.2%, over the second quarter of 2017.
- The following financial results reflect Q2 2018 performance compared to Q2 2017.
- Retail segment revenue increased $93.7 million or 3.0%. Excluding Petroleum, retail segment revenue increased 0.5%.
- Retail margin rate excluding Petroleum was flat with a decrease of 3 bps.
- Normalized income before income taxes decreased $24.6 million or 13.4%.
- Canadian Tire Retail saw retail sales increase 2.3% and comparable sales were up 2.0%.
- FGL's retail sales were down 1.9% and comparable sales decreased 0.3%.
- Mark's retail sales grew 1.6% and comparable sales increased 1.3%.
CT REIT OVERVIEW
- As disclosed in the Q2 2018 CT REIT earnings release on August 1, 2018, CT REIT announced four new investments in its quarterly results at an estimated cost of $24 million.
FINANCIAL SERVICES OVERVIEW
- Normalized income before income taxes decreased 16.1% in the second quarter to $84.9 million due primarily to the adoption of IFRS 9 accounting.
- Net write-off rate of 5.62% was flat to last year, reflecting the health of the portfolio and continued strong credit risk management.
- Operating capital expenditures were $101.0 million in the quarter, up from $70.7 million in the second quarter of 2017.
- The Company has declared dividends payable to holders of Class A Non-Voting Shares and Common Shares at a rate of $0.90 per share payable on December 1, 2018 to shareholders of record as of October 31, 2018. The dividend is considered an "eligible dividend" for tax purposes.
- On November 9, 2017, the Company announced its intention to repurchase $550.0 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, by the end of 2018. As at June 30, 2018 the Company had repurchased $379.0 million, leaving $171.0 million that is expected to be repurchased during the remainder of fiscal 2018.
To view a PDF version of Canadian Tire Corporation's second quarter 2018 results please see: http://files.newswire.ca/116/CTC_MDA_FS-Q22018.pdf
This press release 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.
Certain statements other than statements of historical facts included in this press release may constitute forward-looking information, including but not limited to, statements concerning 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 2018 under the heading "Share Repurchase".
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 press release 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 2.11 (Risk Factors) of our Annual Information Form for fiscal 2017 and to sections 7.2.4 (Retail segment business risks), 7.3.2 (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 Management's Discussion and Analysis for the year ended December 30, 2017, as well as the Company's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof and 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. 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.
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 August 9, 2018. 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 & Gardening divisions. 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; Pro Hockey Life, the world's largest hockey centric retailer; and FGL (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport and Atmosphere), which offers the best active wear brands. The approximately 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across Canada and around the world by the Company and its local dealers, franchisees and petroleum retailers. In addition, Canadian Tire Corporation owns and operates Helly Hansen, a leading global brand in sportswear and workwear based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.
SOURCE CANADIAN TIRE CORPORATION, LIMITED