A Canadian Tire store in downtown Toronto is seen in this file photo.MARK BLINCH/Reuters
Brisk business in Ontario, British Columbia and Quebec helped drive a strong third quarter for Canadian Tire Corp. Ltd., despite some difficulties in Alberta tied to the soft oil sector.
Gains at Canadian Tire's namesake chain – its biggest retail business – as well as its sporting goods chains such as Sport Chek, are more than making up for weakness at its clothier Mark's in Alberta, chief executive officer Michael Medline said on Thursday. Mark's is the retailer's smallest division.
Ontario is enjoying "extraordinary" results, the best Mr. Medline has ever seen in that key province, he said. Business in B.C. is "booming," while in Quebec – which had been lagging – it "is doing very well," he told analysts.
Business in those three major provinces more than offset any troubles in Alberta, where it counts more on the high-margin industrial clothing operations of Mark's. Its sales and profit margins have been hurt by the troubled oil industry, forcing it to shift to lower-margin casual wear.
Canadian Tire enjoyed improved third-quarter results buoyed by strong sales, lower overhead expenses and better deals from fewer suppliers. And while Canadian Tire also felt the squeeze of a weak Canadian dollar, it more than made up for the currency pain with better productivity, its executives said.
"Overall we consider the quarter to be positive," Peter Sklar, retail analyst at BMO Nesbitt Burns, said in a note. "We believe that investors will remain concerned about the pressures on the Canadian consumer, the weakness in Alberta and the decline in the Canadian dollar."
Canadian Tire has benefited from a more efficient operation and new technology that has helped it more precisely monitor sales, while focusing on more high-margin, in-demand segments, such as its auto-care business.
Mr. Medline said that while other retailers have been forced to raise prices to make up for the effects of a weak loonie, Canadian Tire has achieved sales gains without inflation. The strategy of refraining from increasing prices is helping Canadian Tire nab market share from rivals, he suggested. "I'd like to take some market share if we can hold off doing that for a while," he said.
Canadian Tire's third-quarter profit rose to $199.7-million, or $2.62 a share, from $172.2-million, or $2.17 a share, a year ago. Company revenue rose to $3.13-billion from $3.07-billion, while retail revenue at Canadian Tire edged up to $2.8-billion from $2.77-billion. Revenue in the retailer's petroleum division fell to $476.1-million from $552.4-million, feeling the pinch of lower oil prices.Same-store sales, a key retail measure at outlets open a year or more, rose 3.4 per cent at Canadian Tire stores and 7 per cent at FGL Sports, while falling 0.2 per cent at Mark's.