Canadian Tire Corporation Reports Strong First Quarter Results, Announces 25% Quarterly Dividend Increase - Lumber Blue Book
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Canadian Tire Corporation Reports Strong First Quarter Results, Announces 25% Quarterly Dividend Increase

General News

Canadian Tire Corporation, Limited (“Canadian Tire”) released its first quarter results for the period ended April 2, 2022.

  • Consolidated Comparable sales (excluding Petroleum)1 grew 6.4% in the first quarter
  • Diluted Earnings Per Share (“EPS”) was up 23% to $3.03; normalized diluted EPS1 was $3.06, up 19% compared to the first quarter of 2021
  • Quarterly dividend to shareholders to be increased 25% to $1.625 per share

“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 Corporation.

“As we execute on our Better Connected strategy, 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 expansive multi-category assortment drove strong topline growth across its banners; Consolidated retail sales 1 were up 9.7% and consolidated comparable sales (excluding Petroleum) 1 were up 6.4% compared to the first quarter of 2021
    • Canadian Tire Retail (CTR) comparable sales1 grew 4.5%, driven by strong performances in Automotive, hockey and winter businesses
    • Mark’s and SportChek had exceptional comparable sales growth1, up 17.1% and 10.2%, respectively; Mark’s was up double-digits across the vast majority of categories, while demand for hockey, winter apparel, skis and snowboards drove growth at SportChek
    • eCommerce penetration rateremained more than double pre-pandemic levels, at 8.2%, despite a return to in-store shopping amid fewer COVID-19-related restrictions compared to Q1 of 2021, particularly in Ontario
  • CTC is executing on its Better Connected strategy, unveiled at the Company’s March 2022 Investor Day
    • Owned Brands sales1 represented 36.0% of sales in the quarter; athleisure brand, FWD (Forward with Design), designed and developed in-house, has now launched at SportChek
    • Focused on engaging and attracting Triangle Rewards members; Q1 2022 metrics remained strong, with almost 400,000 new members joining Triangle Rewards; growth in loyalty sales1 among the program’s 11 million active members was up 13%, outpacing non-loyalty sales
    • Enabling an omnichannel customer experience, with pickup lockers now in two-thirds of CTR stores and ship-to-home capabilities enhanced at SportChek with the national expansion of its DoorDash partnership
  • Diluted EPS growth was 23% and 19%, on a normalized basis, driven by Retail segment performance
    • Normalized Retail income before income taxes (IBT) 1 grew by $39.7 million, or 35.7%, primarily driven by a 15.9% increase in revenue
    • Financial Services income before taxes was $125.3 million, down slightly compared to $126.4 million in Q1 2021, which included a $21.1 million reduction in the expected credit loss (ECL) allowance
      • Gross Average Accounts Receivables (GAAR)1 was up 11.8% in the quarter; average active accounts were up almost 8% as customer activity increased and investments drove new card acquisition
      • Risk levels remain below historic levels
  • Quarterly dividend rate to increase starting in September 2022 to $1.625 per share, up 25%, 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

Consolidated Overview

  • Retail sales were $3,421.4 million, up $303.6 million or 9.7%, compared to the first quarter of 2021; consolidated comparable sales (excluding Petroleum) increased 6.4%
  • Revenue increased $514.5 million to $3,837.4 million, up 15.5%; Revenue (excluding Petroleum)1 increased 12.1% over the same period last year
  • Consolidated IBT was $294.9 million, up 15.9% compared to the first quarter of 2021; and up 12.8% on a normalized1 basis
  • Diluted EPS was $3.03, compared to $2.47 in the prior year, an increase of $0.56 per share, or 22.7%; normalized diluted EPS in the quarter was $3.06, an increase of $0.49 per share, or 19.1%
  • Retail Return on Invested Capital (ROIC)1 calculated on a trailing twelve-month basis, was 13.8% at the end of the first quarter, compared to 12.2% at the end of the first quarter of 2021
  • Refer to the Company’s Q1 2022 Management Discussion and Analysis (MD&A) section 4.1.1 for information on normalizing items and for additional details on events that have impacted the Company in the quarter

Retail Segment Overview

  • Retail revenue increased $481.7 million to $3,504.5 million, or 15.9%, compared to the prior year. Excluding Petroleum, Retail revenue1 increased 12.2%.
  • Retail sales (excluding Petroleum)1 were up 5.6%
  • CTR retail salesincreased 4.5% in the first quarter, and comparable sales were up 4.5% over the same period last year
  • SportChek retail salesincreased 4.5% in the first quarter, and comparable sales were up 10.2% over the same period last year
  • Mark’s retail salesincreased 17.4% in the first quarter, and comparable sales were up 17.1% over the same period last year
  • Helly Hansen revenue was up 24.4% compared to the same period in 2021
  • Retail Gross margin for the first quarter was up 12.1%, or 11.7% excluding Petroleum1
  • 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.
  • Refer to the Company’s Q1 2022 MD&A section 4.1.1 for information on normalizing items and to sections 4.2.1 and 4.2.2 for additional details on events that have impacted the Company in the quarter

Financial Services Overview

  • Gross average accounts receivable were up 11.8% relative to prior year, due to increased cardholder activity with average active accounts up 7.8% compared to the first quarter of 2021
  • Credit card sales growth1 was 26.0% in the quarter
  • Gross margin improved by $9.9 million, or 4.8%, 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
  • Refer to the Company’s Q1 2022 MD&A section 4.3.1 for additional details on events that have impacted the Company

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% 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
  • CT REIT delivered 1.8% growth in Adjusted Funds From Operations (AFFO) per unit1 on a diluted basis in the first quarter
  • For further information, refer to the Q1 2022 CT REIT earnings release issued May 9, 2022

Capital Allocation

Capital Expenditures

  • Operating capital expenditures1 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% 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.

Normal Course Issuer Bid and Automatic Securities Purchase Plan

  • On February 17, 2022, the TSX accepted the Company’s: 1) notice of intention to make a normal course issuer bid to purchase up to 5.3 million Shares between March 2, 2022 and March 1, 2023 (the 2022-23 NCIB); and 2) new automatic securities purchase plan which expires on March 1, 2023 and which allows a designated broker to purchase Shares under the 2022-23 NCIB during the Company’s blackout periods

For the full first quarter results, click here.

(1)  NON-GAAP FINANCIAL MEASURES AND RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES: This press release contains non-GAAP financial measures and ratios and supplementary financial measures. References below to the Q1 2022 MD&A mean the Company’s Management’s Discussion and Analysis for the First Quarter 2022 for the 13 weeks ended April 2, 2022, which is available on SEDAR at www.sedar.com and is incorporated by reference herein. Non-GAAP measures and non-GAAP ratios have no standardized meanings under GAAP and may not be comparable to similar measures of other companies. 

About Canadian Tire Corporation

Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or “CTC”, is a group of companies 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. Party City, 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, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The more than 1,700 retail and gasoline outlets are supported and strengthened by CTC’s Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees and petroleum retailers. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.

Contact:

Jane Shaw – Media Contact – jane.shaw@cantire.com – (416) 480-8581

Source: Canadian Tire Corporation Limited