Mr. Stephen Wetmore reports
CANADIAN TIRE CORPORATION REPORTS STRONG Q2 RESULTS
Canadian Tire Corp. Ltd. has released its second quarter results for the period ended July 1, 2017.
"We delivered exceptional EPS [earnings per share] growth exceeding 14 per cent in the second quarter for the second consecutive year," said Stephen Wetmore, president and chief executive officer of Canadian Tire. "I am very pleased with our top-line results, given the challenges posed by the slow start to the spring and summer season.
"We experienced strong sales growth in June, controlled our expenses during the quarter and had strong margin performance, which is the momentum we like to see as we go into the second half of the year," continued Mr. Wetmore.
Consolidated overview:
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Consolidated retail sales increased $119.8-million, or 3.0 per cent, in the second quarter. Excluding petroleum, consolidated retail sales were up 2.5 per cent over the same period last year.
- Consolidated revenue increased $61.3-million, or 1.8 per cent, which includes a $27.3-million increase in petroleum revenue resulting from higher per-litre gas prices. Excluding petroleum, consolidated revenue increased $34.0-million, or 1.2 per cent, in the quarter.
- Diluted EPS was $2.81 in the quarter, an increase of 35 cents per share, or 14.1 per cent, over the second quarter of 2016.
Retail overview:
- Retail segment revenue increased $48.0-million or 1.6 per cent in the second quarter compared with last year. Excluding petroleum, retail segment revenue increased 0.8 per cent in the quarter.
- Retail margin rate excluding petroleum increased 83 basis points.
- Income before income taxes increased $10.5-million, or 6.1 per cent over the second quarter of 2016.
- Retail saw retail sales increase 2.2 per cent and same-store sales were up 1.4 per cent compared with the prior year.
- FGL Sports' retail sales were up 3.7 per cent and same-store sales were up 2.6 per cent in the second quarter of 2017. Same-store sales at Sport Chek were up 1.1 per cent.
- Mark's retail sales grew 4.7 per cent and same store sales increased 4.0 per cent compared to the same period last year.
CT REIT overview:
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As disclosed in the the second quarter of 2017 CT REIT earnings release on Aug. 2, 2017, CT REIT announced four investments in its quarterly results at an estimated cost of $53-million.
Financial services overview:
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Income before income taxes increased 12.3 per cent in the second quarter to $101.2-million.
- In the second quarter of 2017, gross average credit card receivables (GAAR) was up 6.7 per cent over the prior year.
Capital expenditures:
- Operating capital expenditures were $70.7-million in the quarter, down from $126.7-million in the second quarter of 2016.
- As previously announced, for fiscal 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 a rate of 65 cents per share payable on Dec. 1, 2017, to shareholders of record as of Oct. 31, 2017. The dividend is considered an eligible dividend for tax purposes.
Share repurchase:
- On Nov. 10, 2016, 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 2017. As at July 1, 2017, the company had repurchased $337.3-million, leaving $212.7-million that is expected to be repurchased during the remainder of fiscal 2017.
Conference call
Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 1 p.m. Eastern Time on Aug. 10, 2017. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast on its website, and will be available through replay at this website for 12 months.
About Canadian Tire Corp. Ltd.
Canadian Tire is a family of businesses that includes a retail segment, a financial services division and CT REIT. The company's 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. 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), and offers the best active wear brands. The 1,700 retail and gasoline outlets are supported and strengthened by the company's financial services division and the tens of thousands of people employed across the company.
CONSOLIDATED FINANCIAL RESULTS
(in millions, except where noted)
YTD YTD
Q2 2017 Q2 2016 Q2 2017 Q2 2016
Retail sales $4,103.1 $3,983.3 $6,680.3 $6,465.5
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Revenue 3,413.5 3,352.2 6,167.0 5,911.6
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Gross margin
dollars 1,151.0 1,110.2 2,123.9 2,024.2
Gross margin as
a percentage of
revenue 33.7% 33.1% 34.4% 34.2%
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Other expense
(income) 0.5 (4.7) 0.5 (7.8)
Selling,
general and
administrative
expenses 831.9 824.3 1,631.0 1,601.7
Net finance
costs 26.2 22.8 51.0 43.7
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Income before
income taxes 292.4 267.8 441.4 386.6
Income taxes 75.4 68.8 116.5 102.0
Effective tax
rate 25.8% 25.7% 26.4% 26.4%
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Net income 217.0 199.0 324.9 284.6
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Net income
attributable to
shareholders of
Canadian Tire 195.2 179.4 282.7 245.9
Non-controlling
interests 21.8 19.6 42.2 38.7
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217.0 199.0 324.9 284.6
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Basic EPS 2.82 2.47 4.05 3.36
Diluted EPS 2.81 2.46 4.04 3.35
We seek Safe Harbor.
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