Canadian Tire Corp. saw little change in its first-quarter profits as sales at its flagship hardware and auto parts stores merely edged ahead as an economic recovery slowly chugs into gear, though it is optimistic that consumer spending will pick up in the spring.
The iconic retailer reported Thursday net earnings of $49.4 million or 61 cents per share, virtually unchanged from the same time last year. Operating revenue improved slightly, rising about 4% to $1.8 billion.
Consolidated retail sales rose 5.7% to $1.89 billion, with sales at its Canadian Tire retail outlets up 2.1%, while sales at the Mark’s brand clothing division were up 3.8% and the company’s gas bars increased sales by 19.5% on higher oil prices.
“We saw positive trends return to all our businesses… however there are still several quarters to go until we see a top-line increase in sales that is satisfying to me,” president and CEO Stephen Wetmore told those at the company’s annual meeting in Toronto.
He said the chain plans to focus on “customer-centric” retailing to transform the way the company does business.
“The opportunities are there for us to capture, now it’s all about staying on course,” Wetmore said, adding that he is confident the store can achieve its goal of up to 10% growth over the next five years.
Canadian Tire said its adjusted earnings before taxes were up 13% in the quarter at $74.7 million or 63 cents per share, factoring out the impact of a tax gain in the first quarter of 2009 related to capital gains resulting from the sale of its shares in MasterCard in 2006 and 2007.
Same-store sales at Canadian Tire retail outlets, a measure of performance in the retail industry, were up 1.7% compared to the same period last year, marking “a very slow start to the quarter due to soft sales in weather-related categories and in automotive, stronger sales in March positively impacted total first quarter results.”
Mark’s stores saw same-store sales rise 1.5%, helped by a 4.1% sales increase in industrial wear “as resource-based customers returned to work” in the wake of the recession.
Financial Services, Canadian Tire’s credit card operation, had a “strong” first quarter, with gross operating revenues up 3.8% to $225.4 million and adjusted pre-tax earnings up 41.8% to $45.5 million on higher credit card interest rates and lower operating expenses.
The company said its financial targets remain unchanged with an eye to growing retail sales between 3% and 5% over the next five years, with adjusted earnings per share growth between 8% and 10%.
