TORONTO
Canadian Tire Corp. Ltd. reported stronger-than-expected third-quarter profit and sales, boosted by higher gasoline prices, and raised its dividend.
The Toronto-based retailer reported net income of $246.4 million or $4.28 per share in the quarter ended Oct. 3, compared with $191.3 million or $3.14 per share in the same period last year.
That exceeded analysts’ expectations of $200.8 million or $3.68 per share, according to consensus estimates compiled by S&P Capital IQ.
“Our Q3 results were solid across the board, characterized by comp sales and share growth, record revenue at the bank, disciplined cost control, and EPS up nicely, growing 13%,” said Greg Hicks, the company’s president and chief executive officer, on an earnings call.
Total revenue grew by 5.3 per cent compared with the same period last year, to $4.32 billion, also beating analysts’ estimates of $4.27 billion.
The company said higher gas prices drove its petroleum business, with comparable sales up 4.4 per cent in the quarter. Excluding petroleum, comparable sales rose by 1.7 per cent.
Gasoline prices jumped 27.8 per cent in September, according to Statistics Canada.
Comparable sales rose at all three of the company’s store banners: Canadian Tire, SportChek and Mark’s. Seasonal and gardening categories boosted performance at the flagship Canadian Tire chain, along with continued growth in its automotive services segment.
E-commerce sales grew by 15.3 per cent.
The company’s financial services segment, which offers credit cards tied to the Triangle loyalty program, reported record revenue for the quarter.
On Thursday, Canadian Tire also announced it had increased its annual dividend to $7.30 per share, up from $7.20 per share previously. The company has raised its dividend for 16 consecutive years.
Hicks said the company’s strategies are working but noted the economic environment remains challenging.
“The clouds of geopolitics and macroeconomics have not cleared, inflation is tough, and rates are heading higher,” he said.
He said the company has been driving value all year and that promotional pricing was a determining factor in the third-quarter numbers.
“Our job has not changed. We will continue to make sure that when cautious consumers decide to shop, they choose to shop our stores and use our Triangle Loyalty Program with all the personalized savings it is bringing to millions of Canadians,” Hicks said.
Chief financial officer Darren Myers said diluted earnings per share was $4.27, up 13 per cent year-over-year on a normalized basis.
“Broad-based sales growth and disciplined execution drove improved earnings across both the retail and financial services segments,” Myers said.
Myers said retail sales and revenue were up 4.4 per cent and 5 per cent respectively in the quarter, supported by petroleum, where higher gas prices more than offset lower volumes.
He said revenue increased 1.5 per cent excluding petroleum, with Canadian Tire Retail revenue returning to growth and strong growth at Mark’s and SportChek.
Triangle membership grew at raised rates, with loyalty sales and traffic up 6 per cent and 3.6 per cent respectively, the company said.
The company said it is heading into its biggest quarter, the holiday period, against tough comparisons from last year’s exceptional fourth-quarter results and an early snowy winter.
This story was written by the e2gold.ca newsroom from reporting by The Globe and Mail and Investing.com Canada. Quotes are checked word for word against that reporting.