Canadian Tire Posts Worse-Than-Expected Losses In Q2

As its stores shuttered to prevent the spread of COVID-19 earlier this year, the Canadian Tire Corp. Ltd. posted worse than expected second-quarter (Q2) losses on Thursday (Aug. 6). 

Revenues for the Toronto-based company fell 14.2 percent to $3.16 billion, well above the $2.95 billion estimates from Bay Street, the Canadian equivalent of Wall Street.

Canadian Tire operates automotive, hardware, sports, leisure and houseware stores including Canadian Tire, Mark’s, FGL Sports, PartSource and Party City. The auto, home and sporting goods retailer closed its 203 stores in Ontario.

Excluding one-time items, the company reported a loss of 25 Canadian cents per share, while analysts on average expected a loss of 10 Canadian cents.

The company said its operations and diluted earnings per share (EPS) were $(0.33) and normalized diluted EPS were $(0.25), compared to normalized diluted EPS of $2.97 for the same period last year.

The decline in credit card sales resulted in lower transaction fee revenue as it hit the company’s financial services segment, which saw its income nearly halved. 

Performance in Q2 was impacted by a $300 million decrease in revenue compared to last year, primarily at Sport Chek, Mark’s and Helly Hansen banners due to store closures. 

Consolidated earnings were hurt, the company said, by $41.7 million following COVID-19-related costs, including $41.2 million for a support payment for frontline employees and enhanced safety protocols for employees and customers. 

But eCommerce was a bright spot for the 98-year-old retailer during the quarter. Online sales were up 400 percent, helping to offset some losses at its retail segment as more consumers shopped online, the company said. Still, the segment posted a 15.2 percent decline in revenue.

Greg Hicks, president and CEO of Canadian Tire Corp., put the best face on the results. “We continue to fulfill our deep-rooted purpose of being there for life in Canada, no matter what life may look like,” he said in a statement. “I am incredibly proud of the contributions of our dedicated frontline store, distribution center and contact center employees, as well as our associate dealers, who place the customer at the heart of everything we do.”