Canadian Tire reported that its revenue grew to $4.2-billion in the second quarter ended June 28, up 5.2 per cent compared to the same period last year. Comparable sales rose by 5.6 per cent.Sean Kilpatrick/The Canadian Press
While consumer confidence remains dismal, shoppers are proving resilient in their spending, driving sales growth in the second quarter for Canadian Tire Corp. Ltd. CTC-A-T even as expenses related to a major restructuring plan contributed to a decline in profits.
Shoppers have been buoyed by factors such as low interest rates, the cancellation of the federal carbon tax in April and patriotic sentiment in reaction to U.S. President Donald Trump’s tariffs on Canadian goods, which has driven support for domestic retailers, Canadian Tire chief executive officer Greg Hicks said Thursday.
“While it’s tough to quantify, we have no doubt that patriotic purchasing is real and working in our favour,” Mr. Hicks told analysts during a conference call to discuss the second-quarter results. “Simply put, Canadians are visiting us more.”
The quarterly results included signs that consumers are spending more freely on non-essential products.
Purchases grew in both discretionary categories, such as seasonal products and gardening, and more essential purchases such as automotive products and services.
At the flagship Canadian Tire chain, comparable sales grew 6.4 per cent, during what the company called its “most discretionary quarter.” Spending also improved in households with higher debt burdens –customers who had been cutting back significantly on non-essential purchases until recently.
Still, Mr. Hicks noted that consumer confidence is “still just a hair above 2008 levels,” citing continued economic uncertainty, although sentiment has been improving since March.
“So we continue to monitor employment levels and demand in markets with greater exposure to tariff risks,” he said.
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The Toronto-based retailer reported Thursday that its revenue grew to $4.2-billion in the second quarter ended June 28, beating analysts’ estimates and increasing 5.2 per cent year-over-year. Comparable sales – an important metric that tracks sales growth not attributable to new store openings – rose 5.6 per cent.
However, Canadian Tire’s profits were affected by higher expenses related to a major restructuring plan announced in March. The $2-billion investment plan involves store renovations, expanding the Triangle Rewards loyalty program and boosting sales of its private-label products.
“While the strength of CTC’s top line was a positive surprise, we found the costs associated with implementing its True North plan and investments in infrastructure concerning,” wrote Garrett Nelson, a senior equity analyst at CFRA Research, in a note Thursday.
Canadian Tire’s share price fell more than 8 per cent in Thursday morning trading after the earnings release.
The restructuring plan also involves cost-cutting, including layoffs that began last week. Canadian Tire has not said how many jobs will be cut, but Mr. Hicks said Thursday that the ongoing reductions are “meaningful” and will be completed by the end of the third quarter.
Net income attributable to shareholders fell to $168.2-million, or $2.04 in diluted earnings per share, compared with $207.7-million or $3.56 per share in the same quarter last year. Not including the restructuring costs and other factors, normalized net income attributable to shareholders fell to $195.9-million, or $3.57 per share.
Normalized earnings fell below analysts’ expectations of $3.93 per share, according to the consensus estimate from S&P Capital IQ.
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Canadian Tire’s teams are also working on plans to use the Hudson’s Bay Company’s intellectual property, which the company acquired in a $30-million deal in May. That will allow Canadian Tire to launch products featuring the historic HBC stripe pattern and make use of its other brand names, logos, designs and coat of arms.
Mr. Hicks hinted that some products featuring the stripes could be on shelves in time for the holidays, saying Canadians could “expect to see some updates and fun initiatives” in the last few months of this year. He added that wider product launches are planned for the second half of 2026.
“As we push forward with our commercial plans, we remind ourselves daily of both the opportunities and the expectations of stewardship that are on our shoulders,” he said of the Hudson’s Bay brand.
“Our teams are determined to be considered and careful. When it comes to stewarding the stripes, we’d rather be right than fast.”