Last quarter, Canadian Tire saw growth in discretionary spending outpace growth of essential purchases for the first time since 2021.Sean Kilpatrick/The Canadian Press
More Canadians stuck close to home this summer, giving a boost to Canadian Tire Corp. Ltd.’s CTC-A-T sales of items such as patio furniture and gardening supplies – the sort of non-essential purchases that shoppers had been cutting back on in recent years – while expenses related to a major restructuring plan led to a decline in profits.
Many people in Canada have been boycotting travel to the United States and looking to support domestic retailers, a trend that executives have said benefited Canadian Tire’s performance. On Thursday, the company reported sales growth in its third quarter, even amid concerns about softening consumer spending. And growth in discretionary purchases outpaced sales of essential items at its stores for the first time since 2021.
“There’s no question that the consumer-demand landscape remains dynamic, yet Canadian shoppers continue to demonstrate admirable resilience,” chief executive officer Greg Hicks said during a conference call with analysts on Thursday. “We are cautiously optimistic, recognizing the macroeconomic backdrop remains uncertain and unpredictable, with ongoing trade negotiations and government actions that will shape the Canadian economy for years to come.”
Canadian Tire to launch limited Hudson’s Bay holiday collection next month
The Toronto-based retailer reported on Thursday that sales increased across its store banners. Sales growth was slowest at the flagship Canadian Tire chain, which saw stronger demand in Ontario and Quebec, offset by weaker performance in Alberta.
An unusually warm October in many parts of Canada contributed to softening sales in the first part of the fourth quarter. Growth will be partly dependent on the weather and on how quickly the Canada Post labour disruption stabilizes, executives said, noting the company was forced to quickly shift to some other delivery options for its still-important paper flyers, but that such alternatives are not as effective as the postal service.
Canadian Tire reported that net income attributable to shareholders fell to $169.1-million or $3.13 in diluted earnings per share in the third quarter, compared with $198.5-million or $3.55 a year ago, but still beat analyst estimates by a significant margin.
The dip in earnings was largely attributed to expenses related to the company’s True North strategy – a $2-billion plan to strip out inefficiencies in the business, reorganize the operations, expand the Triangle loyalty program, update stores, and improve digital performance. Not including that and other factors, normalized net income attributable to shareholders grew to $204.3-million or $3.78 in normalized diluted earnings per share.
Normalized earnings exceeded analysts’ expectations of $2.84 per share, according to the consensus estimate from S&P Capital IQ.
As part of the True North strategy, Canadian Tire cut an unspecified number of corporate jobs during the quarter. On Thursday, the company reported that it expects to see its first quarter of cost savings from its restructuring in the fourth quarter.
Canadian Tire’s gross profit margins improved across all of its banners, to 35.8 per cent in the quarter, beating analysts’ estimates.
The company’s share price rose more than 6 per cent on the Toronto Stock Exchange on Thursday morning following the quarterly report.
Canadian Tire also announced this week that on Dec. 5 it will launch a limited collection of holiday products featuring the Hudson’s Bay stripes – part of the intellectual property the company acquired during the Bay’s bankruptcy proceedings. “We expect this initial run of products to fly off store shelves,” Mr. Hicks said, adding that a broader assortment of items will begin hitting store shelves in the back half of 2026. Canadian Tire has also said it will bring back the retailer’s point blankets in time for the holidays.
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The company’s SportChek banner had the strongest growth in the quarter ended Sept. 27, which was boosted by back-to-school shopping and hockey equipment purchases. The Blue Jays’ playoff run also fuelled sales of fan gear, Mr. Hicks noted. Mark’s stores benefited from demand for workwear, jeans and fall seasonal products.
Consolidated revenue grew by 3 per cent year-over-year to $4.1-billion.
Comparable sales – which measures growth at stores open for more than a year, to monitor growth not driven by new store openings – increased by 1.8 per cent compared with the same period last year, falling below analysts’ estimates.
The company announced a dividend increase to $7.20 per share on an annualized basis, up from $7.10.