Canadian Tire Corporation, Limited reported second quarter consolidated net earnings of $53.4 million, compared to the $49.0 million recorded in 2000, an 8.9 per cent increase. Earnings before interest expense, income tax, depreciation and amortization (EBITDA) also rose 8.9 per cent to $142.8 million from $131.1 million in the second quarter last year. Earnings per share for the quarter were $0.67, up 8.5 per cent from the $0.62 per share recorded in 2000.
“I am pleased to report that Canadian Tire Retail experienced exceptionally strong comparable store sales in a very challenging economic environment. During the quarter we also achieved double digit growth in total retail sales. These results reflect not only very strong seasonal sales, but also healthy increases across all of our key merchandising categories. In particular, we experienced very strong sales of non-promotional merchandise. Our results also reflect significant achievements in our focus on improving productivity and implementing strategic initiatives,” said Wayne Sales, president and chief executive officer. “All of our businesses contributed to our earnings performance during the quarter, including Retail, Financial Services and Petroleum,” Sales added.
Canadian Tire Associate Dealers reported strong second quarter retail sales up 12.9 per cent, a testament to customer acceptance of CTR’s product offering and a return to normal summer weather conditions compared to the same period last year. Comparable store sales increased by 7.0 per cent, the strongest quarterly increase in over seven years.
Major factors contributing to improvements in consolidated pre-tax earnings included a 12.0 per cent increase in pre-tax earnings in Financial Services reflecting cost reductions and productivity improvements, and a significant increase in pre-tax earnings in Petroleum. Increased shipments and revenues in Canadian Tire Retail helped offset the significant investments in growth initiatives. Increased expenses associated with these initiatives reduced pre-tax earnings during the quarter by $4 million for the continued development of CTR’s e-Commerce offering and $2 million for PartSource. The net result was a 1.9 per cent pre-tax earnings increase in CTR.
Canadian Tire finished the first six months with consolidated net earnings of $82.1 million, up 12.2 per cent from a year earlier. Earnings per share were $1.04, an 11.7 per cent increase over the first half of 2000. First half results reflect increased earnings in all businesses as well as the $8 million first quarter pre-tax gain on the sale of the third-party credit card receivables business in Financial Services.
Consolidated gross operating revenue for the second quarter was $1,499.3 million, up 7.2 per cent from the $1,398.2 million recorded in 2000. Major factors included strong retail sales contributing to a 7.3 per cent increase in shipments at Canadian Tire Retail, complemented by a 10.4 per cent increase in gross operating revenue in Petroleum. Revenues in Financial Services for the quarter were down 1.8 per cent, reflecting reduced revenue contributions due to the sale in the first quarter of the third-party receivables business. Consolidated gross operating revenue for the first half of 2001 was $2,634.6 million, an increase of 5.3 per cent over the $2,502.5 million recorded in the same period last year.
– Construction of the new Calgary Distribution Centre building has been substantially completed and handed off to Canadian Tire and GENCO, the third-party operator of this facility. Integration and system testing is underway and the Distribution facility will be fully operational commencing in the first quarter of 2002. This represents a key milestone in the development of the Corporation’s more cost-effective regional replenishment and multi-channel distribution system.
– Vendor supply chain service levels to the Corporation reached a record high during the second quarter. Service levels from the distribution centres to Canadian Tire Associate Stores were up 103 basis points over the same period last year.
– As part of the Customer Values initiative, web-based learning technology has been introduced in more than 90 per cent of Canadian Tire stores, with more than 100 learning modules in production delivering product knowledge and customer service training for store staff.
– Consumer traffic to www.canadiantire.ca, including unique visitors, continues to be very strong and Canadian Tire’s web store is one of the top ten e-Commerce sites in Canada.
– 12 new-format stores were opened during the quarter, bringing to 249 the total number of new-format stores that have been opened since the rebuilding program was initiated in 1994.
– PartSource completed the conversion and integration of Auto Village/Drivers stores to the PartSource format and banner.
– Financial Services made significant progress in its continued expansion of the Options MasterCard portfolio and average balances and ancillary credit products benefited during the quarter as a result.
“Canadian Tire’s quarterly results indicate that our aggressive approach to growing our business and reducing costs is paying off, and at the same time we are putting in place a strong foundation for our future growth and shareholder returns,” noted Sales.
Canadian Tire is committed to continually improving near-term earnings and performance by continuing to invest in existing programs which are designed to increase total and comparable store sales and to significantly reduce costs. At the same time, Canadian Tire is in the process of undertaking a comprehensive strategic review of the Corporation’s businesses and opportunities for long-term growth. The Corporation plans to communicate the direction of its Strategic Plan in late September.
The Corporation reaffirms its outlook for an increase in gross operating revenues in the range of six to eight per cent in 2001 and to increase consolidated net earnings in the range of seven to nine per cent. This excludes any gain from the securitization of credit charge receivables. Effective July 1, 2001, the Corporation adopted the new recommendations issued by the Canadian Institute of Chartered Accountants Accounting Guideline 12 “Transfers of Receivables”. As a result of the adoption of the new accounting rules, the Corporation will realize a gain of approximately $8 million to $9 million before taxes in the third quarter of 2001.
On August 2, 2001 the Board of Directors declared a dividend of $0.10 per share on each Common and Class A Non-Voting share. The dividend is payable on December 1, 2001 to holders of record on October 31, 2001.
Canadian Tire Corporation, Limited (TSE: CTR.a, CTR) – the country’s most shopped retailer – offers a unique mix of products and services through three distinct, yet inter-related businesses. Canadian Tire Retail and the Associate Dealers together form one of Canada’s best-known and most successful retailers, offering customers the convenience and leadership of three specialty stores under one roof – Automotive, Sports and Leisure, and Home Products. Canadian Tire Retail recently launched www.canadiantire.ca, offering Canadians a brand new way for customers to shop online for automotive, sports, leisure and home products. Canadian Tire Financial Services manages related financial products and services for retail and petroleum customers, and also markets other value-added products to our customers. Canadian Tire Petroleum is one of the country’s largest independent retailers of gasoline, with 203 outlets. With 443 Canadian Tire Associate Stores serving communities nationwide, Canadian Tire Corporation, Limited and the Associate Dealers together employ more than 38,000 Canadians.Details