May 17th, 2024

Canadian Tire revenue down in first quarter as consumer spending softens

By The Canadian Press on May 9, 2024.

A Canadian Tire logo is displayed on a store in Ottawa on Friday, Aug. 11, 2023. Canadian Tire Corp. Ltd. reported its first-quarter profit rose compared with a year ago as its revenue fell about five per cent. THE CANADIAN PRESS/Sean Kilpatrick

TORONTO – Canadian Tire Corp. Ltd. is the latest retailer to warn of softening consumer demand as high costs of living continue to rein in spending.

“The increased cost of living combined with higher interest rates has created a period of hesitation among Canadian consumers,” president and CEO Greg Hicks told analysts during a conference call Thursday.

“This has had an obvious impact on our operations,” he added.

The retailer on Thursday reported its first-quarter profit rose compared with a year ago even as its revenue fell about five per cent. Its net income attributable to shareholders totalled $76.8 million or $1.38 per diluted share for the quarter ended March 30, the company said in a release.

The result was up from a profit of $7.8 million or 13 cents per diluted share in the same quarter last year when it was hit by costs related to a warehouse fire.

Canadian Tire says its normalized profit amounted to $1.38 per diluted share in its latest quarter, up from a normalized profit of $1 per diluted share in the same quarter last year.

Revenue for the quarter totalled $3.52 billion, down from $3.71 billion in the same period last year.

Consolidated comparable sales fell 1.6 per cent as fewer people shopped at retail stores amid high interest rates and inflationary pressures.

Same-store sales at Canadian Tire retail were down 0.6 per cent, compared to 4.8 per cent decline at the same time last year.

Mark’s and SportChek same-store sales also fell, in line with overall consumer sentiments on discretionary spending.

At Mark’s comparable sales were down 1.2 per cent, while SportChek dropped 6.5 per cent in same-store sales.

Hicks said potential interest rate cuts “could foster stability, easing uncertainties in our business operations.”

The Bank of Canada has been closely watching economic data – including consumer spending – as waits for the right time to begin lowering interest rates. Its next decision is scheduled for June 5.

This report by The Canadian Press was first published May 9, 2024.

Companies in this story: (TSX:CTC.A)

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