Canadian Tire to launch e-commerce site, profits climb on strong retail sales

TORONTO – Canadian Tire Corp. (TSX:CTC.A) plans on rolling out its new e-commerce website late next year as it turns its focus on its digital retail strategy.

The national chain began selling 10,000 products on its website earlier this week as part of a pilot project with 30 of its locations.

Once fully implemented late next year, the e-commerce platform will allow customers to view and buy products online and then have them shipped to their closest Canadian Tire location.

“This is not a trial to see whether we’re doing it. This is actually execution excellence,” Canadian Tire chief executive Stephen Wetmore told analysts during a conference call Thursday.

Once the national program is launched, customers across Canada will be able to pick up their online purchases at Canadian Tire stores.

“We say that… 90 per cent of Canadians are within 15 minutes of a Canadian Tire store,” he said. “We’re very close to our customers and I think this is a huge, huge benefit in the online world. We’ll see how all this goes but I think we’re very, very well-positioned for e-commerce.”

Individual stores may decide to offer home delivery as well, he said.

On Thursday, Canadian Tire reported that its profit climbed by 11 per cent to $145.5 million in the third quarter, as strong sales across all its retail banners helped it handily beat analyst expectations.

It also announced that it will increased its dividend by 25 per cent, to 43.75 cents per quarter, up from 35 cents, starting next year.

“We saw this quarter what Canadian Tire can do when we get reasonably seasonal weather combined with good execution of many of our important initiatives to build our brand, improve our service levels and bring innovative great products to our customers across all our retail banners,” said Wetmore.

The retailer says its latest quarterly earnings amounted to $1.79 per diluted share, up from $131.4 million, or $1.61 per diluted share, a year ago.

Revenue for the three months ended Sept. 28, was $2.96 billion, up from $2.83 billion year-over-year.

Expectations were for earnings of $142.6 million, or $1.77 per diluted share and revenue of $2.9 billion, according to analysts surveyed by Thomson Reuters.

The company said the strong results were due to a boost in sales across all its banners, including Canadian Tire; Mark’s (formerly known as Mark’s Work Wearhouse) and FGL Sports. For the quarter, the retailer said it saw more people buying from its automotive, seasonal and kitchen categories, from its Sport Chek brand and filling up at its gas stations.

Same-store sales at Canadian Tire stores were up two per cent, while same-store sales at Mark’s were up 4.3 per cent. FGL Sports same-store sales were up 6.3 per cent.

The chain also noted that earnings before income taxes from its financial services sector jumped to $80 million in the third quarter, compared with $73.7 million from a year ago, as it saw more growth in its credit card business. Revenue in this business also climbed by five per cent to $262.1 million.

Wetmore said the company is seeing positive results with converting its Canadian Tire stores to focus on two key categories: automotive maintenance and kitchen, cleaning and storage and organization products.

Meanwhile, the company also announced the promotion of Michael Medline to president of the company. Medline was most recently the president of FGL Sports and the Mark’s retail chain.

Earlier this year, Canadian Tire said it was going to spin off a real estate investment trust that would acquire a majority of the company’s real estate, including 255 retail properties and one distribution centre.

CT Real Estate Investment Trust (TSX:CRT.UN) completed its initial public offering last month and raised $303 million. Canadian Tire holds an 83.1 per cent effective interest in the trust.

Canadian Tire has over 1,700 retail and gasoline outlets across the country including Canadian Tire stores as well as Mark’s and various banners under FGL sports, including Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport and Atmosphere.

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