Winter weather boosted Canadian Tire's Q4 revenue and is still driving sales
Mother Nature's wicked ways are delivering dollar signs for Canadian Tire Corp. Ltd. at a time when customers are feeling the pinch.
The early onset of winter during the retailer's fourth quarter pulled forward many seasonal purchases and more recent blasts of cold weather and snow are aiding its current quarter.
"Despite ongoing geopolitical uncertainty, inflation and continued mortgage renewals, Canadian consumers have remained resilient," chief financial officer Darren Myers said on a call with analysts.
"Q1 is off to a good start with winter weather driving sales in late January and into February in what is normally our smallest and least discretionary quarter."
The frigid and stormy conditions across many parts of Canada have come as people are bundled up inside, watching the Olympics—another potential sales driver for the retailer, which also owns athletic apparel store SportChek.
First-quarter strength
The early signs of first-quarter strength build on Canadian Tire's fourth quarter, which spans both the holiday season and usually, the first snowfalls of the year.
This time, the fourth quarter brought higher revenue, which totalled $4.55 billion, up from $4.20 billion a year earlier.
The increase came as the company's consolidated comparable sales rose 4.2% during the quarter ended Jan. 3, while comparable sales at its namesake Canadian Tire stores gained 2.7%.
SportChek comparable sales rose 9.5% and at Mark's, an apparel retailer Canadian Tire owns, added 7.2%.
Weather contributed to several of the increases. Myers said shoppers bought snowblowers and shovels earlier, there was growth in the ice fishing category, and winter footwear, outerwear, hockey gear and automotive parts like batteries, wipers and tires performed well.
Blue Jays gear
He said Christmas trees, decor and toys also sold well, as did Blue Jays gear—a product of the team's post-season run that got them all the way to the World Series.
Despite the wins, Canadian Tire's fourth-quarter net income attributable to shareholders from continuing operations amounted to $211 million or $3.96 per diluted share, down from $365.2 million or $6.54 per diluted share a year earlier.
Some of the gap was attributable to a Brampton, Ont., distribution centre the retailer sold last year, spurring a net inventory writedown a year ago.
On a normalized basis, Canadian Tire earned $4.47 per diluted share in its latest quarter, up from $3.24 per diluted share a year earlier.
While the quarter transpired with continued tariff threats from U.S. President Donald Trump, it's been hard to parse out how many people are still hooked on purchasing primarily from Canadian companies.
The sentiment was already waning in Canadian Tire's third quarter and perhaps, its most recent show of patriotic sales came from Blue Jays merchandise, CEO Greg Hicks said on the same call as Myers.
