Canadian Tire profit jumps on credit cards, acquisition

Thu May 10, 2012 2:15pm EDT
 
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By Allison Martell

TORONTO (Reuters) - Canadian Tire Corp (CTCa.TO: Quote) reported a quarterly profit on Thursday that was well above expectations, helped by its acquisition of a sporting goods chain, growth in its financial services division and a lower tax rate.

Much of the earnings growth at the company, one of Canada's biggest and best-known retailers, came from its credit card business, but it also posted strong sales at established stores, a key measure of performance in the industry, and its shares rose.

At the flagship Canadian Tire banner, which sells housewares, sporting goods and automotive products, same-store sales rose 3.3 percent. The company said good weather in March boosted sales of products such as bicycles and gardening equipment.

"The results were just very strong, much better than we expected," said Edward Jones analyst Brian Yarbrough. "These guys continue to execute. I mean, you've got to give (Chief Executive) Stephen Wetmore credit."

At the company's clothing retailer Mark's, same-store sales rose 5.8 percent, and they were up 7.0 percent at its sporting goods chain, FGL Sports.

The company said FGL, formerly Forzani Group Ltd, which it bought last year, was "well positioned for the early onset of spring."

"Forzani was the most weather-sensitive consumer stock back when it was a public company, and now that it's part of Canadian Tire, we're seeing increased exposure to weather" at Canadian Tire, said Canaccord Genuity analyst Derek Dley.

FINANCIAL SERVICES LEADS   Continued...

 
Canadian Tire Corp. President and CEO Stephen Wetmore is silhouetted against the video screen at their annual general meeting for shareholders in Toronto, May 10, 2012. REUTERS/Mark Blinch