Canadian Tire profit jumps, raises dividend
TORONTO (Reuters) - Canadian Tire Corp (CTC.TO: Quote) (CTCa.TO: Quote), one of the country's biggest retailers, reported a 36 percent jump in earnings on Thursday, benefiting from its August acquisition of the Forzani sporting-goods chain.
The results, and Canadian Tire's announcement of a dividend increase, made the company the net gain leader on the Toronto Stock Exchange on Thursday afternoon.
Profit growth was driven by a 16.3 percent increase in overall sales, helped by Forzani, now known as FGL Sports. Excluding FGL, consolidated sales rose 7.6 percent.
"The transition at FGL Sports is progressing very well and is meeting our expectations, both in top line sales and in realizing synergies," Chief Executive Stephen Wetmore said in a release.
The results were also helped by a significant increase in fuel prices, with sales at Canadian Tire gas bars up 27.4 percent.
"In a quarter when all retailers seem to be struggling for share of consumer wallet, CTC reported very solid and slightly better than expected results," wrote RBC Capital Markets analyst Irene Nattel in a research note.
Nattel said Canadian Tire beat expectations with its financial services business, where before-tax income rose 18.3 percent to C$64.2 million ($62.9 million).
The company, whose flagship Canadian Tire chain sells household goods, sporting goods and automotive products, earned C$136.5 million, or C$1.67 a share, in the quarter ended October 1, up from C$100.5 million, or C$1.23 a share, in the same quarter last year.
Sales at Canadian Tire stores rose 3.2 percent, and same-store sales, a key measure for retailers, rose 2.3 percent, driven by growth across categories. Continued...