TORONTO (Reuters) - Canadian Tire Corp CTC.TO (CTCa.TO), a diversified retailer whose products range from snowblowers to hockey sticks, reported higher sales and underlying profit on Thursday even though most of Canada is enjoying an unusually warm winter.
Shares of the company rose after it said overall retail sales rose 21 percent to C$3.71 billion, thanks in part to the acquisition of the Forzani sporting goods chain, now called FGL Sports. Profit beat analysts’ average estimate.
“When you think about it, weather is a big deal for Canadian Tire, when it comes to snowblowers and automotive parts and then on the Forzani Group side ... skiing and outerwear,” said Edward Jones analyst Brian Yarbrough, who called the results stronger than expected.
Despite higher sales overall, inventories of winter-related goods could pose a risk at FGL, he said.
The company is one of the country’s biggest and best-known retailers. Its flagship Canadian Tire outlets - a fixture in Canadian towns from coast to coast - sell housewares, sporting goods and automotive products. The company also operates the Mark’s clothing chain as well as gas bars.
Net income fell to C$166.3 million ($167.08 million), or C$2.03 a share, from C$169.3 million, or C$2.07, in the same quarter last year. Excluding the tax settlement, earnings per share came in at about C$1.40.
Analysts, on average, had expected earnings of C$1.89 a share in the latest quarter, according to Thomson Reuters I/B/E/S.
To be sure, the warm weather hurt winter tire, light auto parts and outdoor tools businesses, the company said. Even so, sales under the Canadian Tire banner rose 2.7 percent, and sales at established stores, a key measure for retailers, rose 1.8 percent.
Same-store sales were 0.7 higher at FGL, and 3.1 percent higher at Mark‘s.
Canadian Tire’s heavily traded class A shares were up 4.8 percent at C$66.53 early Thursday afternoon on the Toronto Stock Exchange.
Reporting By Allison Martell; Editing by Frank McGurty