(Reuters) - Canadian Tire Corp (CTCa.TO) reported higher quarterly profit on Thursday, helped in part by retail sales growth, strong performance in its financial services business and last year’s acquisition of the Forzani sporting goods chain.
Canadian Tire, one of the country’s best-known retailers, turned in its weakest performance at its namesake stores, which sell housewares, sporting goods and automotive products.
Sales at established stores, an important measure for retailers, edged up 0.4 percent at the Canadian Tire banner. That compares with a 4.8 percent gain at FGL Sports, the sporting goods chain acquired last year when it was called Forzani Group Ltd. Mark’s, a clothing chain, was up 4.2 percent.
Overall, retail gross profit margins improved to 26.6 percent, from 25.0 percent a year earlier, helped in part by the inclusion of FGL.
Margins were little changed at the Canadian Tire banner, but improved at Mark’s compared with last year, when unusually cool weather led to clearance markdowns on spring and summer clothes.
Income before income taxes from the company’s financial services business rose nearly 42 percent to C$68.5 million, and accounted for 37 percent of total income before taxes.
The company said gains came thanks to higher revenue from credit card receivables, lower loan loss expenses and better control of operating costs in the division.
Net income for the second quarter rose to C$133.7 million ($134.4 million), or C$1.63 a share, from C$105.8 million, or C$1.29, a year earlier.
Analysts, on average, had expected earnings of C$1.52 a share, according to Thomson Reuters I/B/E/S.
Revenue rose 16.4 percent to C$2.99 billion. The inclusion of FGL added C$335.2 million.
Shares rose 2.1 percent to C$77.31 on Thursday morning on the Toronto Stock Exchange.
Reporting by Allison Martell; Editing by Frank McGurty