May 13, 2010 / 12:58 PM / 8 years ago

UPDATE 3-Canadian Tire tops profit forecast, stock surges

* Adj EPS C$0.63 vs analysts’ view C$0.55

* Revenue rises 5.7 percent to C$1.89 billion

* Shares rise 4.3 percent at C$58.95 (Adds analyst and company comments)

By Scott Anderson

TORONTO, May 13 (Reuters) - Canadian Tire Corp (CTCa.TO), one of the country’s biggest retailers, on Thursday posted a stronger-than-expected quarterly profit and sales growth in its established stores, sending its shares up more than 4 percent.

Earnings excluding one-time non-operating items rose nearly 4 percent, while same-store sales — at stores open at least a year —rose 1.7 percent at its flagship household goods and automotive supply chain. Overall revenue climbed 5.7 percent.

Last month the company set out targets to boost its stock performance that include earnings per share growth of as much as 10 percent over the next five years. It aims to achieve its goals by focusing on its traditional retail business while placing less emphasis on its work clothing chain.

“The key is that you have got to get same-store sales positive to drive earnings longer term and we do like that same store sales were positive,” said Brian Yarbrough, an analyst at Edward Jones in St. Louis.

“We think everything across the board is achievable.”

Adjusted earnings, excluding non-operating gains and charges, rose to C$51.5 million, or 63 Canadian cents a share, in the three months ended April 3, from C$49.6 million, or 61 Canadian cents.

Analysts on average had expected earnings of 55 Canadian cents a share, excluding one-time items, on revenue of C$1.83 billion, according to Thomson Reuters I/B/E/S.

Net income amounted to C$49.4 million (US$48.5 million), or 61 Canadian cents a share, compared with C$49.7 million, or 61 Canadian cents a share, a year earlier.

The latest results included a higher effective tax rate, while the year-earlier results included a favorable tax adjustment of C$4.6 million.

Revenue rose 5.7 percent to C$1.89 billion.

Chief Executive Stephen Wetmore told reporters after Canadian Tire’s shareholders meeting in Toronto that he was confident that the company could achieve its targets .

“This will be a gradual improvement,” he said. “I think everything is bang on track.”

Canadian Tire’s shares were up 4.3 percent at C$58.95 on the Toronto Stock Exchange. ($1=$1.01 Canadian) (Reporting by Scott Anderson; Editing by Frank McGurty)

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