May 14, 2009 / 2:15 PM / 9 years ago

UPDATE 2-Canadian Tire profit tops estimates, shares jump

* EPS C$0.61 vs C$0.82 a year earlier

* Same store sales up 2.5 pct

* Cuts 2009 capex 7 pct to C$360 mln

* Shares jump 7.3 percent to C$48.80 (Adds company comments. Updates share price)

By Scott Anderson

TORONTO, May 14 (Reuters) - Canadian Tire Corp (CTC.TO) (CTCa.TO) reported a 26 percent drop in quarterly profit on Thursday, but its earnings still topped analysts’ estimates, and that sent its shares up more than 7 percent.

Canadian Tire, the country’s biggest auto parts and household goods retailer, which also operates gasoline bars and a financial services unit, said the effect of falling gasoline prices more than offset a rise in sales in its stores.

But the company benefited from a lower than usual tax rate of about 25 percent.

“At the end of the day the results were OK. I think they are doing a very good job of managing in a very difficult environment in Canada,” said Brian Yarbrough, an analyst at Edward Jones in St. Louis, Mo.

The company said it earned C$49.7 million ($42.3 million), or 61 Canadian cents a share, in its fourth quarter, compared with C$67.1 million, or 82 Canadian cents a share, in the same period a year earlier.

Canadian Tire said its revenue fell 2.7 percent to C$1.79 billion.

Analysts had expected, on average, profit of 56 Canadian cents a share, before items, and revenue of C$1.78 billion.

Canadian Tire shares, which have dropped 28 percent in the past year due to slumping consumer confidence, were up 7.3 percent at C$48.80 on Thursday afternoon on the Toronto Stock Exchange.

Same store sales rose 2.5 percent in what is considered the slowest quarter of the year for retailers.


The company, which introduced two new retail concepts last year, including “small market” stores, and opened a new distribution center, lowered its forecast for capital spending for this year.

It said it now sees 2009 capital expenditures at about C$360 million. That is down 7 percent from its earlier estimate of about C$390 million.

That is also well off 2007 capital expenditures of about C$600 million and C$472 million last year.

“We’re in a cycle where our commitments on capital continue to come down. We’re through the really heavy lifting with respect to the capital expenditures,” Chief Financial Officer Huw Thomas told reporters.

“I am just being more and more focused on the projects that we are allowing to get built. They have to justify their returns. We are just being very disciplined around the allocation of capital.”

Thomas and Chief Executive Stephen Wetmore reaffirmed that the company is still on track to build or renovate a total of 100 stores this year, adding about 2 percent to its overall square footage.

$1=$1.17 Canadian Reporting by Scott Anderson; editing by Peter Galloway

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