August 11, 2011 / 1:17 PM / 6 years ago

CORRECTED - UPDATE 2-Canadian Tire profit falls on higher spending

(Corrects first bullet point to show diluted EPS, not basic)

* Q2 2011 EPS C$1.29 vs C$1.50 in Q2 2010

* Profit missed C$1.45 estimate, according to I/B/E/S

* Revenue up 4 pct to C$2.57 bln

* Spending on promotions, infrastructure holds back profit

TORONTO, Aug 11 (Reuters) - Canadian Tire Corp’s CTC.TO CTCa.TO profit fell 14 percent on Thursday, missing market estimates, as the retailer spent more on promotions and invested in infrastructure.

Profit at the company, whose flagship Canadian Tire chain sells housewares, sporting goods and automotive products, dropped even as higher gasoline prices helped boost retail sales by 5.1 percent.

Earnings fell to C$105.8 million, or C$1.29 a share, in the fiscal second quarter ended July 2, from C$122.8 million, or C$1.50, a year earlier.

Analysts, on average, had expected earnings of C$1.45 a share, according to Thomson Reuters I/B/E/S.

Revenue, which includes financial services, rose 4 percent to C$2.57 billion, compared with the average analyst estimate of C$2.62 billion.

In addition to spending on its stores and merchandising, lower-than-expected sales of some seasonal goods and costs related to the company’s Forzani acquisition held back profit, said Chief Executive Officer Stephen Wetmore in a release.

The C$771 million purchase of Forzani Group Ltd FGL.TO, the country’s top sports retailer, cleared a review by the Competition Bureau in early August. Canadian Tire said it expects that transaction to close in the current quarter.

$1=$1 Canadian Reporting by S. John Tilak and Allison Martell; Editing by Frank McGurty

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