TORONTO — Canadian consumers are increasingly “mindful” in their shopping, prioritizing essential purchases and reining in spending on more expensive goods as inflation continues to squeeze budgets, the head of Canadian Tire Corp. Ltd. said Thursday.
“There is no question we’re in a more challenging consumer environment,” CEO Greg Hicks told analysts during an earnings call as the company reported that its first-quarter profit fell compared with a year ago.
“Canadians are mindful of how and where they spend,” he said. “Current high inflation rates have led customers to prioritize essential products over higher-ticket discretionary ones.”
Unseasonably mild winter weather and a slow start to spring in several regions of Canada also weighed on the retailer’s earnings.
The company, which operates multiple brands including Canadian Tire, Mark’s and SportChek, recorded a net income attributable to shareholders of $7.8 million or 13 cents per diluted share for the quarter ended April 1, down from $182.1 million or $3.03 per diluted share a year ago.
Revenue for the quarter totalled $3.71 billion, down from $3.84 billion in the same quarter last year.
The drop in revenue came as comparable sales at its Canadian Tire stores fell 4.8 per cent.
The weather “did us no favours, especially in Ontario, where a warm winter was followed by a slow start to spring,” Hicks said. “This along with a more challenging consumer demand environment contributed to the decline in comparable sales at (Canadian Tire retail).
Sales of items like toboggans, heaters, humidifiers and snowblowers all fell in the quarter, Gregory Craig, chief financial officer of Canadian Tire Corp., said during the call.
Comparable sales at its Mark’s banner gained 4.8 per cent, while SportCheck comparable sales grew 3.7 per cent.
Helly Hansen revenue rose 22.9 per cent compared with a year ago.
Meanwhile, the company said its income was also impacted due in part to costs of $67.7 million related to a distribution centre fire in Brampton, Ont.
Canadian Tire said its normalized earnings for the quarter amounted to $1.00 per diluted share, down from a normalized profit of $3.06 per diluted share a year ago.
Analysts on average had expected an adjusted profit of $1.31 per share and $3.64 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
This report by The Canadian Press was first published May 11, 2023.
Companies in this story: (TSX:CTC, TSX:CTC.A)
The Canadian Press