Auto Service World
News   August 9, 2002   by Auto Service World

Canadian Tire Reports Rising Profits Across the Board


Canadian Tire Corporation, Limited reported second quarter consolidated net earnings of $58.6 million, an increase of 9.7 percent compared to $53.4 million in the same quarter of 2001.
Second quarter net earnings per share were $0.74 compared to $0.67 per share in 2001. Excluding incremental real estate gains in 2001 compared to 2002, net earnings were up 15.5 percent. Consolidated retail sales for the quarter were up 9.4 percent to $2.05 billion across the store networks of Canadian Tire, Mark’s Work Wearhouse, Petroleum and PartSource.
“Contributions from all our businesses led to very solid earnings and sales momentum in the second quarter,” said Wayne Sales, president and CEO. “Our growth this quarter was particularly encouraging in light of the very strong comparable quarter in 2001.
“Excellent sales of basic and seasonal goods in April and June more than offset the impact of adverse weather on seasonal sales in May. Our performance this quarter demonstrates our strength not only in seasonal categories but also in basic goods for every day use both in Canadian Tire and Mark’s Work Wearhouse stores. Our sales momentum continued in July with excellent sales growth across all categories. We also experienced strong receivables and earnings growth in Canadian Tire Financial Services as a result of our strategic program to convert retail accounts to Options MasterCard and higher earnings contributions from Canadian Tire Petroleum as a result of good expense control and margin improvement,” noted Sales.
Consolidated gross operating revenue for the second quarter was $1.61 billion, an increase of 7.6 percent from the $1.50 billion recorded in 2001. Canadian Tire finished the first six months with consolidated retail sales of $3.29 billion, up 10.0 percent year to date compared to 2001. Consolidated gross operating revenue was up 6.7 percent year to date to $2.81 billion and consolidated net earnings were up 8.3 percent to $88.9 million compared to the first half of 2001.
CTR total retail sales for the quarter were $1.70 billion, a 4.7 percent increase from $1.62 billion in 2001. Comparable store sales were up 1.5 percent for the quarter, following very strong comparable store sales growth of 7.0 percent in the same quarter of 2001. Gross operating revenue for the quarter was $1.22 billion, a 3.0 percent improvement over the $1.19 billion recorded in 2001. Strong sales in basic merchandise categories led to higher shipments and earnings contributions in CTR. As a result of an ongoing effort to reduce store inventories CTR experienced higher growth in retail sales than in corporate shipments to stores for the quarter. CTR improved earnings before taxes and minority interest by 2.0 percent, to $66.1 million compared to $64.8 million in 2001. Excluding $4.2 million in incremental quarterly gains in 2001 compared to 2002, primarily due to the disposal of surplus real estate, CTR earnings before taxes and minority interest were up 9.3 percent.
Solid retail sales, moderately higher shipments to Associate Stores and stable gross margins offset higher expenses primarily related to the corporation’s continued investments in the CustomerLink supply chain initiative. These expenses are related to amortization and depreciation costs for the opening of a new distribution centre and implementation costs for new supply chain technologies and processes.
The CTR supply chain reduced corporate inventory year over year by more than $50 million while improving service levels for shipments to stores by 33 basis points year to date over last year. For the first six months, Canadian Tire Retail total retail sales were $2.68 billion, up 6.4 percent. Comparable store sales were up by 3.0 percent. CTR gross operating revenues for the first six months were up 3.6 percent to $2.10 billion, while CTR earnings before income taxes and minority interest increased 11.6 percent to $88.4 million. PartSource, the automotive specialty chain, continues to grow comparable store sales in excess of ten percent including significant progress in the commercial segment.
PartSource began work on three new stores during the quarter that will open in the third quarter.


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