Over the Counter – Sept 2002: 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% 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%. Consolidated retail sales for the quarter were up 9.4% to $2.05 billion across the store networks of Canadian Tire, Mark’s Work Wearhouse, Petroleum and PartSource.

PartSource continues to grow its comparable store sales in excess of 10%, including significant progress in the commercial segment, says the company. PartSource began work on three new stores during the quarter that will open in the third quarter.

“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.”

Consolidated gross operating revenue for the second quarter was $1.61 billion, an increase of 7.6% 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% year to date compared to 2001. Consolidated gross operating revenue was up 6.7% year to date to $2.81 billion and consolidated net earnings were up 8.3% to $88.9 million compared to the first half of 2001.

Canadian Tire Retail (CTR) total retail sales for the quarter were $1.70 billion, a 4.7% increase from $1.62 billion in 2001. Comparable store sales were up 1.5% for the quarter, following comparable store sales growth of 7.0% in the same quarter of 2001. Gross operating revenue for the quarter was $1.22 billion, a 3.0% improvement over the $1.19 billion recorded in 2001.

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%. Comparable store sales were up by 3.0%. CTR gross operating revenues for the first six months were up 3.6% to $2.10 billion, while CTR earnings before income taxes and minority interest increased 11.6% to $88.4 million.

Uni-Select Second Quarter Profits Increase By 28.0%

Uni-Select reports strong profit growth in the second quarter, on the heels of its joint venture in Western Canada.

This puts profits for the quarter at $5,597,000 or $0.31 per share compared to $4,374,000 or $0.24 per share in the previous year.

Net profits for the six-month period ended June 30, 2002 reached $8,694,000 or $0.48 per share compared to $6,618,000 and $0.37 per share during the course of the preceding year. Sales in the second quarter were $183,804,000, an increase of 7.1% compared to sales of $171,656,000 realized in the second quarter of 2001. Sales reached $328,292,000 for the six-month period ended June 30, 2002, an increase of 5.9% compared to sales of $309,877,000 realized in 2001.

Sales for Automotive Group Canada increased by 10.8% during the course of the second quarter to reach $134,853,000. Organic growth for the group was 1.2% when compared to the same number of days as in the second quarter of 2001.

The remainder of the growth is attributable to the USI-AGI Prairies joint venture created in Western Canada with Acklands-Grainger, offset in part by a change in the estimate of rebates earned by merchant members. The second quarter also included an additional billing day when compared to the same period in 2001.

The operating margin of Automotive Group Canada in the second quarter was reported at 6.3% compared to 6.5% a year earlier, due to the lower margin on additional revenues of the new joint venture.

“Our 2002 perspectives remain favorable,” said Jacques Landreville, president and chief executive officer. “Past mergers and acquisition efforts are bearing fruit in Canada where we continue to improve our business model. Furthermore, we are pursuing several mergers and acquisition opportunities in the United States. With respect to the Heavy-Duty Group, it is gaining market share and accentuating its profitability.”