Higher margins, gasoline prices help Canadian Tire beat profit estimates

Retailer Canadian Tire Corp. Ltd. reported a better-than-expected thirdquarter profit on Thursday, driven by higher demand for its home, kitchen and personal care products, along with a rise in gasoline prices.

The company, which sells products ranging from automotive parts to kitchen appliances, said its total comparable same-store sales in its retail unit rose 2.5 per cent in the quarter, beating analysts’ average estimate of 1.6 per cent.

Revenue from its petroleum business rose 15.7 per cent in the quarter ended Sept. 30.

The company also said it’s increasing its quarterly dividend to $1.0375 per share compared with its earlier quarterly payment to shareholders of 90 cents.

Canada’s homegrown retailers have been trying to find ways to win back market share from larger rivals, including Amazon.com Inc. and Walmart Inc.

Toronto-based Canadian Tire has been focusing on expanding its online presence, increasing private label brands in its brick and mortar stores, as well as spending more on marketing.

The company has launched home delivery services and upgraded some of its stores to allow faster checkouts, which helped the company’s results in the third quarter.

Gross margins were up 53 basis points, Canadian Tire said.

Helly Hansen, the Norway-based sportswear brand that was acquired by Canadian Tire in July this year, contributed $181.7 million in revenue, while revenue from its retail unit surged 11.4 per cent to $3.31 billion.

Profit rose to $231.3 million, or $3.15 per share, from $198.5 million, or $2.59 per share, a year earlier.

Excluding one-time items, Canadian Tire earned $3.47 per share, topping analysts’ average estimate of $2.85, according to IBES data from Refinitiv.