Canadian Tire uses tech to weather miserable spring
TORONTO Ongoing technology enhancements at Canadian Tire helped the retailer of kitchen, outdoor and automotive products beat a longstanding curse in its second quarter among retailers who carry a proportion of seasonal goods — the weather.
While record levels of rain in April and May could have ruined the quarter, the retailer outperformed analyst expectations, in part because it has diversified its assortment of goods and used technology to mine customer data and target more effective promotions. Its shares were up just under six per cent on Thursday after reporting a 14-per-cent increase in earnings per share.
“Our reliance on weather alone is not what it once was,” Allan MacDonald, president of Canadian Tire’s retail division, told analysts on a conference call to discuss Q2 results.
The veteran retailer has undergone fundamental changes since implementing more advanced data analytics, which are used to help plan flyers, loyalty strategies, and promotional events. “Analytics helped us act more deliberately in response to the lack of spring in April and May,” MacDonald said. “In the past, we may have responded too swiftly or relied on intuition when the quarter started softly, but today we have a better understanding of consumer and category sensitivities in response to outside influences like weather.”
The retailer, once considered a relative e-commerce laggard, has spent the last two years accelerating its technology investment and implementation in the face of competition from rivals such as Amazon and Walmart. The company is on track to launch a deliver-tohome test market run in the fall, executives said.
Chief executive Stephen Wetmore said the company’s efforts to improve the search functions on its website through machine learning, wherein computers derive increasingly sophisticated insights from data, led to “major breakthroughs” in the quarter.
Revenue in the period ending July 1 rose two per cent to $3.4 billion from $3.3 billion in the same period a year ago.
Same-store sales, a measure of retail performance that strips out year-over-year square footage changes, rose 1.8 per cent.