Canadian Tire sets ‘aggressive’ targets to fend off Amazon

Canadian Tire Corp. will step up its acquisitions of exclusive brands in 2018 as the retailer of sporting and outdoor goods continues to fend off Amazon.

The multi-banner retailer, whose shares leapt 6.5 per cent to $174.48 Thursday after reporting higher than expected fourth-quarter sales and earnings, has grown its sales substantially in the past two years by improving and bulking up its portfolio of house-branded goods.

“Smaller brand acquisitions of- fer us the opportunity to generate a lot of value,” said Allan MacDonald, executive vice-president of retail, noting the company could have been more acquisitive in 2017. “In 2018 we will be setting more aggressive targets and introducing more owned brands to our banners.”

Private brands confer a higher margin to retailer than national brands and, if they prove to be popular, ensure customer loyalty due to their exclusivity. Canadian Tire’s house brands include Noma, Mastercraft and Canvas, and the retailer has acquired a number of others in the last year, including the Paderno cookware line and premium barbecue brand Vermont Castings.

In January, the retailer bought the lawn care brand Golfgreen and team sports Sher-Wood Athletics Group Inc., which manufactures hockey gear and licensed products.

Private-label goods now account for 30 per cent of revenue at Canadian Tire stores, up from 20 per cent in 2012. At the Mark’s apparel banner, the figure is 70 per cent.

Improving its assortment of products and brands, aided by research and loyalty data, has helped Canadian Tire boost its same-store sales, MacDonald said.

Frigid temperatures helped the retailer drive up profit in the period ended Dec. 30, with earnings attributable to shareholders of $275.7 million, or $4.10 per share, compared with profit of $246.8 million ($3.46) in the same period a year ago.

That beat analyst expectations of $3.80 per share, according to estimates from Thomson Reuters.

Revenue rose 9 per cent to $3.96 billion, and same-store sales, a key measure of retail performance tallying volume at stores open for more than a year, rose 3.9 per cent.

Same-store sales rose 3.5 per cent at the chain’s Canadian Tire banner, 3.4 per cent at Mark’s and 5.8 per cent at FGL Sports on robust sales of outerwear and hockey gear. Retailer to bulk up private-label brands, which now make up 30% of revenue HOLLIE SHAW