Canadian Tire targets $200M in savings
Canadian Tire Corp Ltd unveiled a plan to save at least $200 million annually by 2022 after missing third-quarter revenue and profit estimates as the retailer faced intense competition from Walmart and Amazon.com.
The savings plan and an increased quarterly dividend overshadowed the downbeat quarterly results and pushed shares up as much as four per cent on Thursday.
Canadian Tire said it is looking to cut costs by centralizing operations such as marketing and sourcing for its multiple banners including Mark’s and Sport Chek.
“It allows us to be more focused and effective by ‘doing things once,’ and to eliminate redundant costs,” chief executive Stephen Wetmore said on a post-earnings call.
Canadian Tire’s brick-and-mortar sales have been pressured by the online-focus of Walmart and Amazon.com and the 97-year-old company has been investing heavily in its e-commerce business and speed up delivery. The efforts fell short of market expectations in Q3.
Total revenue rose marginally to $3.64 billion, but missed the average analyst estimate of $3.73 billion. Same-store sales at its retail segment rose 2.7 per cent.
Net income fell 1.6 per cent to $227.7 million, or $3.20 per share in the quarter ended Sept. 28, hurt by higher freight costs and a strong dollar.
Excluding items, Canadian Tire earned $3.46 per share. Analysts on average had expected the company to earn $3.47 per share, according to IBES data from Refinitiv.
It raised its quarterly dividend by 10 Canadian cents to $1.14 per share.
Reuters