(Toronto) Despite problems with the global supply chain, shelves at Canadian Tire stores will not be empty during the holiday season, the retailer assured Thursday, explaining how it has managed to cope with issues hampering its operations. competitors.
As material and semiconductor shortages, plant closures attributable to COVID-19 and delays in port operations hamper many businesses, Canadian Tire CEO Greg Hicks said his company’s supply chain was up to the challenge.
“The fact that we’re neither a grocery store nor a fast fashion retailer means that at times like these we can be very flexible when it comes to holding inventory quarter to quarter. other, with a significantly lower risk of aging, ”he said during a conference call with financial analysts to discuss the company’s most recent quarterly results.
“The non-perishable nature of the products gives us flexibility in terms of timing and trading conditions, and as the owner of significant distribution and storage capacity through our store network, real estate assets and real estate investment trust,” we can easily keep excess inventory in Canada. ”
This access to space and the lack of worry about the shelf life of products gives Canadian Tire an edge in the race to ensure consumers get the products on time for the holiday season.
Cost increases
With the pandemic, several retailers have warned that consumers may wait longer to get their hands on their purchases or that they may have difficulty finding the most coveted products, due to strikes or closures on the port side. , slowdowns in manufacturing plants and skyrocketing shipping container costs.
The Drewry World Container Index showed that the tariff for moving a container from Rotterdam to New York hit US $ 6,255 this week and has jumped 211% from last year. The route between Shanghai and Rotterdam was even more expensive at US $ 13,801, up 498% from last year.
To adjust to this situation, Canadian Tire chartered four ships to get its products – mostly Christmas and winter items – to Canada in time for the fourth quarter.
He was also interested in parts of the supply chain over which he can exert more influence.
For example, Mr. Hicks pointed out that more than a third of the company’s revenue comes from its own brands or products to which it has exclusive selling rights, such as the Noma line of lighting, Mastercraft tools and Denver apparel. Hayes.
These agreements ensure that “we control when and where goods are produced,” Hicks explained, and they give the company the ability to “order more, and sooner” to avoid shortages. .
“We also have a direct view of shipments from factories and a clear understanding of where input shortages may require longer delivery times, where cost inflation may lead to increased product costs, or, in case of shortages and longer term inflation, a product overhaul, ”he said.
Results below expectations
Canadian Tire’s grip on its supply chain has given it the confidence to increase its quarterly dividend to $ 1.30 per share, from $ 1,175 per share previously.
The company posted profit attributable to common shareholders of $ 243.7 million, or $ 3.97 per share, for the quarter ended Oct. 2, down from $ 296.3 million, or 4.84 $ per share, for the same period last year.
Revenue totaled $ 3.91 billion, compared to revenue of $ 3.99 billion in the third quarter of 2020.
On a normalized basis, Canadian Tire posted earnings of $ 4.20 per share in the most recent quarter, compared to adjusted earnings of $ 4.93 per share a year earlier.
Analysts expected adjusted profit of $ 4.30 per share and revenue of $ 3.97 billion, according to forecasts collected by financial data firm Refinitiv.
In addition to the Canadian Tire stores, the company owns L’Équipeur, Sports Experts, Atmosphere and SportChek, among others. She is also the owner of the Helly Hansen outerwear brand.