(Toronto) Canadian Tire inventories are higher than usual after a late start to summer sales and early shipments of fall and winter seasonal products.
Updated yesterday at 3:29 p.m.
The company had additional merchandise inventory of 465.6 million at the end of its most recent quarter, an increase of about 18% over the same period last year.
These surpluses raise fears that the Canadian retail giant could find itself in a situation similar to that of American retailers who have had to sell their items on sale to clear their excess inventory.
For his part, President and CEO Greg Hicks said he was pleased with the company’s ability to manage inventory “especially given what we’re seeing with large retailers south of the border.” .
“We are happy with our inventory levels and see no significant risk to our margins or the need to use sales to liquidate inventory,” he said Thursday during a call to discuss the results of the stock market. second trimester.
The rise in merchandise inventories at the end of June was partly explained by a later start to spring this year, Hicks said. The company saw “good product turnover in July once the warmer weather finally arrived,” he added.
Inventory levels also reflect the shipment of more than 260 million goods for the fall and winter seasons, which the company ordered early to ensure minimal supply chain disruptions, the executive said. .
Still, TJ Flood, president of Canadian Tire Retail, said franchisees find their stores “are a bit fuller in a few spring and summer categories and…probably wish they had fewer bikes and kayaks.”
He said, however, that lower sales of items like bicycles, kayaks and paddleboards were offset by sales of plumbing and auto maintenance items.
Canadian Tire reported lower second quarter earnings compared to the same period a year ago.
The retailer said its net income attributable to shareholders was 145.2 million, or $2.43 per share, for the quarter, down from 223.6 million, or $3.64 per share, a year ago. earlier.
Canadian Tire says retail sales increased 9.9% and comparable sales, excluding fuel, increased 5.0%. Retail sales for the SportChek banner increased by 0.6% while comparable sales increased by 4.1%, and retail sales for the L’Équipeur banner increased by 21.1% while comparable sales increased by 20.9%.
Canadian Tire says it earned normalized diluted earnings per share of $3.11, down from normalized earnings of $3.72 a year earlier.
The company says the performance of the business’ retail segment remains significantly above pre-pandemic levels on a normalized basis. On the other hand, higher expenses, including the currency translation effect, led to lower profits in the second quarter compared to the previous year.
Canadian Tire attributed the 15% increase in financial services revenue, driven by growth in accounts receivable and growth in credit card sales, to increased customer activity and new account acquisition .
RBC Capital Markets analyst Irene Nattel said Canadian Tire’s “messy quarter” masked “strong fundamental performance.”
She noted that trends remained supportive of demand for Canadian Tire as its banners generate strong growth, despite supply chain disruptions.