Canadian Tire Corp Ltd (CDNAF) Q3 2024 Earnings Call Highlights: Strong EPS Growth Amid Revenue ...

GuruFocus News
4 min read

In This Article:

  • Normalized Diluted EPS: $3.59, up 21% from Q3 last year.

  • Retail Revenue: Down 1.8% to $3.8 billion.

  • Comparable Sales: Down 1.5% overall; Sportchek up 2.9%, CTR down 2.2%, Mark's down 2.3%.

  • Retail Gross Margin Rate (Excluding Petroleum): 35.7%, up 62 basis points from last year.

  • Inventory: Corporate inventory down 9% year-over-year.

  • Cash Generated from Operations: Up by more than $700 million year-to-date.

  • Dividend Increase: To $7.10 per share, marking the 15th consecutive year of increase.

  • Capital Expenditure: Expected between $525 million and $575 million for 2025.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Canadian Tire Corp Ltd (CDNAF) reported a significant increase in normalized diluted EPS to $3.59, up 21% from the previous year.

  • The Triangle Rewards program showed strong performance with loyalty sales outpacing non-loyalty sales, and a 10% increase in Canadian Tire money redemption.

  • The company implemented modern cloud-based technology to enhance transportation management and loyalty program infrastructure, improving data insights and member engagement.

  • Sportchek and Mark's saw notable growth in loyalty sales, with increases of 12% and 6% respectively, contributing to overall enterprise-wide loyalty penetration.

  • Canadian Tire Corp Ltd (CDNAF) achieved a strong retail gross margin rate of 35.7%, up 62 basis points from the previous year, driven by effective cost management and product mix.

Negative Points

  • Retail revenue was down 1.8% to $3.8 billion, with lower petroleum revenue contributing to the decline.

  • Consumer sentiment remains low, with spending power constrained by economic factors such as cost of living and unemployment.

  • The company faces ongoing challenges with discretionary spending, which continues to decline despite some improvement in Q3.

  • Financial services saw an increase in write-offs, impacting profitability despite good cardholder engagement.

  • The company anticipates headwinds in 2025, including foreign exchange and global freight rate challenges, which may impact margins.

Q & A Highlights

Q: Can you talk about some of the specific initiatives that seem to be resonating with consumers and how we should think about that evolving as we move through Q4 and into 2025? A: Greg Hicks, President and CEO, highlighted the Triangle Rewards program as a key initiative resonating with consumers. The program provides benefits for cash-strapped Canadians, and the partnership with Petro-Canada has significantly increased redemption rates. The company is focusing on personalized offers and integrating marketing across all banners. Additionally, there is a focus on pricing strategies to drive unit elasticity and introducing new product innovations to attract customers.

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