Canadian Tire hits record high as Q4 profit beats on strong demand

(MENAFN- ProactiveInvestors) Canadian Tire (TSE:CTC.A) surged to a record high after the country's largest sporting goods retailer posted a fourth-quarter profit that beat market expectations buoyed by strong sales of its automotive products and sports gear.

Shares rose to as high as C$133.19 before trading at C$132.97 up 8.5 percent at 1:49 p.m. in Toronto.

Net income rose just under 2 percent to C$191.3 million or C$2.44 per share in the three months ended January 3 compared with a profit of $191 million or $2.32 per diluted share a year earlier the Toronto Ontario-based company said in a statement today.

The company earned C$2.59 per share excluding certain items topping analysts' average estimate of C$2.52 according to Capital IQ data.

Total revenue which includes revenue from financial services rose nearly 10 percent to C$3.65 billion helped in part by an additional week of operations.

That beat analysts' average estimate of C$3.56 billion.

Same-store sales at Canadian Tire were up 2.8 per cent mainly on strong demand for winter tires sales at FGL Sports owner of Sport Chek were up 4.9 per cent and sales at Mark's Work Wearhouse were up 1.2 per cent. Same-store sales are an important measure for retailers that compares sales in the current quarter with sales the year before.

The increase in spending at Canadian Tire retail operations came despite an overall decrease in seasonal spending by Canadians as recorded by Statistics Canada. It had been predicted that lower gas prices would lead to more consumer spending before Christmas.

“We delivered another record fourth quarter and impressive annual results despite unseasonable weather compared to last December" said Canadian Tire chief executive officer Michael Medline said in the statement.

Canadian Tire began a change in its marketing practices to attract more families and has boosted its digital offerings in an effort to woo a younger demographic.

Canadian Tire operates under several banners in addition to its namesake stores including Mark's PartSource Sport Chek Hockey Experts Sports Experts National Sports Intersport Pro Hockey Life and Atmosphere. The company also has a financial services division and property holdings through its stake in CT REIT (TSE:CRT).