Canadian Tire Corporation announced on Thursday financial results for its fourth quarter and full year ended December 28, 2024, saying strong December sales drove a return to comparable sales growth in Q4.
Triangle spend per member was up in Q4, as members earned and redeemed at higher levels than last year, it said, adding that Q4 Diluted Earnings Per Share (EPS) was $7.37; Q4 Normalized Diluted EPS was up 20.4% to $4.07 while Full-year Diluted EPS was $15.92; Full-Year Normalized Diluted EPS was up 21.7% to $12.62.
“In the quarter, we charted strong earnings and a return to growth, while observing economic green shoots like improved consumer sentiment and spending,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “The strength of Triangle Rewards was on display in Q4, as loyalty sales grew 4% and we activated more personalized promotions – having attracted and engaged nearly half-a-million new and returned members in 2024.
“As we look beyond our Better Connected strategy, we have growing evidence and conviction that a deeper connection of our retail banners and our loyalty system drives higher member engagement and sales.”
FOURTH-QUARTER HIGHLIGHTS
- Consolidated comparable sales and consolidated retail sales returned to growth and were both up 1.1%, driven by strong December sales across all banners; loyalty sales were up 4%.
- Canadian Tire Retail (CTR) comparable sales grew 1.1%. Strong growth was led by Automotive and offset by modest declines across other divisions. Essential categories were up 4%, while consumer demand remained constrained in discretionary categories, which were down 2%.
- SportChek comparable sales were up for a second consecutive quarter, with growth of 0.4% driven by strong franchise sales. Hockey, hydration, and lifestyle footwear were top performing categories in the quarter.
- Mark’s comparable sales were up 1.8%, as the industrial businesses returned to growth and new store openings drove broad-based growth across Mark’s categories.
- Consolidated income before income taxes (IBT) was $529.1 million, up $266.1 million. Normalized IBT was up $39.7 million or 13.9% to $324.3 million. Improved retail segment profitability drove the increase.
- Retail IBT was $436.7 million, up $275.0 million or $41.2 million on a normalized basis, driven by favourable gross margin dollars as a result of higher revenue, lower operating expenses, and lower net finance costs.
- Financial Services IBT was down $17.7 million, or down $10.3 million on a normalized basis after accounting for costs related to the recently-completed strategic review and targeted headcount reduction in the prior year. Expected increases in net impairment losses, as well as higher funding costs, drove the remainder of the decline.
FULL-YEAR HIGHLIGHTS
- Consolidated retail and comparable sales, excluding Petroleum, were down 1.7%, reflecting a weaker consumer demand environment. At CTR, essential categories were up 1%, led by Automotive, and outpaced the 5% decline in discretionary categories.
- Loyalty sales penetration represented 54.4% of full-year retail sales on a direct scan basis, growing the amount of electronic Canadian Tire Money (eCTM) in the ecosystem and driving redemption to create more value for Triangle members. Canadians redeemed $360 million of eCTM in 2024, up 7%.
- Delivering an improved Retail gross margin rate, excluding Petroleum, up 50 bps to 36.0%, and maintaining operating expense discipline contributed to improved Retail segment profitability and Retail Return on Invested Capital (ROIC) at 9.4%. Normalized Retail IBT was $558.0 million, up 27.4%; Retail IBT was $772.2 million, including the gain on the sale of a Brampton industrial property completed in December 2024.
- Continued sell through of existing inventory, partially offset by investments in newer retail inventory ahead of 2025, resulted in year-end inventory down 5% compared to year-end 2023. Working capital improvements contributed to strong retail cash generated from operating activities of close to $1.7 billion, compared to $1.1 billion in 2023. At the end of Q4, CTC had fully repaid the $895 million of borrowings associated with its October 2023 repurchase of 20% of the Canadian Tire Financial Services business.
STRATEGIC HIGHLIGHTS
- Since 2022, the Company has been executing its Better Connected strategy, modernizing core retail foundational elements by investing in the business, with total Operating Capital Expenditures of $1.8 billion. Over that time, the Company has also returned $1.9 billion to shareholders, by way of share repurchases and dividends paid.
- The third year of the Company’s Better Connected strategy has seen CTC:
- Roll out further CTR store investment projects, with close to a quarter of the Company’s 502 CTR stores updated since 2022. Combined with new store formats and refreshed stores at other banners, CTC has added an incremental ~1 million of retail square feet across its banners over the same period. The Company also drove value by monetizing redundant real estate assets during 2024.
- Bolster its digital capabilities, better connecting digital and physical channels and supporting $1.1 billion of annual eCommerce sales. These enhancements have contributed to an enhanced customer experience, as demonstrated by improved customer Net Promoter Scores (NPS).
- Continue to strengthen the Owned Brands portfolio across our banners, growing and elevating our largest brands such as MotoMaster, which delivered double-digit growth in 2024. Since 2022, an additional three brands have achieved annual sales of over $100 million, taking the total to 17. Owned Brands continued to deliver a significant margin differential vis-à-vis National Brands. Customer attachment to these brands remains strong.
- Grow the base of active registered Triangle members from 7.8 million at the end of 2021 to 9.2 million at the end of 2024. Direct scan Loyalty Penetration is up by 480 bps, delivering even stronger first-party data on which to build.
- Continue to transform its supply chain network and invest in IT network modernization and resilience. Supply chain investments included optimized capacity utilization and automated fulfilment at existing Distribution Centres (DC) and regional capacity expansion in Western Canada with a new DC in Metro Vancouver, set to open in 2025.
Canadian Tire Corporation is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Its retail business is led by Canadian Tire, which was founded in 1922. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark’s, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere. The company’s close to 1,700 retail and gasoline outlets are supported and strengthened by CTC’s Financial Services division. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway.
Related Retail Insider stories:
