Canadian Tire Corp. Ltd. has joined the chorus of retailers expressing concerns over weakened consumer demand amid the persistent rise in living expenses. President and CEO Greg Hicks highlighted the impact of soaring living costs and elevated interest rates, attributing them to a cautious stance among Canadian shoppers. This sentiment was echoed during a recent conference call with analysts, where Hicks noted the evident repercussions on the company's performance.
Despite reporting a higher first-quarter profit compared to the previous year, Canadian Tire saw a decline in revenue of approximately five percent. The company disclosed a net income of $76.8 million, or $1.38 per diluted share, for the quarter ending March 30. This marked an improvement from the same period last year, which was overshadowed by expenses stemming from a warehouse fire.
Adjusted for exceptional items, the normalized profit for the quarter amounted to $1.38 per diluted share, up from $1 per diluted share in the corresponding period last year. However, total revenue for the quarter dipped to $3.52 billion from $3.71 billion year-on-year.
The downturn was reflected in consolidated comparable sales, which contracted by 1.6 percent, signaling reduced foot traffic in retail outlets amidst the prevailing high interest rates and inflationary pressures. Canadian Tire's own retail same-store sales slipped by 0.6 percent, a moderation compared to the 4.8 percent decline witnessed during the same period last year.
Similar trends were observed at Mark's and SportChek, aligning with broader consumer sentiment towards discretionary spending. Mark's reported a 1.2 percent decrease in comparable sales, while SportChek experienced a more pronounced decline of 6.5 percent.
Hicks expressed optimism regarding potential interest rate adjustments, suggesting that such measures could stabilize the business environment by alleviating uncertainties. The upcoming decision by the Bank of Canada, scheduled for June 5, holds significance as policymakers monitor economic indicators, including consumer spending, in determining the appropriate course of action.
