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Feb 13, 2020

Canadian Tire profit beats expectations, revenue falls short

'We're ready to compete': Canadian Tire CFO

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Canadian Tire Corp.'s chief executive assured analysts that the retailer has yet to experience any supply issues due to the novel coronavirus outbreak, but longer-term impacts remain unclear.

"I think the coming few weeks will tell us more about the longer-term implications for us," said Stephen Wetmore, chief executive, during a conference call with analysts Thursday after the company released its fourth-quarter and full-year financial results.

"But at this stage of the game, it's just: we'll keep an eye on it, but there's no systematic issues that we have to deal with."

The company does not have any "active vendors in the quarantined area," he said.

The virus, now known as COVID-19, originated in Wuhan, China. As of Wednesday, the country had 44,730 confirmed cases, according to the World Health Organization's latest situation report. There are more than 45,000 cases around the world, including several in Canada.

More than 1,100 people have died in China from the virus, and there's been one death outside of the country.

The outbreak has prompted business concerns over supply issues. Canada Goose Holdings Inc. slashed its expected revenue growth for the year earlier this month due to "material negative impact" from the outbreak, while Indigo Books & Music Inc. said some of the company's products that are made in China may face delays getting to stores.

"We're monitoring this like everybody else in the world is monitoring it," said Wetmore.

He noted Canadian Tire is "well stocked here going through for a number of months" and that the company has done business in China for decades and has strong relationships there.

The commentary on the outbreak came as the retailer saw its profit grow beyond analyst expectations in its fourth quarter, though its revenue missed the mark.

The Toronto-based retailer reported profit attributable to shareholders of $334.1 million or $5.42 diluted earnings per share for the quarter ended Dec. 28.

That's compared with $254.3 million or $3.99 for the same quarter the previous year.

The company's revenue jumped 4.5 per cent to $4.3 billion for the quarter.

Analysts had expected revenue of $4.4 billion and profit of $329.6, according to financial markets data firm Refinitiv.

The company reported consolidated comparable sales, a key retail metric, were up 3.9 per cent for the quarter with the highest growth at its Canadian Tire stores at 4.8 per cent. Sport Chek comparable sales rose two per cent, while Mark's increased 1.8 per cent.

Canadian Tire credited its Triangle rewards program with boosting customer engagement and driving growth. The company says it is now one of Canada's largest e-commerce players.