Canadian Tire shares moved higher after the retailer reported fourth-quarter revenue and earnings that topped expectations, helped by strong holiday demand and winter weather that boosted store traffic.
BNN Bloomberg spoke with Dan Rohinton, portfolio manager at iA Global Asset Management, who said solid results across key banners and an attractive valuation helped support the stock, even as competition from Walmart, Costco and Amazon continues to pressure margins in Canadian retail.
Key Takeaways
- Canadian Tire reported normalized diluted earnings per share of $4.47 in the fourth quarter, well above analyst expectations of between $3.80 and $3.99, as revenue rose 8.3 per cent year over year to $4.55 billion.
- Consolidated comparable sales increased 4.2 per cent, with same-store sales up 2.7 per cent at Canadian Tire, 7.2 per cent at Mark’s and 9.5 per cent at SportChek.
- Gross margins improved by 173 basis points from a year earlier, reflecting stronger retail sell-through and improved operating performance during the holiday season.
- The retailer benefited from winter weather and Black Friday demand, particularly in outerwear, seasonal goods and automotive categories.
- The company plans between $500 million and $550 million in capital expenditures in 2026 and authorized a $400 million share buyback program, signalling confidence in cash flow and capital allocation priorities.
Read the full transcript below:
ANDREW: Canadian stocks at a new record high today. And here’s an archetypal Canadian company, Canadian Tire, posting better-than-expected revenue, with sales driven by strong demand during the holidays. We’re joined by Dan Rohinton, portfolio manager at iA Global Asset Management. Dan, thanks very much indeed for joining us. So the company showing strength across the board, it seems, across all of its major chains.
DAN: Yeah, and we can say it’s a little bit stronger at Mark’s Work Wearhouse, where you get your steel-toed boots, and also more so for SportChek than it is for the core Canadian Tire stores itself, which was a beat versus expectations, but far less so compared to the other banners that they do have. And I think the other thing, Andy, was that losses and write-offs on the credit card, the Canadian Tire Financial Services business, were broadly speaking OK as well. So I think it’s just all those factors together. And let’s not forget that we’re talking about a company that was trading at 12 times earnings before they moved this morning. So the valuation was more constructive for these types of pretty strong results overall. So it’s bringing all those things together that led to the price performance we see today.
ANDREW: I guess bitter winter weather is good for Canadian Tire. It’s got people scrambling for boots and stuff like that.
DAN: Yeah, think of it as general merchandise, right, with an auto parts section and then other banners. So having that type of cyclical dynamic, like a really cold winter, definitely does play a role. But it is worth saying that over time — and I know we’re going to talk about Walmart in a little bit — the best way to think about Canadian Tire is it’s that general merchandise player that is seeing some pressure at the margin from more Walmarts, more Costcos opening up across Canada. So there is a competitor that does have scale purchasing power, along with Amazon, which maybe gets too much credit for Canadian e-commerce penetration. It’s not that it hasn’t been successful, but the real story of Canadian retail is definitely Walmart and Costco continuing to expand, and then Amazon following them as well.
ANDREW: Would you be a buyer of Canadian Tire? Maybe we’ll put up a 10-year chart for Canadian Tire. Would you be a buyer of this stock with new money right now, Dan?
DAN: Yeah, I think it’s a tough one, Andy, because I’d say in the context of gold prices, gold equities that have been really robust, financial services that have been really robust, I’d be OK with nibbling away. But I think it’s important to just take a step back and say, in a closed pond like Canada is, I would say yes, it might be worth the time. But looking out globally, I think there are more interesting opportunities than averaging into Canadian Tire, including in retail.
ANDREW: OK, let’s swing to Walmart. The company’s guidance was cautious. Investors weren’t thrilled.
DAN: Yeah, the best way to think about Walmart is it’s several factors at once. The first one is the e-commerce strategy and basically copying what Amazon has already proven to be successful. So basically a last-mile retail strategy, adding on advertising as a profit driver. We used to call that — or Canadian Tire would call that — trade spend, where you basically pay more to be eye level with the consumer as you’re walking down the aisle. That’s true in the digital world as well. It just shows up through the advertising dollars. So strong advertising business, decent retail sales, and they continue to see what I think is the most interesting story out of Walmart’s borders: they’re seeing market share growth among consumers with incomes greater than $100,000. So they’re actually benefiting from trade-down, as consumers in a higher-inflation environment are searching for value and finding it through Walmart.
I think I will say one thing, Andy, maybe just to end this long ramble of mine: at 45 times earnings for mid-single-digit revenue growth, inclusive of everything I just said, and EPS growth that’s slightly over double digits, it’s a pretty rich multiple. So I definitely think that Walmart has benefited significantly from the rotation that we’ve seen under the hood in the U.S. stock market to start the year, where technology has seen tons of pressure and investors have been hiding in companies where you can’t get disrupted by AI. Walmart has been anointed as one of the primary winners there. So at 45 times earnings, I am exceptionally cautious about where Walmart can go from here.
ANDREW: It’s interesting. I mean, the stock is trading near record highs, and it is up today as well. It got to a record last week. So certainly, investors like what they’re doing in e-commerce, et cetera.
DAN: Exactly. And it’s a good, safe place. It’s a safe harbour to hide in. There’s more certainty around it than around software companies and big cloud computing companies. So there are only a few places, like Walmart and Costco, that you can go to put real dollars to work. And that is what large pools of capital have been doing to start the year.
ANDREW: It’s interesting. For such a huge company, they’re an elephant that can dance. They now offer pre-owned Prada bags and Fender guitars, I think, on their online channel. So they are willing to adapt.
DAN: They’re taking the “everything store” model that Amazon had and cultivated and grew to the scale that it is today, and then they’ve effectively played that forward and are copying Amazon. So right now, in revenue, Amazon is a little bit bigger. But if you take out cloud computing, Walmart is still the big dog in the room, but that race is narrowing. So think of the U.S. retail and general merchandise retail market — and across many parts of the world, but especially in Canada and the United States — as Amazon as the leader in e-commerce, Walmart as the follower, and Costco as the primary player on the brick-and-mortar side. So in North America, it is a three-player race, and all three companies are taking market share from smaller firms, from handbags to grocery and everything in between. So that great evisceration of smaller retailers is still going on.
Yeah, and there’s one interesting story for Walmart’s e-commerce success. Things really do come full circle in the market. So Amazon put out of business a company called, I believe, Diapers.com back in the 2000 era. The CEO and founder of that company actually started Jet.com, which was the e-commerce brand that Walmart bought, and that’s what led to Walmart becoming successful in e-commerce almost a decade ago now. So we’re seeing, ironically, the same players cultivating and developing the same market, which is e-commerce growth across the world.
ANDREW: You mentioned that Canadian Tire wouldn’t be your first choice in retail. Are there any other more global retail names that have caught your attention lately, Dan?
DAN: Well, you know what’s interesting, Andy? I would say there were more to start the year. But I think where I’m more interested today is in technology. I think the disruption fears have been way overdone, and some of the Magnificent Seven stocks are a little too unjustified in their valuation on the downside. But to directly hit your question, where we are doing more work on the retail side is looking into companies that are potentially going to benefit even more from trade-down. So never say never on the U.S. dollar stores. If they can get their supply chains in order, they should also be the trickle-down beneficiaries and see the same things that Walmart is seeing. So I’d be a little bit cautious on the middle brands. But I think the trade-down beneficiaries might still be the place to be. We’re a little early in that research journey, so I don’t want to speak too conclusively on that, but that is where we’re leaning.
ANDREW: Dan, we better jump. Thank you very much indeed. Dan Rohinton, portfolio manager at iA Global Asset Management.
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This BNN Bloomberg summary and transcript of the Feb. 19, 2026 interview with Dan Rohinton are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
