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The Toronto Raptors’ NBA championship has prompted an analyst to raise his profit outlook for Canadian Tire Corporation Ltd. as fans flock to the retailer’s stores to snap up team merchandise.
“Both SportChek and Canadian Tire will be positively impacted by the Raptors' successful win this season,” Peter Sklar, equity research analyst at BMO Capital Markets, said in a report released on Tuesday.
Sklar raised his estimate for Canadian Tire’s fiscal second-quarter earnings-per-share two per cent to $3.06, based on a 10 per cent annual increase in same-store-sales for the company’s sport-themed stores and a 4.5 per cent rise in Canadian Tire same-store-sales.
Sklar’s profit outlook comes after the Toronto Raptors took home the title of 2019 NBA Champions, marking the first time a Canadian NBA team has won the Larry O’Brien trophy.
Sklar highlighted how the Raptors’ historic win is driving fans across the country to Canadian Tire stores to buy official merchandise despite not being the obvious choice for sports apparel.
“[Canadian Tire] is not a well-known destination for licensed apparel, but rather could benefit from increased sales from other memorabilia such as flags, basketballs,” Sklar wrote in the report.
Sklar also compared the recent basketball championship with Canadian Tire’s boost in sales during the 2018 Winter Olympics, but calls the Raptors’ win a potential bigger driver of sales for the retailer.
“Of course, the Raptors winning the NBA Championship should be more impactful than the Olympics. When you search ‘Raptors merchandise’ in Google, both SportChek and Canadian Tire have ads advantageously placing their search results,” Sklar wrote.
Sklar has a Market Perform rating on Canadian Tire and a price target of $158 per share.