Canadian Manufacturing

Canadian Tire believes it can navigate supply chain troubles as Q3 profit drops

The handle Canadian Tire has on its supply chain gave it the confidence to raise its quarterly dividend to $1.30 per share, up from $1.175 per share.

November 11, 2021  The Canadian Press

Global supply chain problems won’t leave Canadian Tire Corp. Ltd. shelves bare this holiday season, the retailer said on Nov. 11, as it detailed how it has successfully coped with issues stymying competitors.

As material and semiconductor shortages, COVID-19 factory shutdowns and backlogs at ports hamper many companies, Canadian Tire chief executive Greg Hicks said his company’s supply chain is ready for the challenge.

“The fact that we are neither a grocer nor a fast-fashion retailer means that in times like these we can be very flexible when it comes to holding inventory from quarter to quarter with a significantly lower risk of aging,” he told a conference call with financial analysts to discuss the company’s latest results.

“The non-perishable nature of products gives us flexibility around lead times and commercial terms and as the owner of significant distribution and storage capacity through our store network, corporate-owned real estate and the real estate investment trust, we can easily hold excess inventory in Canada.”

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The access to space and lack of worries about products rotting or falling out of fashion are giving Canadian Tire an edge in a growing fight to get items into customers hands in time for the holiday season.

Throughout the pandemic, retailers have warned consumers could be waiting longer for purchases to arrive or find few of their most desire products available because of port worker strikes and closures, slowdowns at factories and soaring shipping container costs.

The Drewry World Container Index showed the rate to move a container from Rotterdam to New York reached US$6,255 this week and surged by 211 per cent since last year. The Shanghai-Rotterdam route was even more expensive at US$13,801, up 498 per cent from last year.

The handle Canadian Tire has on its supply chain gave it the confidence to raise its quarterly dividend to $1.30 per share, up from $1.175 per share.

The increased payment to shareholders came as the company reported a profit attributable to shareholders of $243.7 million or $3.97 per diluted share for quarter ended Oct. 2, down from a profit of $296.3 million or $4.84 per diluted share in the same quarter last year.

Revenue totalled $3.91 billion, down from $3.99 billion a year earlier.

On a normalized basis, Canadian Tire says it earned $4.20 per diluted share, down from a normalized profit of $4.93 per diluted share in the same quarter last year.

Analysts on average had expected an adjusted profit of $4.30 per share and $3.97 billion in revenue, according to financial markets data firm Refinitiv.