Canadian Tire Reports Q1 Results/Names New President for Canadian Tire Retail

On May 6th, Canadian Tire Corp Ltd. reported a 0.7% rise in first-quarter comparable sales at its namesake stores, driven by a surge in online sales, even as its stores remained closed due to the coronavirus outbreak. However, overall Canadian Tire Corp. reported a loss in its latest quarter as sales and revenue fell due to the steps taken to slow the spread of COVID-19, including the temporary closure of its SportChek and Mark’s stores.

Q1 Financial Highlights

  • Consolidated retail sales decreased $75.7 million or 2.7% in the first quarter. Excluding Petroleum, consolidated retail sales were down 2.3% over the same period last year. 
  • Consolidated revenue decreased $46.1 million, or 1.6%. Excluding Petroleum, consolidated revenue decreased $24.9 million, or 1.0% in the quarter. 
  • Diluted EPS were $(0.22), normalized diluted EPS were $(0.13) compared to $1.12 in the prior year negatively impacted by the significant effect of the pandemic on the global economy. 
  • Retail segment revenue decreased 2.4%. Excluding Petroleum, retail segment revenue decreased 1.8%. 
  • Canadian Tire retail sales increased 2.2% and comparable sales were up 0.7%. This marks the 24th consecutive quarter of positive comparable sales growth
  • CTC dramatically accelerated its digital and eCommerce efforts across all banners in response to rapidly shifting customer behaviour  
  • eCommerce sales grew 44% in the quarter, led by close to 80% growth at CTR 
  • Implemented Curbside Pick Up nationally in all CTR stores, resulting in the majority of Click & Collect orders designated as Curbside Pick Up 
  • eCommerce daily average order volumes at CTR grew from 5k pre-COVID-19, to over 80k in April as website stability measures were implemented

“We believe COVID-19 has permanently shifted the shopping behaviour of many,” president and chief executive Greg Hicks said on a conference call with analysts to discuss the company’s first-quarter earnings. “To date we have seen a quantum leap in our eCommerce performance across all of our banners and we have accelerated our planned investments in our digital capabilities to meet our customers’ increased desire to shop online. I am very encouraged by early results in the second quarter, and I am confident that we will continue to successfully operate in this new normal and excel over the long-term,” continued Hicks. 

On May 14th, Canadian Tire announced that TJ Flood has been appointed president of Canadian Tire Retail. A 12-year veteran of Canadian Tire, he spent the last two years in the role of president of the company’s FGL Sports division. He succeeds Greg Hicks, who was named president and CEO of parent company Canadian Tire Corp.

Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Canadian Tire
Source: Hardlines
Source: Canadian Tire


Home Depot (HD) Q1 Earnings Miss Despite Strong Sales & Comps

Home Depot logoThe Home Depot, Inc. (HD) has posted first-quarter fiscal 2020, wherein earnings missed the Zacks Consensus Estimate, while sales beat the same. The top line benefited from strong interconnected presence, which helped adapt to changing customer preference during the coronavirus pandemic in late March. However, the bottom-line results reflected the impacts of higher costs to steer through the environment. Despite the robust top-line trends in the fiscal first quarter and strong initial results in the second quarter, the company suspended its previously outlined guidance for fiscal 2020, citing the unprecedented impacts of the pandemic.

Notably, the company incurred about $850 million of pre-tax expenses (or $640 million after-tax) in first-quarter fiscal 2020 related to actions taken to support associates during the pandemic. This resulted in an impact of 60 cents per share on earnings per share during the first quarter of fiscal 2020.

In the wake of the coronavirus pandemic in mid-March, the company implemented several actions to prioritize the safety of associates and provide enhanced benefits to them. Among these, the company implemented early store closures to ensure the sanitization of stores and replenishment of shelves. Further, it took steps like limiting customer traffic in stores and canceling high-traffic events like Spring Black Friday. Additionally, the company took to providing enhanced payments to hourly associates, including expanded paid time-off, additional paid time-off for older associates who are at high risk, weekly bonuses for store and distribution center workers, doubled overtime pay, and extended dependent care benefits. The actions led to an increase in operating expenses, which impacted the bottom line in the fiscal first quarter.

Shares of the home-improvement retailer declined 1.7% in the pre-market session, following the dismal first-quarter fiscal 2020 earnings. However, the Zacks Rank #3 (Hold) stock has rallied 12.3% year to date, outpacing the industry’s growth of 4.1%.

Q1 Highlights
Earnings of $2.08 per share declined 8.4% from $2.27 registered in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of $2.26. Results were mostly hurt by the higher costs incurred to reward store associates during the coronavirus pandemic, which more than offset strong top-line gains. Net sales rose 7.1% to $28,260 million from $26,381 million in the year-ago quarter. Sales benefited from the company’s robust and flexible interconnected infrastructure, which helped it quickly adapt to changing customer preferences amid the coronavirus pandemic. The company’s overall comps grew 6.4%, with a 7.5% improvement in the United States.

The Home Depot, Inc. Price, Consensus and EPS Surprise
In the reported quarter, comps were aided by an 11% rise in average ticket, offset by a 3.9% decline in customer transactions. Moreover, sales per square foot rose 7.2%. In dollar terms, gross profit increased 6.7% to $9,625 million from $9,017 million in the year-ago quarter, primarily driven by robust sales growth. However, gross profit margin contracted 13 basis points (bps) to 34.05%.

Operating income declined 8.9% to $3,276 million, while operating margin contracted 200 bps to 11.6%. The decline in operating margin resulted from soft gross margin as well as higher operating expenses in the quarter, including an 18% increase in SG&A expenses. The increase in SG&A expenses can be attributed to higher remunerations to staff to recognize their efforts amid the pandemic.

Balance Sheet and Cash Flow
Home Depot ended first-quarter fiscal 2020 with cash and cash equivalents of $8,696 million, long-term debt (excluding current maturities) of $31,622 million, and shareholders’ deficit of $3,490 million. In first-quarter fiscal 2020, it generated $5,737 million of net cash from operations.

In first-quarter fiscal 2020, the company paid out cash dividends of $1,611 million and repurchased shares worth $791 million. Concurrently, it declared the fiscal first-quarter dividend of $1.50 per share, which is payable Jun 18, 2020, to shareholders of record as of Jun 4.

Source: Nasdaq


Walmart Reports Q1 Earnings Beat, E-Commerce Sales Increase By 74%

Walmart Inc WMT 0.08% shares were trading higher premarket on may 19 after the retailer reported better-than-expected first-quarter EPS and sales results for fiscal year 2021. Walmart posted adjusted earnings per share of $1.18, beating the analyst consensus estimate of $1.17. This is a 4.42% increase over earnings of $1.13 per share from the same period last year.

The company reported quarterly sales of $134.6 billion, beating the analyst consensus estimate of $130.31 billion. This is a 8.61% increase over sales of $123.925 billion in the same period last year. Walmart said first-quarter U.S. comps sales increased by 10%, while e-commerce sales ripped higher by 74%. Walmart has withdrawn its fiscal year 2021 guidance.

“More than ever, the news this quarter is our amazing associates. They are rising to the challenge to serve our customers and our communities. I’m proud of how they’re adapting and performing. Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future,” CEO Doug McMillon said in a statement.

Source: Benzinga


Lowe’s Canadian Operations Underperforms US Counterpart as Lowe’s Beats Q1 Earnings and Revenue Estimates but Withdraws FY20 Outlook Amid COVID-19

Lowe’s Canadian operations, which include the Rona and Reno-Dept banners, continued to underperform those of the American network during the first quarter, as the effects of the COVID-19 pandemic were felt. Chief executive Marvin Ellison told analysts Wednesday that Canadian same-store sales — a key retail metric — were negative during the three-month period ended May 1. The extent of the decline wasn’t quantified. Ellison attributed the Canadian network’s performance to store closings and reduced hours ordered by governments to curb the spread of COVID-19.

Meanwhile, in the United States sales for stores open at least a year jumped 12.3 per cent due to strong demand for cleaning products, appliances such as refrigerators and freezers, and home improvement materials.

While reporting financial results for the first quarter on May 20, home improvement retailer Lowe’s Cos., Inc. (LOW) said it is withdrawing its previously communicated financial guidance for the full-year 2020, due to the limited visibility into future business trends in this unprecedented operating environment amid the COVID-19 outbreak.

“Our strong first quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model.  I am also pleased with our ability to pivot to serve increased online demand with Lowes.com sales increasing 80% in the quarter,” said Marvin Ellison, Lowe’s president and CEO.

For the first quarter, the company reported net earnings of $1.3 billion or $1.76 per share, higher than $1.0 billion or $1.31 per share in the prior-year quarter. Excluding items, adjusted net earnings for the quarter was $1.77 per share, compared to last year’s $1.22 per share. Lowe’s shares have lost about 2.4% since the beginning of the year versus the S&P 500’s decline of -9.5%.

Sales for the quarter grew to $19.7 billion from $17.7 billion last year, and comparable sales increased 11.2%. Comparable sales for the U.S. home improvement business increased 12.3%.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $1.31 per share on sales of $18.08 billion for the quarter. Analysts’ estimates typically exclude special items. During the quarter, the company also decided to suspend share repurchases, and does not expect to repurchase any more shares this year beyond what was executed in the first quarter. 

Source: Yahoo Finance
Source: Nasdaq
Source: The Star