Canadian Tire, a leading retailer in Canada, has announced a decline in its second-quarter profit, along with lower-than-expected revenue. The company cites a softening in demand for consumer discretionary goods during this period.
During the second quarter, Canadian Tire reported a net income of 126.9 million Canadian dollars ($94.6 million), or C$1.76 per share. This is a decrease from the previous year’s figures of C$177.6 million and C$2.43 per share.
Normalized earnings, which provide an adjusted figure, dropped to C$3.08 per share from C$3.11 per share. Analysts, according to FactSet, had predicted a decline to C$3.05 per share.
Factors Contributing to the Decline
The decline in revenue can be attributed to both lower retail revenue and investments made by Canadian Tire in its business during the quarter. Revenue fell by 3.4%, amounting to C$4.26 billion, just below analyst forecasts of C$4.29 billion.
Comparable Sales Performance
In terms of consolidated comparable sales, Canadian Tire experienced modest growth of 0.1% during this period. However, this is notably lower compared to the stronger growth of 5% experienced in the same period last year.
Shifting Consumer Demand
According to Chief Executive Greg Hicks, consumer demand for discretionary goods softened, particularly in the latter half of the quarter, as inflation persisted and rate hikes continued. Canadians shifted their focus to more essential items within Canadian Tire’s multi-category assortment.
This report highlights the challenges faced by Canadian Tire in a changing consumer landscape. The company will need to adapt to shifting demands in order to remain competitive in the market.