The report on Canadian Tire is updated and rated Hold at $140. It’s Q4 earnings released last week were very disappointing.
Same-store sales were down 6.8% in Q4 And it appears that shipments to the Canadian Tire dealers were down double digits which suggests tat the dealers see continued weak sales ahead. Part of the weakness in same-store sales was due to the warm December weather. Unfortunately the mild winter has mostly continued in much of the country.
2023 earnings were also impacted by inefficiencies after a distribution center fire. Therse indirect impacts were not adjusted for. Interest expense has also risen. But overall it is hard to understand why adjusted earnings per share have declined by about 335 on average over the past three quarters.
Unless management can turn things around through significant cost cutting it looks like 2024 may not see much recovery in earnings if any.
Canadians are facing and have faced significant inflation in groceries, utilities and property tax and in some cases in interest expenses. It appears that discretionary spending has taken a noticeable hit.
Looking at these results I’m now a bit surprised that the shares did not decline after this earnings release (other than a temporary blip down on Thursday morning which was quickly recovered)