Canadian Tire’s Revenue Jumps in Busy Holiday Season as E-Commerce Sales Continues to Grow 

Canadian Tire Corporation, Limited has released its fourth quarter and full year results for the period ended January 2, 2021. Highlights include:

  • Fourth quarter diluted Earnings Per Share (EPS) was $7.97; normalized diluted EPS grew 51.9%
  • CTR comparable sales grew 12.8% and consolidated comparable sales grew 9.5% in the fourth quarter
  • Fourth quarter Retail segment normalized income before income taxes increased by 70.1%
  • Full year 2020 eCommerce sales across all retail banners soared to $1.6 billion, up 183%

“We achieved outstanding operational and financial results in 2020, driven by sustained strong growth in eCommerce and Owned Brands, and the addition of 1.8 million new customers to the Triangle Rewards program. Despite countless unprecedented challenges, our commitment to being there for Canadians was unwavering throughout the year,” said Greg Hicks, president and CEO, Canadian Tire Corporation.

Fourth Quarter Highlights 

  • Strong omni-channel performance in the quarter drove CTC’s comparable sales growth of 9.5%
  • CTR’s strong growth of 12.8% was driven by double digit growth in almost 70% of product categories and Owned Brands growth of 18%
  • Over 600,000 new members joined the Triangle program and contributed $168 million in sales
  • eCommerce sales in the quarter grew 142%, with penetration rate more than doubling 2019 levels
  • eCommerce sales surged across all retail banners, with CTR up 179%
  • Digital visits across retail banners grew almost 50% to over 230 million visits
  • Significant increase in EPS performance in the quarter was driven by topline sales and Dealer demand at CTR 
  • Diluted EPS was $7.97; normalized diluted EPS was $8.40, an increase of 51.9%
  • Normalized income before income taxes in the Retail segment significantly increased, by 70.1%
  • Retail revenue (excluding Petroleum) grew 20.1%, with CTR revenue growing by 28%
  • Normalized retail gross margin rate (excluding Petroleum) grew by 168 bps, driven primarily by CTR
  • Financial Services income before income taxes grew 5.6% in the quarter
  • Aging metrics continue to be favourable
  • Consistent with industry trends, growth in cardholder sales and receivables volume were lower
  • Due largely to the year over year decline in receivables, the allowance for loans receivable was reduced by $27 million in the quarter

Select Annual Highlights

  • CTC’s retail sales grew 11% (excluding Petroleum), primarily driven by 17.6% growth at CTR
  • eCommerce sales reached $1.6 billion, up $1 billion or 183%, with CTR delivering over 250% growth
  • Strong performance in the last half of 2020 resulted in full year normalized diluted EPS of $13.00, only slightly lower than 2019, despite the impact that the COVID-19 pandemic had on the operations and results in the first half of 2020
  • Retail segment normalized earnings grew 15.7% for the year
  • Cash and investments in the Retail segment grew by $196 million in the year, driven by higher retail earnings and lower capital expenditures
  • The Company ended the year with $2.0 billion in cash and short-term investments and $3.0 billion, $3.9 billion, and $298.9 million in available liquidity in its Retail, Financial Services and REIT segments, respectively

To view the full release, visit the Canadian Tire website. 

Source: Globe and Mail
Source: The Star
Source: Cision Newswiere
Source: Canadian Tire

Walmart Forecasts Full-Year Profit, U.S. Sales Above Expectations as Demand Holds Firm

Walmart muscled through rising inflation and snarled global supply chains to put up strong fourth quarter results. Net income reached $3.56 billion, or $1.28 per share in the quarter ended Jan. 31. Per-share earnings adjusted for one-time costs and benefits was $1.53, or 3 cents better than Wall Street expected, according to a survey by FactSet. Revenue rose 0.4% to $151.5 billion. In 2021, during the same period the company lost $2.9 billion due partly to costs related to the pandemic.

Same-store sales rose 5.6% at U.S. Walmart stores, down from a 9.2% jump in the third third quarter. Online growth has slowed from the pandemic-infused sprees early in 2021 and rose just 1%, down from 8% growth in the the fiscal third quarter, and a nearly 70% surge a year earlier.

CFRA Research analyst Arun Sundaram said that Walmart’s alternative online businesses including Walmart Connect, market place and financial services helped keep the retailer’s gross margins strong because they “are very asset light and margin creative to Walmart’s overall business.” CEO Doug McMillon said Walmart plans on adding 40,000 sellers on its Walmart marketplace this year and will expand its pickup and delivery capacity by more than a third.

Walmart is the first major retailer to report fourth quarter results and is considered a barometer of consumer spending given its vast reach. Retail sales in the U.S. jumped a surprisingly strong 3.8% from December to January, the Commerce Department reported, with robust spending almost across the board. It was the largest month-to-month jump in spending since March 2021 when Americans got a federal stimulus check worth $1,400.

To view the full release, visit the Walmart website. 

Source: Globe and Mail
Source: US News
Source: Walmart

Home Depot Beats Estimates, Retailer Says It Sees Sales Growth Ahead for 2022

Home Depot said that sales grew 11% in the fiscal fourth quarter and it projected growth in 2022, as contractors bought lumber, electrical equipment and other supplies for projects. While demand has eased from the height of the coronavirus pandemic, Home Depot is being challenged by inflation and supply chain bottlenecks. The company topped Wall Street’s expectations and said it anticipates earnings per share will grow at a low single-digit pace while sales trends will be “slightly positive” in the coming fiscal year.

Ted Decker, the company’s chief operating officer and its next CEO, said that home professionals are stripping shelves as soon as items hit them. “It’s not dissimilar to a storm environment,” he said.

In an interview with CNBC, Chief Financial Officer Richard McPhail said more people are investing in renovations or remodels as real estate values rise, and tackling significant projects because of the limited supply of available homes. He said manufacturers have struggled to keep up.

Here’s what the home improvement retailer reported compared with what Wall Street was expecting for the quarter ended Jan. 31, based on a survey of analysts by Refinitiv:

  • Earnings per share: $3.21 vs. $3.18 expected
  • Revenue: $35.72 billion $34.87 billion expected

Net income for the fiscal fourth quarter grew to $3.35 billion, or $3.21 per share, from $2.86 billion, or $2.65 per share, in 2021. Analysts surveyed by Refinitiv were expecting earnings per share of $3.18. Net sales rose to $35.72 billion, topping expectations of $34.87 billion. 

A pandemic winner

Home Depot has been a clear pandemic winner, thanks to Americans taking on do-it-yourself projects and redecorating their homes. Millennials, the country’s largest generation, are moving into their first homes or into bigger houses, even as some baby boomers, the second-largest generation, decide to age in place. That’s squeezing supply and driving real estate prices higher.

The country’s aging housing stock is causing more repair, maintenance and renovation projects, too — as is the additional wear-and-tear from Americans spending more time at home as they work remotely.

Some investors wonder if home improvement’s hot streak will cool as retailers lap a period of government stimulus, raise prices because of inflation, and compete with other spending priorities like dining out and vacations. Mortgage rates are also expected to rise, which may price out potential homebuyers or delay projects once they buy.

Home Depot’s forecast, while positive, reflects more conservative expectations for growth in the quarters ahead. Its outlook is roughly in line with analysts, who expect sales to rise 2.5% and earnings per share to increase 4.7% for the full year, according to Refinitiv.

In the fourth quarter, however, Home Depot continued to put up big numbers. Its same-store sales climbed 8.1%, higher than the 5% gain that analysts expected, according to StreetAccount. Its same-store sales in the U.S. increased 7.6%.

Sales growth was sharper among home professionals rather than do-it-yourself customers in the three-month period, Decker said. Big-ticket transactions, which are those over $1,000, were up about 18% compared with the year-ago period, he said.

Home Depot’s transactions fell in the quarter to 402.5 million, but the average ticket rose to $85.11. That’s compared with 416.8 million visits and an average ticket of $75.69 in the year-ago period. Sales per retail square foot also jumped to $571.79 from $528.01 in the year-ago period.

Decker said the increase in average ticket size was primarily due to inflation, as costs of building materials, copper and other commodities rose. He said Home Depot is coping with fast-changing prices. For instance, he said, in the three-month period framing lumber ranged in price from $585 to more than $1,200 per thousand board feet.

Getting pros to plan ahead

Sales for fiscal 2021 totaled $151.16 billion, an increase of 14% from 2021. Home Depot’s annual sales have grown more than $40 billion over the past two years.

To drive higher sales, executives said Home Depot will focus on making it easier for do-it-yourself shoppers to get personalized recommendations and find items online and in store aisles. The company also wants to become a place where home professionals buy a larger share of planned purchases for jobs instead of using stores for mostly unplanned or last-minute items.

The company has spent $1.2 billion on supply chain investments, including building a network of flatbed distribution centres that can handle the much bigger orders made by pros and deliver them directly to a construction site.

The company will have a new CEO soon. On March 1, Decker will succeed Craig Menear, who will continue to serve as chair of the board.

Source: CNBC
Source: Yahoo Finance
Source: MSM.COM

Lowe’s Posts Strong Q4 Results on Strong Housing Market

Lowe’s surpassed quarterly earnings expectations and raised its forecast for the year, as Americans buy, fix up and renovate homes in a tight real estate market. Aging houses, rising real estate values and generational trends are fuelling demand for home projects. 

Americans have been buying houses and upgrading to bigger ones during the coronavirus pandemic. That has depleted the supply of available homes and inspired some to hire contractors to redo a bathroom, replace a roof or take on other similar projects. Those dynamics have lifted sales for Lowe’s and competitor Home Depot. “When home prices go up, consumers have confidence to invest in their homes,” Lowe’s CEO Marvin Ellison said.

He said repair and maintenance projects will drive spending, even as prices rise from inflation and a mortgage rate hike looms. About half of the country’s single-family homes were built before 1980, according to data from the Federal Home Loan Mortgage Corp. 

Here’s what Lowe’s reported for the quarter ended Jan. 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.78 vs. $1.71 expected
  • Revenue: $21.34 billion vs. $20.90 billion expected

In the fourth quarter, Lowe’s net income rose to $1.21 billion, or $1.78 per share, from $978 million, or $1.32 per share, a year earlier. The results were above the $1.71 expected by analysts surveyed by Refinitiv. 

Sales climbed to $21.34 billion from $20.31 billion in 2021 and outpaced analysts’ expectations of $20.90 billion. Lowe’s same-store sales in the U.S. increased 5.1% in the fourth quarter, as customers made fewer trips to the company’s website and stores but spent more when they did.

Ellison said in a separate interview that in 2021 the mix of purchases looked different as shoppers bought cleaning products and supplies for simple do-it-yourself projects. Now, major projects are driving a larger share of purchases.

Transactions in the U.S. fell 4.4% in the fourth quarter compared with the same period in 2021. Ellison said sales of big-ticket items that cost at least $500 grew 15.6% in the quarter. The average ticket at U.S. stores and on Lowe’s website rose 9.5% to $95.66 in the fourth quarter, partially due to inflation.

Sales from home professionals jumped 23% in the three-month period, too. The pros tend to be steadier and more lucrative customers.

Lowe’s has historically drawn about 20% to 25% of its total sales from pros compared with Home Depot, which gets about half of its sales from them. Lowe’s has been chasing pros, however, with a new loyalty program and perks like reserved parking and free air for tires at its stores.

Pro sales are growing for another reason, too. As the omicron variant recedes and schedules get busier again, some people are hiring contractors rather than taking on DIY projects.

Like other retailers, Lowe’s is seeing costs rise and chasing inventory due to supply chain delays. Inflation drove about half of Lowe’s sales increase in the second half of the year, Ellison said. In some categories, such as appliances, he said Lowe’s has expanded its portfolio of merchandise, so shoppers have a wider variety if an item is out of stock.

Ellison said the retailer is working closely with suppliers, sourcing more products from the U.S. and importing inventory from other countries. It opened coastal holding distribution centers on the East and West coasts where it can store products from other parts of the globe rather than ordering just in time — an approach that can help retailers’ balance sheets, but make them vulnerable if ports are temporarily shuttered or congested.

He said Lowe’s already has its inventory in the U.S. as it gears up for spring, its busiest season. As the weather warms, it will ship merchandise from the coastal holding facilities to regional distribution centers and then stores.

The retailer said it expects earnings per share to range from $13.10 to $13.60 on revenue of $97 billion to $99 billion in fiscal 2022. It had previously forecast earnings per share of $12.94 on revenue of $97 billion for the year, which is a week longer than fiscal 2021. It said same-store sales will range from a decline of 1% to an increase of 1% for the full year.

To view the full release, visit the Lowe’s website. 

Source: AP News
Source: CNBC
Source: Lowe’s