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Canada: Canadian Tire sets sights on retail heights

Canada: Canadian Tire sets sights on retail heights

Mayo 15, 2017

Autor/Fuente: Marina Strauss / Globe and Mail 👤Periodista: María Alejandra Lopez 🕔15.May 2017

 

Stephen Wetmore has set out to make Canadian Tire Corp. Ltd. the “undisputed” top retail brand in Canada within five years, even as its flagship chain struggles to make gains on the e-commerce front.

The chief executive officer of the Toronto-based retail giant acknowledged it has set a lofty goal for itself since he was unexpectedly reinstalled in the top job last summer after retiring from it about 18 months earlier.

While Canadian Tire has managed to survive big U.S. retail invasions, including discount heavyweight Wal-Mart Stores Inc., the Canadian retailer has brought back Mr. Wetmore to fight off emerging forces, counting on his savvy as a “transformational” leader at a time of unprecedented retail change, chairman Maureen Sabia told the annual meeting on Thursday.

“We are in the midst of a ‘retail revolution’ and companies are having to react quickly,” Mr. Wetmore added. “Digital devices are the starting point for information, entertainment, social engagement and, of course, commerce. Established retailers are facing difficult investment decisions.”

Canadian Tire is racing to bolster its online shopping and other digital and data analytics initiatives, pushing it to operate more nimbly to shore up its bottom line and offset heavy investments. Today, it faces growing competition from e-commerce titans, including U.S. powerhouse Amazon.com Inc., putting pressure on Mr. Wetmore and his team to come up with new strategies to compete.

While its FGL Sports division, including the Sport Chek chain, has led the digital way at the company, Canadian Tire is taking tentative steps in e-commerce, with plans by the end of the year to test home deliveries of online purchases. Currently, its namesake chain offers online shopping and pick-up of orders at its stores.

But introducing digital commerce is complicated at Canadian Tire because of the issue of divvying up the profits with its “dealers” or individual store owners.

To gain an edge, Canadian Tire is putting a bigger focus on private labels to help take on big brick-and-mortar and e-commerce rivals, allowing the retailer to stock merchandise that shoppers can’t find elsewhere – and, importantly, can’t find at a lower price.

In a further bid to cash in on its private labels, Canadian Tire is moving to sell its in-house brands internationally to other retailers, Mr. Wetmore said.

Also to shore up its private-label efforts, the company agreed this week to acquire owner of the Paderno kitchen-goods line to add to its portfolio of own-brands, which include Noma lights, Woods camping goods and Canvas home-decor line.

Its private-label sales of kitchen products currently make up just 8 per cent of its total revenue in that category, while over all at Canadian Tire, its own-brand business represents about one-third of sales, company executives said.

Still, the company is grappling with its goal to become resistant to unseasonable weather swings. In its crucial holiday period, it managed to generate strong sales despite a late winter, which delayed purchases of items such as shovels and snow blowers.

However, in its first quarter, which ended April 1, Canadian Tire felt the pinch of a late spring, which squeezed sales of items such as outdoor furniture and, at FGL Sports, running gear and sneakers.

Amid strong overall first-quarter results, Canadian Tire’s same-store sales at outlets open a year or more were relatively weak at its namesake and FGL Sports businesses. Those sales, which are considered an important retail measure, rose just 0.5 per cent at Canadian Tire and fell 2.7 per cent at FGL Sports – and dropped 4.3 per cent at Sport Chek.

The sales decline at FGL Sports was particularly surprising as it has performed strongly since Canadian Tire acquired it in 2011.

Duncan Fulton, president of FGL, said unseasonable weather hurt some key categories, especially winter boots and jackets, while a late spring squeezed running and other gear.

“We need to do a better job of making the business less purely weather dependent,” he told an analyst conference call later. “There’s always going to be a seasonal component to what we do.”

But the chain’s recent initiative to launch a separate women’s Sport Chek store – and later this year a children’s Sport Chek – is an example of a way to refrain from relying too heavily on seasonal weather, he said.

Meanwhile, in the company’s goal to become the country’s top retail brand, it will look, among other measures, at “net promoter” scores, which track customers’ willingness to recommend the retailer to others, Mr. Wetmore said in an interview.

In its first quarter, Canadian Tire’s profit rose to $107.9-million or $1.24 a share from $85.6-million or 90 cents a share a year earlier. Revenue grew 7.6 per cent to $2.75-billion. Excluding items, the company earned $1.24 a share, well above analysts’ average estimate of 95 cents a share, according to Thomson Reuters I/B/E/S.

Still, Canadian Tire’s class “A” shares fell almost 6 per cent to $156.39 Thursday on the Toronto Stock Exchange.

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