Canadian Tire Reports Loss Despite 400% E-Commerce Surge
With a significant percentage of its stores closed for much of its second quarter of 2020, Canadian Tire Corporation saw e-commerce sales surge, but it wasn’t enough to offset a loss from store closures due to the pandemic.
Despite having 80% of its store network closed for the majority of the quarter, the retailer delivered retail sales growth at 9.3%, excluding Petroleum.
"This quarter we drove extraordinary retail sales growth, particularly at our core Canadian Tire Retail (CTR) banner, further reinforcing the relevancy of our unique, multi-category assortment to our customers," said Greg Hicks, president and CEO, Canadian Tire Corporation. "With a significant percentage of our store network closed for much of the quarter, customers turned to our online platforms and we saw e-commerce sales surge across all banners by 400%.”
E-commerce demand “exploded” in April and May, said Hicks, and in June the retailer saw new heightened levels relative to pre-COVID-19 activity. In the quarter, consolidated e-commerce business reached over $600 million in sales, up $500 million or 400%, with CTR, SportChek and Mark's up 500%, 300% and 350%, respectively.
“This quarter, we proved beyond a shadow of a doubt that we are relevant in an increasingly digital world,” he said. “We find ourselves having leapt forward about 2 to 3 years in our e-commerce and digital journey.”
Performance in the quarter was impacted by:
- Decrease in revenue, compared to last year, of $300 million, primarily at SportChek, Mark's and Helly Hansen banners due to store closures
- CTR revenue grew by 1.4%, however, it lagged retail sales growth. Revenue was negatively impacted by store closures in Ontario. In June, when full operations resumed, revenue grew 24% across the network
- Revenue at Financial Services decreased 5.9% in the quarter due to lower cardholder spend, and net allowance for expected credit losses increased by $27.4 million compared to last year
Yet, Canadian Tire saw a net loss attributable to shareholders of $20 million or 33 cents per share, compared with a $177.4-million profit or $2.87 per share in the same quarter the previous year. The company saw a decrease in revenue, compared to last year, of $300 million, primarily at SportChek, Mark's and Helly Hansen banners due to store closures.
“Across all of our banners, one thing is clear: the importance of customer experience,” noted Hicks. “Regardless of how and where our customers choose to shop, a frictionless experience is not simply valuable; it's critical.”
“We continue to work diligently on our digital platform upgrades,” he continued. “And we recently invested in software that helps us diagnose customer pain points along the path to purchase, enabling us to better prioritize our future investment in digital technology.”
The new software allows the retailer to understand the customer experience at almost every touchpoint in a customer's journey, allowing Canadian Tire to dissect and improve at the national level, the store level and all the way down to customer.
“By continuing to grow our data and analytics capabilities, we can clearly see where we stood up and exactly where we stumbled, enabling us to continue moving towards a seamless omnichannel customer experience,” he said. “Through data, we can act, and act quickly, on what we know about our customers, not on what we think we know. As we move forward, this will continue to reinforce our relevancy as we further our customer-centric focus across every touchpoint.”
Canadian Tire is still operating on a reduced capital spend budget for the year, deferring all nonessential projects, but said it is still executing on critical projects relating to strengthening its digital platform, operational efficiency initiatives and a new dealer ordering system.