Canadian Tire Corp. plans to acquire more brands into its fold this year, the company said as its fourth-quarter results topped expectations.
“Smaller brand acquisitions offer us the opportunity to generate a lot of value,” said Allan MacDonald, executive vice-president of retail, during a conference call with analysts.
In January, the company completed transactions to acquire two new brands, he said. The company confirmed Wednesday its division INA International Ltd. acquired Sher-Wood Athletics Group’s global hockey trademarks and related inventory of hockey gear and hockey-licensed products for an undisclosed price.
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“As opportunities arise, we will be completing acquisitions,” MacDonald said, adding the company will set more aggressive targets and introduce more own brands to its banners.
The company is looking for companies that are not only relevant in the business Canadian Tire is in today, but also where it wants to take the business in the future.
Availability is a key factor, he said.
“When you sift through brands that are available for sale, that haven’t been sort of cut up and licenses you know divided by category or by country. There’s not as much out of there as we would like,” he said.
MacDonald said Canadian Tire’s done a good job building a framework for how to handle acquisitions.
“I’m really encouraged that we can pick up some velocity in here and go a little faster as the brands become available. And we’re working really hard to make that happen.”
His comments came as Canadian Tire reported its fourth-quarter profit and sales grew compared with a year ago during the crucial holiday shopping season.
Canadian Tire earned a profit attributable to shareholders of $275.7 million or $4.10 per diluted share, compared to $246.8 million or $3.46 per diluted share in the same quarter a year earlier.
Analysts on average had expected a profit of $3.80 per share and revenue of $3.75 billion, according to Thomson Reuters.
Actual revenue totalled $3.96 billion, up from $3.64 billion as same-store sales – a key retail metric for sales of existing stores – gained momentum across its banners.
Same-store sales at Canadian Tire were up 3.5 per cent, while its Mark’s clothing stores saw same-store sales gain 3.4 per cent. FGL Sports, which includes the Sport Chek banner, saw same-store sales increase 5.8 per cent.
“The favourable winter weather and the strong economic growth provided a welcome boost to our performance,” MacDonald said.
Analyst Irene Nattel said the company’s strong results are a “direct result of initiatives implemented by management around assortment, promotional activity and sourcing terms/efficiency initiatives.”
The company has invested hundreds of millions of dollars in innovation over the past few years, even as many other brick-and-mortar retailers struggle to compete with the rise of e-commerce.
That includes renovating existing stores to be more interactive and incorporating virtual reality for customers to test out how tires feel in different driving conditions.
