Canadian Tire Corp. Ltd. says it's closing all National Sports stores to reduce overlap in the company's sporting goods assortment after an internal evaluation.
The decision to close all 18 of the retail stores across southern Ontario came as the company reported its fourth-quarter profit and revenue both rose significantly compared with a year ago.
"This has been a difficult decision, particularly due to its impact on people," Gregory Craig, the company's chief financial officer, told investors on a conference call Thursday.
"We're making every effort to place affected employees within our family of companies."
The company operates multiple brands including Canadian Tire, Mark's, SportChek, Atmosphere, Sports Experts and Pro Hockey Life.
Greg Hicks, president and CEO of Canadian Tire Corp., told investors that the company's fourth-quarter results were "nothing short of phenomenal" and that its full-year results were strong despite the challenges of operating during a pandemic.
Across the company's banners, consolidated comparable sales grew a "record breaking" 9.5 per cent in the fourth quarter while e-commerce sales grew 142 per cent, he said.
Canadian Tire same-store sales grew 12.8 per cent, with seasonal sales related to Christmas up 41 per cent in the quarter, he said, while e-commerce sales surged 179 per cent.
"While the first two quarters of the year were significantly impacted by the pandemic, the team drove outstanding results," Hicks said, noting that the company ended the year with "outstanding operational and financial results."
Still, the decision to close National Sports is part of Canadian Tire's strategy to increase efficiencies and focus on core assets, he said.
"It's a smaller banner for us, for sure, but the decision to close the business is a matter of focus," Hicks told investors. "There's always been a fair amount of overlap with this banner and both SportCheck and (Canadian Tire)."
In addition to a density of physical stores, he said there is an overlap between e-commerce capabilities as well.
An evaluation of the company's portfolio as part of its operational efficiency program with an "investor mindset" led to the decision to close the stores, Hicks said.
"This was a business that was receiving just enough capital for maintenance needs over the years, and just wasn't a core asset for us," he said, adding: "We just couldn't find a continued purpose."
National Sports, which carries sportswear, shoes and gear, was launched in 1968 as National Gym Clothing Ltd., according to its website. The company said stores will close between now and the end of June.
Meanwhile, Canadian Tire said its net income attributable to shareholders totalled $488.8 million or $7.97 per diluted share for the quarter ended Jan. 2.
The result was up from $334.1 million or $5.42 per diluted share in its fourth quarter a year earlier.
Revenue was $4.87 billion, up from $4.32 billion. On an adjusted basis, Canadian Tire said it earned $8.40 per diluted share, up from $5.53 a year earlier.
The company was expected to post $6.69 per share in adjusted profits on $4.83 billion of revenues, according to financial data firm Refinitiv.
Canadian Tire's strong fourth-quarter results underscore the company's "unique positioning for Canadian consumers," Irene Nattel, an RBC Dominion Securities Inc. analyst, said in a note to clients.
For the full-year, its net income attributable to shareholders totalled $751.8 million or $12.31 per diluted share on $14.87 billion of revenues, compared with $778.4 million or $12.58 per share on $14.53 billion of revenues in 2019.
Follow Brett Bundale on Twitter @bbundale.
This report by The Canadian Press was first published Feb. 18, 2021.
Companies in this story: (TSX:CTC.A)
Brett Bundale, The Canadian Press
