Profits at the biggest retail company operating in Burnaby have dropped off at a steep rate, but the company expects to rebound due to shoring up its supply chain as the Christmas-buying spree arrives.
Canadian Tire Corp. Ltd. operates two SportChek stores in Burnaby at Metropolis at Metrotown and Lougheed Town Centre, as well as a Canadian Tire and Mark’s clothing store at the Market Crossing mall in South Burnaby.
The parent company has taken some swift moves to ensure its shelves aren’t empty at Christmas, including commandeering supply ships.
The handle Canadian Tire has on its supply chain gave it the confidence to raise its quarterly dividend to $1.30 per share, up from $1.175 per share.
The increased payment to shareholders came as the company reported a profit attributable to shareholders of $243.7 million or $3.97 per diluted share for quarter ended Oct. 2, down from a profit of $296.3 million or $4.84 per diluted share in the same quarter last year.
Revenue totalled $3.91 billion, also well down from $3.99 billion a year earlier.
As material and semiconductor shortages, COVID-19 factory shutdowns and backlogs at ports hamper many companies, Canadian Tire chief executive Greg Hicks said his company's supply chain is ready for the challenge.
"The fact that we are neither a grocer nor a fast-fashion retailer means that in times like these we can be very flexible when it comes to holding inventory from quarter to quarter with a significantly lower risk of aging," he told a conference call with financial analysts on Wednesday to discuss the company's latest results.
"The non-perishable nature of products gives us flexibility around lead times and commercial terms and as the owner of significant distribution and storage capacity through our store network, corporate-owned real estate and the real estate investment trust, we can easily hold excess inventory in Canada."
Throughout the pandemic, retailers have warned consumers could be waiting longer for purchases to arrive or find few of their most desire products available because of port worker strikes and closures, slowdowns at factories and soaring shipping container costs.
The Drewry World Container Index showed the rate to move a container from Rotterdam to New York reached US$6,255 this week and surged by 211 per cent since last year. The Shanghai-Rotterdam route was even more expensive at US$13,801, up 498 per cent from last year.
To cope, Canadian Tire chartered four ships to get its products — namely Christmas and winter items — to Canada in time for the fourth quarter.
It also turned its attention to parts of the supply chain it can exert more influence over.
For example, Hicks said more than one-third of the company's revenue comes from its own brands or products it has exclusive selling rights to like lights line Noma, Mastercraft tools and Denver Hayes apparel.
The arrangements mean "we are in control of when and where goods are produced," Hicks said, and gave the company the ability to "order more and earlier" to stave off shortages.
"We also have line of sight into the shipping from factories and a clear understanding where input shortages may require longer lead times, where cost inflation might lead to higher product costs, or in cases of longer term shortages and inflation, a product redesign," he said.
- With files from The Canadian Press
