Canadian Tire (TSX: CTC.A) is a Toronto-based company that provides a range of retail goods and services to domestic shoppers. Today, I want to examine the state of traditional retail, as it stands in the middle of the 2020s. Meanwhile, I want to discuss why this top retailer is a great long-term target. Let’s jump in.
How some top companies averted the retail apocalypse…
The so-called retail apocalypse refers to the mass closure of brick-and-mortar retail locations that occurred in the face of rapid digitization of the retail space. Companies that have found success in this arena have been able to effectively move into the digital shopping space while maintaining a strong brick-and-mortar footprint. Meanwhile, other top companies have been able to utilize technology to enhance the customer experience.
Walmart, the legendary United States retail chain, worked to automate parts of its supply chain while slashing the overall size of its brick-and-mortar footprint. Some companies have also introduced automated checkouts and even robots to provide cleaning services and even baseline customer service in store.
Here’s why investors should look at Canadian Tire in 2023
Shares of Canadian Tire have dropped 0.5% month over month as of early afternoon trading on May 10. The stock has achieved 20% growth so far in 2023. Investors who want to see more of its recent performance can play with the interactive price chart below.
This company is expected to unveil its first quarter (Q1) fiscal 2023 earnings before markets open tomorrow on May 11. There are good reasons to be optimistic ahead of its earnings release.
In Q4 fiscal 2022, the company posted consolidated retail sales growth of 1.2% with the Canadian Tire chain delivering comparable sales that were in line with its results in 2021. Meanwhile, Mark’s achieved its 10th straight quarter of comparable sales growth at 4.3%, and Helly Hanson reported retail revenue growth of 20.6%. This helped contribute to record diluted earnings per share of $9.09 in Q4 FY2022 — up 9% from Q4 2021.
For the full year, Canadian Tire delivered normalized diluted earnings per share of $18.75 — down from a record level of $18.91 in 2021. Retail revenue rose 9% compared to the prior year.
Canadian Tire: Why I’m buying this top retail stock today
In the month of May, the top Canadian retailer made some impressive strides ahead of its Q1 earnings release. On May 2, Canadian Tire increased its store footprint through an agreement to acquire 10 strategic real estate leases that were formerly held by Bed, Bath, and Beyond. That will enable the company to bolster its Mark’s and Pro Hockey Life (PHL) footprints. Meanwhile, on May 3, Canadian Tire and Petro-Canada announced a partnership between Triangle Rewards and Petro-Points that will further integrate its customer bases. Canadian Tire gas retail fuel sites will now be rebranded to Petro-Canada.
Shares of Canadian Tire currently possess a favourable price-to-earnings ratio of 10. This super retail stock offers a quarterly dividend of $1.725 per share. That represents a 3.9% yield.
