(Reuters) - Canadian Tire (TSX:CTCa) Corp on Thursday reported a drop in quarterly revenue, as demand for sporting goods and home improvement items slowed at its retail stores.
Higher costs of food and gas, despite a drop in the annual inflation rate in Canada, have led to tepid customer-spend on higher-priced discretionary items such as sportswear and gardening equipment.
The Toronto-based retailer, which has also battled supply chain issues after a fire at its A.J. Billes distribution centre in March, said consumers have shifted to purchasing more essentials and discounted offerings at its stores.
Retail segment revenue fell 4.2% from a year ago, with the company saying that consumer spending softened in the latter part of the quarter. Retail sales declined at its Mark's and SportCheck stores as demand for athletic clothing and casual wear slowed.
Still, consolidated comparable sales grew 0.1% in the second quarter ended July 1, as sales at its loyalty program Triangle Rewards rose 80 basis points as a percentage of retail sales and outperformed non-member spend.
Revenue in the reported quarter fell 3.4% to C$4.26 billion ($3.18 billion), from C$4.40 billion ($3.28 billion) a year ago. The average of five analysts was C$4.26 billion, according to Refinitiv data.
Adjusted net income fell to C$206.5 million from C$218.2 million a year ago. The company reported adjusted earnings per share of C$3.08, while analysts expected C$3.09 per share.
The retailer said it was withdrawing its previously disclosed financial targets for 2022-2025 as it battles high inventory costs and strained consumer spend.
($1 = 1.3402 Canadian dollars)