(Toronto) Canadian Tire Corporation laid off about 3% of its workforce in the fourth quarter as tougher economic conditions weigh on consumer spending habits.
Additionally, the retailer said Thursday that it will also not fill most of its current vacancies, resulting in an additional 3% reduction in the workforce.
The president and CEO of the Toronto retailer, which also owns the Sports Experts, l’Équipeur and Atmosphère brands, called the decision to cut jobs “difficult” and said it was made “with a heavy heart “.
“There is no question that the most difficult business decisions are the ones that impact your people,” Greg Hicks said in a conference call with analysts.
“At the same time, we know this is what is necessary to continue to execute on our strategy and ensure we are equipped to deliver on our commitments to our customers, employees and shareholders. »
Canadian Tire said it expects to record a charge of between $20.0 million and $25.0 million to its fourth quarter accounts in connection with this decision, while the resulting savings are expected to be approximately $50.0 million on a monthly basis. annualized.
The reductions come as Canadian Tire and other retailers find their customers are starting to struggle ahead of Black Friday and the typically busy holiday shopping season. High inflation and high interest rates create more incentive to hunt for deals or postpone purchases considered discretionary.
“Customers are abandoning higher-priced discretionary items and also reducing the number of items in their cart,” CFO Gregory Craig observed on the same conference call.
Much of the weakness Canadian Tire sees in discretionary spending comes from households with debt, particularly in Ontario and British Columbia.
That drop in spending, attributed to “debt-burdened” customers, accounted for 70 percent of the sales decline the company has seen recently, Hicks estimated.
L’Équipeur, however, saw its sales increase. The company took this resilience as a sign that customers were looking for more value and viewed the retailer’s prices as acceptable.
The company offered the outlook after posting an increase in its quarterly dividend and a loss for its most recent quarter. Its results were undermined by a one-time charge related to its agreement to buy back the 20% stake in Canadian Tire Financial Services that was held by Scotiabank.
Canadian Tire will now pay a quarterly dividend of $1.75 per share, an increase of 2.5 cents per share from the previous dividend.
The company’s net loss attributable to shareholders was $66.4 million, or $1.19 per share, for the quarter ended September 30, compared with a profit of $184.9 million, or $3.14 $ per share, for the same period last year.
These results included a charge of $328 million related to the Scotiabank transaction, partially offset by an insurance recovery of $131 million for a March fire at one of its distribution centers.
On a normalized basis, Canadian Tire posted earnings of $2.96 per share in the most recent quarter, compared to $3.34 per share for the same period last year.
Revenues totaled $4.25 billion, up from $4.23 billion in the same quarter last year, while consolidated sales at stores open at least a year declined 1.6%.
Analyst Irene Nattel of the Royal Bank said the figures showed that the company’s “operating segments are performing as expected, as consumer spending moderates and household financial distress increases.”