Shoppers ‘more resilient’ in face of tariffs than Canadian Tire CEO expected

Shoppers come and go from a Canadian Tire store in Ottawa on Friday, Aug. 11, 2023. THE CANADIAN PRESS/Sean Kilpatrick

The tariff fight that has broken out between the U.S. and its trading partners doesn’t appear to be rankling Canadian Tire Corp. Ltd. customers as much as its CEO once expected.

Greg Hicks said shoppers across the Toronto-based company’s banners — Canadian Tire, SportChek, Party City, Mark’s and Pro Hockey Life — appear to be coping well with the higher duties he had worried would weigh heavily on spending.

“Despite low confidence levels, customers have been and remain more resilient than we anticipated,” he told analysts on a conference call Thursday, where he noted even tariff-riddled auto manufacturing communities are showing “no clear signs of softness.”

That resilience is also reflected in “healthy” spending across all income levels Canadian Tire tracks and contributed to the company seeing an eight per cent spike in spending on essentials and a one per cent rise in purchases of discretionary goods — the first increase in this area in three years.

Hicks’s rosier-than-expected outlook came as a surprise given he told analysts in February that he was worried the tariffs U.S. President Donald Trump was threatening could substantially erase signs of an economic rebound, if they caused shoppers to cut back on purchases.

Since then, Trump has made good on many of his threats, imposing tariffs on aluminum, steel and some auto products crossing the Canada-U.S. border.

About 15 per cent of the money Canadian Tire spends on acquiring or manufacturing products is tied to the U.S. and only a “manageable fraction of that is currently affected,” Hicks said.

However, that situation could change because Hicks said escalating tariffs lobbed between China and the U.S. are now “really starting to hit factories” in the Asian country, which produces a massive amount of the world’s goods.

To cope with all the global trade attacks, Canadian Tire has a “tariff task force” that has been seeking alternatives to U.S. goods, negotiating with vendors and managing margins to blunt the risk of price inflation for customers.

“With limited exposure today, we have visibility to potential impacts and a plan for the balance of the year should we need it,” Hicks said.

His remarks came shortly after Canadian Tire reported its first-quarter profit fell compared with a year ago as it was hit by restructuring costs.

The retailer’s net income attributable to shareholders from continuing operations amounted to $27.3 million or 49 cents per diluted share, down from $59.9 million or $1.08 per diluted share a year ago.

Its net income attributable to shareholders from discontinued operations totalled $9.9 million or 18 cents per diluted share in its latest quarter compared with $16.9 million or 30 cents per diluted share in the same quarter last year.

On a normalized basis, it earned $2.00 per diluted share from continuing operations, up from $1.08 per diluted share a year earlier.

Revenue for the quarter totalled $3.46 billion, up from $3.33 billion in the same period last year.

The results cover the period when Canadian Tire revealed its new True North strategy, which will see it spend $2 billion over four years to restructure the company for growth.

The strategy is meant to modernize its retail experience, uncover ways to use customer data to grow its businesses, develop technology to make the company more agile and boost the impact of its Triangle Rewards loyalty program.

A new partnership announced Thursday will allow Triangle Rewards and WestJet Rewards members to link their loyalty accounts and earn stacked rewards.

Because Hicks’s focus moving forward will remain on advancing True North, analysts asked him Thursday whether mergers and acquisitions will fit into the strategy.

Two sources familiar with processes underway to find buyers for Hudson’s Bay, its assets and its leases have said Canadian Tire made a bid for some of the intellectual property belonging to Canada’s oldest company, which filed for creditor protection in March. The Canadian Press has not named the sources because they were not authorized to speak about the matter.

“As a practice, we don’t comment on rumours and speculation like this,” Hicks told analysts.

He said his company was not contemplating an acquisition of the Bay’s entire operations because “that is just not a good fit for us right now, given all the things we have going on.”

He would not confirm whether his company made a play for Hudson’s Bay intellectual property, which could include its iconic Stripes motif, its Zellers line or housewares brands Gluckstein Home and Distinctly Home.

However, he said, “we have always considered attractive tuck-ins and brands and this time period is no different on that front.”

This report by The Canadian Press was first published May 8, 2025.

Tara Deschamps, The Canadian Press