Canadian Tire Corp. (TSX:CTC, TSX:CTC.a) is looking for a financial partner to share in the risk and reward for its $4 billion credit card portfolio, the company said while announcing its second quarter results.
“In recent years, we have been working to better integrate financial services with our retail operations,” president and CEO Stephen Wetmore said in a statement.
“As a result of that work, we are now well-positioned to explore an arrangement that would allow us to increase our financial flexibility while continuing to enjoy the substantial contributions of our financial services business.”
The company said this new direction would further reduce the financial risks the company faces funding its credit card assets.
The financial services branch of the company continued to be a strong contributor in the second quarter, thanks to new customers and improved write-off performance. The growth marked a 32.8 percent increase in income before tax, totalling $91 million, from financial services compared to the previous year.
The company had $4.31 billion in gross average accounts receivables (money owed by customers) in the second quarter.
Second Quarter Results
Canadian Tire had $3.02 billion in revenue in the second quarter, marking close to a $30 million increase compared to Q2 in the previous year. Net income rose 15.8 percent compared to the previous year, totalling $155 million. Diluted earnings per share were reported at $1.91, a 16.5 percent raise compared to last year.
The company attributes the increase in net income to the costs it incurred last year related to FGL Sports, acquired in 2011, as well as increased sales performance in the retail arm and the strong growth in the financial services business this year.
On Monday, FGL Sports, which operates a number of sporting goods franchises including Sport Chek, announced that it has completed the acquisition of Pro Hockey Life Sporting Goods Inc. for $85 million.
Pro Hockey Life operates 23 high-end hockey stores in five provinces across Canada, with an annual revenue of $95 million.