Canadian Tire Corp. executives say their biggest concern regarding tariffs is the risk of heightened unemployment, rather than the effects of levies on retail prices, because only 15% of the company’s goods come from the U.S.
If the U.S. imposes a 25% tariff on imports from Canada and Canada responds in kind, “it’s going to have broader implications for retail demand and lead to write-offs at the bank unless there’s some government intervention,” Chief Executive Officer Greg Hicks said during the retailer’s fourth quarter earnings call Thursday morning.
Canadian Tire has hedged 80% of its U.S. dollar exposure for 2025. In the case of a trade war, Hicks said the company has alternative suppliers for all products that originate from the U.S. — and at least a quarter could be sourced within Canada. The company would have to look overseas, however, for auto parts.
“We’re reviewing products, we’re examining U.S. suppliers, exploring opportunities for Canadian partnerships,” Hicks said.
Tariffs would mean lower employment and slower economic growth, Hicks said, reducing consumer spending and causing weakness in the company’s credit card business. The threat has probably “substantially erased” any uptick in confidence from the Bank of Canada’s six interest-rate cuts, he added.
“We will monitor the economy and consumer demand over the course of the next hundred days before needing to make a call on our growth and buying assumptions for the fall-winter season,” Chief Financial Officer Gregory Craig said on the call.
Craig said he expects the federal government to mitigate the fallout of a tariff war, recalling how it sent stimulus checks to Canadians during the pandemic.
Canadian Tire reported earnings of C$4.07 per share on a normalized basis for the fourth quarter, missing the C$4.26 expected by analysts in a Bloomberg survey. Revenue rose 1.4% from last year, but was slightly lower than anticipated. Same-store sales grew by 1.1%, far slower than the 3.5% predicted by analysts. The financial services unit’s write-off rate rose to its highest level since 2012.
Shares were down 4.1% in Toronto as of 11:32 a.m.
—With assistance from Stephanie Hughes.