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TORONTO -- Canadian Tire Corp. released quarterly earnings today that sent shock waves throughout the industry as the Canada’s biggest retailer of outdoor goods and operator of more than 250 gas stations, reported its biggest drop in almost seven years in Toronto trading, reported Bloomberg News.
On the heels of announcing that it cut its 2008 earnings forecast significantly, Canadian Tire reported its net income declined 20 percent to $93 million. The company blamed a slowing economy and unseasonably cold weather for suppressed revenue growth, reported Bloomberg.
"There may be some concerns about whether these guys have an issue with their ability to manage inventories well," Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis, told Bloomberg News. "We’ve never seen these things in the past. That is the most concerning thing that came out of it."
While 11 analysts surveyed by Bloomberg predicted an average of C$5.09 a share, the company reported a per-share profit for the year would be C$4.75 to C$5.05 excluding some costs because of lower earnings at its namesake and Mark's stores, where it had a one-time expense to adjust for excess inventory, reported Bloomberg.
"These guys got a little aggressive early in the year by projecting a hockey-stick kind of return in the back half, when the consumer would come back," Yarbrough told Bloomberg News. "That’s coming back to haunt them. They thought the Canadian economy would be OK, and now consumer spending has slowed."