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The curbside pick up area at a Canadian Tire store in Toronto on Feb. 17, 2021.

Fred Lum/The Globe and Mail

Canadian Tire Corp. Ltd. has seen the e-commerce future. And executives believe much of it will involve bricks-and-mortar stores.

The retailer, which for years lagged in e-commerce trends, raced to keep up with online demand in 2020 during lockdowns related to the COVID-19 pandemic. While online sales still represent a small portion of Canadian Tire’s overall revenue, e-commerce is growing fast. On Thursday, the Toronto-based company reported that e-commerce sales reached $1.6-billion last year, 183-per-cent higher than in 2019 for all its store brands and 250-per-cent higher for the Canadian Tire chain.

But chief executive officer Greg Hicks believes that trend of customers opting for store pickup of online orders – whether inside stores or through curbside service – will continue beyond the pandemic.

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“The popularity of pickup services has challenged the notion of what customers want from e-commerce,” Mr. Hicks said on a conference call to discuss the company’s results on Thursday. “Sure, it seems a little odd that someone would get dressed up for winter – in the middle of a pandemic no less – and get into the car and go pick up the product at store … but that is exactly what’s happening. And it’s happening across the global retail industry.”

Using stores to help fill online orders allowed Canadian Tire to increase its e-commerce capacity faster than some others, in the face of COVID-era demand, Mr. Hicks said. He added that this combination of physical stores and e-commerce will be a focus of the company’s capital spending in the future.

“Today’s more global e-commerce retailers can offer consumers everything. So customers aren’t lacking any choice when it comes to products, or places to purchase them,” Mr. Hicks said. “However, I think our biggest learning through COVID is that customers are expecting more than product or even free delivery. … Although customers love shopping online, I think COVID has demonstrated that what they really want is control: control over how and where they receive their orders.”

Canadian Tire has benefited from a surge in demand for sporting goods, gardening supplies, home-improvement products and kitchenware during the COVID-19 pandemic. Anticipating that people would be particularly eager to decorate their homes for the holidays, the retailer doubled its inventory purchases for the Christmas season.

The company saw sales rise during the all-important holiday season, including in recreation products and toys.

Comparable sales at Canadian Tire stores grew 12.8 per cent in the fourth quarter, a record for the chain. Mark’s stores had comparable sales growth of 11.9 per cent and SportChek sales fell by 3 per cent, owing partly to temporary store closings and other public-health restrictions.

While customer demand has been high for many of the products that the company sells, like many retailers Canadian Tire is also contending with price inflation in the most popular categories, such as fitness equipment and bicycles. Shipping container shortages in Asia are also leading to delays and some inflationary pressure.

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The company is in the midst of a program designed to take $200-million in costs out of the business by 2022, and is still on track to meet that target, Mr. Hicks said on Thursday.

The company announced on Thursday that it has decided to close all 18 of its National Sports stores to reduce overlapping business in sporting goods.

Canadian Tire reported fourth-quarter revenue of $4.87-billion, up from $4.32-billion the prior year. Net income was $521.8-million, or $8.04 a share for the 14 weeks ended Jan. 2, 2021, compared with $365.9-million or $5.42 a share in the prior year. The period in 2020 included an extra week compared with the year before.

The company’s full-year revenue rose to $14.87-billion, compared with $14.53-billion in the prior year. Canadian Tire’s 2020 net income was $862.6-million or $12.35 a share, down slightly from $894.8-million or $12.60 a share the year before.

For the year, the company had $138-million in COVID-related costs, not including the effects of store closings on revenue.

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