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The COVID-19 pandemic has reshaped the approach to e-commerce at Canadian Tire Corp. Ltd., as executives believe a surge in online spending portends longer-term changes to the retail business.

“We believe COVID-19 has permanently shifted the shopping behaviour of many,” president and chief executive Greg Hicks said on a conference call with analysts to discuss the company’s first-quarter earnings on Thursday. The company is now “going to pour gas on” an existing project to upgrade its e-commerce sites, he said.

Canadian Tire took an earnings hit owing to the effect of the pandemic on the global economy. On Thursday, the Toronto-based retailer reported a net loss attributable to shareholders of $13.3-million, or 22 cents a share, in the three months ended March 28, compared with a net profit attributable to shareholders of $69.7-million or $1.12 a share in the same period last year.

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While the company saw a decrease in revenue because of store shutdowns, it was also coping with soaring e-commerce demand that overwhelmed its website capacity.

"We’re dealing with a surge of 25 to 30 times demand, virtually overnight," Mr. Hicks said. "We certainly knew we were going to run into capacity issues with our site, but thought that we could grow our business two to three times before it was an issue," he added.

During the pandemic, the company has seen a 44-per-cent increase in e-commerce sales across all banners, and 80-per-cent growth for Canadian Tire. The flagship site saw average order volumes increase to more than 80,000 a day in April, compared with an average of 5,000 a day before COVID-19.

The company performed emergency upgrades to its site to address that problem, and is now rethinking an already-planned upgrade to a new e-commerce platform. It was initially intended to roll out to Sport Chek and Mark’s sites first, but now Canadian Tire’s online store will be the priority.

The new platform has more modern technology. The change later this year will allow for greater scale, Mr. Hicks said. Sport Chek and Mark’s will move to the new platform early next year.

As measures to contain the virus were put in place in March, Canadian Tire had to close its Sport Chek, Mark’s and Helly Hansen stores. On April 5, the company closed 203 Canadian Tire stores in Ontario, representing 40 per cent of its nationwide network.

In other provinces, the stores have reduced hours and increased cleaning procedures and staff pay. The Ontario Canadian Tire stores will reopen this weekend, and other banners with street-facing storefronts will be opening for curb-side pickup.

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As people were encouraged to stay home to help curb the spread of the disease, Canadian Tire saw an increase in purchases in categories that Mr. Hicks called “boredom busters,” including unexpected demand for high-ticket items such as bicycles, trampolines and treadmills.

Comparable sales were roughly flat at Canadian Tire, not including petroleum sales, and declined at all of the other company’s banners in the first three months of 2020 relative to the same period a year ago.

Comparable sales – an important retail metric that excludes the impact of store openings and closings – were down 1.8 per cent at Sport Chek and 4.5 per cent at Mark’s. In the same quarter last year, comparable sales grew 7.1 per cent at Canadian Tire stores, 3.4 per cent at Sport Chek and 4.9 per cent at Mark’s.

Canadian Tire also took a hit from declining petroleum sales, as more people stayed home and off the roads during the pandemic. Revenue at its gas bars declined 5.1 per cent in the quarter.

To maintain financial flexibility during the crisis, Canadian Tire paused share repurchases and secured an additional $650-million credit facility from four Canadian financial institutions. It has also continued to cut costs and delayed investments in certain projects.

Canadian Tire reported revenue of $2.85-billion in the first quarter, down 1.6 per cent from $2.9-billion in the same period last year.

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