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A Canadian Tire store is seen in North Vancouver on May 10, 2012.

Jonathan Hayward/The Canadian Press

Despite strong sales growth online and at its flagship Canadian Tire stores, retailer Canadian Tire Corp. Ltd. reported a loss in its second quarter, as the impact of store closings during COVID-19 affected performance.

The Toronto-based retailer reported a net loss attributable to shareholders of $20-million, or 33 cents a share, in the second quarter ended June 27, compared with earnings of $177.4-million, or $2.87 a share, in the same period last year.

Like many retailers, the company was forced to close its SportChek, Mark’s and Helly Hansen stores as a result of public-health measures during the pandemic. Canadian Tire stores in Ontario were also closed for most of April, representing 40 per cent of the company’s store footprint.

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Retail sales over all grew by 1.7 per cent in the quarter to nearly $4.4-billion, led by 20.3-per-cent growth at the flagship stores, and dragged down by sales declines of 24.9 per cent at SportCheck, 36.4 per cent declines at Mark’s and 46.4-per-cent declines at Gas+ locations. Excluding declines in petroleum sales, overall retail sales grew 9.3 per cent.

In April, demand for cleaning products and for “boredom busters” such as toys and games helped to drive growth at Canadian Tire stores. Demand for products to keep families entertained at home expanded in the warmer months to include inflatable pools, bicycles and products for gardening and barbecuing. Shopping behaviour also shifted, as customers bought more items each visit: average basket size rose by 34 per cent.

“Customers are now more than ever looking for a one-stop shopping experience,” chief executive Greg Hicks said on a conference call to discuss the earnings on Thursday, citing the “multicategory” product assortment as an advantage for the stores.

“We have an extremely relevant assortment around anything to do with the home,” Mr. Hicks said. “We continue to be surprised with the demand in some categories.”

However, the company’s revenue lagged retail sales, partly because its store franchisees cut back on product orders in response to the uncertainty created by the pandemic. Some categories saw sales demand in a single quarter that would typically be expected in an entire year, Mr. Hicks said, and the company’s shipments are still catching up. The company also faced disruptions in the global supply chain that made it difficult to meet demand for some items, which affected revenue as well.

While retail sales at stores grew, Canadian Tire’s revenue for the quarter fell by 14.2 per cent to approximately $3.2-billion. The company said revenue began to recover once stores were fully reopen, growing 24 per cent in June.

Store closings led many shoppers to turn to e-commerce channels. The company’s online sales grew 400 per cent to approximately $600-million, surpassing in one quarter Canadian Tire’s e-commerce sales for all of last year. The pandemic has accelerated the development of e-commerce by two to three years ahead of the company’s expectations, Mr. Hicks said.

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“Lots of scale came at us all at once,” he said.

The company is now working on improvements at the store level to cope with new shopping habits. Like many other retailers during store shutdowns, Canadian Tire stores quickly introduced curbside pickup. Roughly 60 stores have now introduced an option for customers to notify the store by text message when they arrive for a pickup, a service that is expanding. The company is also building more lockers in stores for faster pickups, as physical distancing in stores is expected to continue but customers may be less willing to wait in lineups for entry during the colder months.

The company’s expenses rose because of COVID-19, with $41.2-million in costs related to pay bonuses for front-line employees and increased safety measures.

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