Canadian Tire say tariffs likely crater consumer confidence

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Canadian Tire Corp. Ltd. executives say budding consumer optimism has been mostly wiped out as tariff uncertainty continues to muddy the waters.

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The retail giant’s chief executive, Greg Hicks, said it looked like the economy was throwing up green shoots and consumer sentiment was starting to turn around coming out of the fourth quarter.

“Interest rate cuts have had a distinct positive psychological effect on consumers, and we believe an economic benefit may follow,” he said during an earnings call following the release of the company’s fourth-quarter results.

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Canada’s economy is vulnerable to interest rates, given that most mortgages reset at five-year intervals. The Bank of Canada cut interest rates to three per cent from five per cent starting last June.

“For our customers, rate relief is real relief,” Hicks said, adding the company was seeing “multiple green shoots.”

However, United States President Donald Trump’s tariff threats may have turned the tables on the retail giant.

“I’d be remiss if I didn’t caveat this optimism with the looming threat of tariffs,” Hicks said. “I suspect that the consumer confidence uptick I mentioned has now been substantially erased with tariff talk.”

He said that even though the threatened 25 per cent tariffs on exports to the U.S. are on pause until March, Canadian Tire is reviewing its U.S. suppliers and seeking alternatives to try to “insulate” customers from the “inevitable inflation pressure these tariffs would deliver.”

Chief financial officer Gregory Craig said the company will be tracking economic performance and consumer behaviour over the next 100 days before updating its growth outlook and buying plans for the fall and winter.

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Tariffs were also clouding Canadian Tire’s ability to identify its margin target, or “North Star,” for the year, he said.

“As we sit here today, without any news on tariffs, I would tell you that TJ (Flood, retail president) and the team are still struggling to get to that North Star for 2025,” Craig said.

Canadian Tire’s year-over-year revenue in the fourth quarter rose 1.5 per cent to $4.5 billion, missing analysts’ expectations for revenue of $4.58 billion. Shares were down 3.7 per cent in early trading on the S&P/TSX composite index on Thursday.

Hicks also tapped into some Canadian nationalism during the earnings call.

“I applaud the provincial and federal government’s unified response to the unjustified economic assault from our nation’s longest-standing ally and I’m hopeful for an effective resolution near term,” he said. “Longer term, we need a plan to build Canadian prosperity.”

• Email: gmvsuhanic@postmedia.com

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