Canadian Tire

Capital Management

Canadian Tire Corporation’s (CTC's) objectives when managing capital are ensuring sufficient liquidity to support its financial obligations and execute its operating and strategic plans; maintaining healthy liquidity reserves and access to capital; and minimizing the after-tax cost of capital while taking into consideration current and future industry, market and economic risks and conditions.

The current economic, operating and capital market environment has led to an increased emphasis on liquidity and capital management. Management is focused on ensuring sufficient liquidity, both through maintaining a strong balance sheet and ensuring access to capital. Management believes the Company’s multi-category assortment, healthy balance sheet, Triangle Rewards program, credit card value proposition, access to multiple sources of liquidity for all its businesses and the essential role it plays in communities across Canada position the Company well to manage through these unprecedented times.

CTC took aggressive action to ensure a strong cash position and financial flexibility during Q1 2020, including implementing a plan to reduce operating costs at the head office and corporate stores, reducing discretionary capital expenditures and working capital requirements across the Enterprise, and pausing share repurchases.

Canadian Tire Bank's Regulatory Environment

CTB manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions of Canada (“OSFI”). OSFI’s regulatory capital guidelines are based on the international Basel Committee on Banking Supervision framework entitled Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (“Basel III”), which came into effect in Canada on January 1, 2013, and measures capital in relation to credit, market and operational risks. The Bank has various capital policies and procedures and controls, including an Internal Capital Adequacy Assessment Process (“ICAAP”), which it utilizes to achieve its goals and objectives.

The Bank’s objectives include:

  • providing sufficient capital to maintain the confidence of investors and depositors; and
  • being an appropriately capitalized institution, as measured internally, defined by regulatory authorities and compared with the Bank’s peers.

As at March 31, 2020 and 2019, the Bank complied with all regulatory capital guidelines established by OSFI, its internal targets as determined by its ICAAP, and all financial covenants under its bank credit agreement.