Canadian Tire

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Canadian Tire Outlines Strategy for Growth Focused on 'Core' Business

April 07, 2010

*Strong Core Business and Top Line Growth will Drive Profitability and Improved Retail ROIC

*Plan Will Strengthen Brand and Improve Customer Experience

TORONTO, April 7 /CNW/ - Canadian Tire Corporation, Limited (CTC, CTC.a) today unveiled its strategy to generate growth over the next three-to-five years by focusing on its core retail business, exceeding customer expectations and driving efficiencies across the business. The plan includes the following financial aspirations:

-   Top line growth in Canadian Tire Retail between 3 and 5 percent per
    -   Consolidated operating earnings per share annual growth of 8 to
        10 percent;
    -   A return on invested capital of 10 percent for its retail operations;
    -   A return on credit card receivables of 4.5 to 5 percent.

This performance is expected to drive a total annual shareholder return of at least 10 to 12 percent.

"The strength of our core brand is at the heart of all of our growth strategies," said Stephen Wetmore, President and CEO, Canadian Tire Corporation. "All of our businesses have to be focused on serving one valuable customer as one great company - centred on the Canadian Tire retail business."

"We have invested billions of dollars in recent years building a world-class infrastructure and store network. We need to drive a greater return for our shareholders on those assets while significantly strengthening our brand and improving the consistency of customer service across the network. Our three-to-five year growth plan demonstrates these are achievable objectives and will generate excellent outcomes for both our shareholders and our customers."

Canadian Tire Retail

Canadian Tire has a sustainable competitive advantage that stems from its trusted brand, unique assortment, modern store network and global sourcing capabilities. It is the market leader in 17 of its 20 top selling categories and its resources are increasingly focused on categories, like backyard and exercise, which are expected to grow faster than the market rate. Other categories that drive traffic and increase trip frequency, such as pet care and household consumables, have an increased presence in store and are supported by Canada's most-read flyer program and promotions.

Strategic initiatives that will help drive sustainable growth include store concept renewal, improved store performance and customer experience. Looking forward, the Company will not need to expand its store network significantly to drive growth but will maximize the productivity of the existing retail footprint. The Smart store program is the primary focus for concept renewal and is delivering solid results through sales growth from increased traffic and basket size increases. Its racetrack floor plan includes more space for high growth and 'cornerstone' categories and helps customers find products more easily through better signage and more logical product adjacencies. The Canadian Tire Retail (CTR) Small Market store, which includes a Canadian Tire gas bar and Mark's wherever possible, allows CTR to enter incremental markets or replace select existing traditional stores.

For Canadian Tire, the process of enhancing the customer experience began by engaging Dealers through enterprise-wide initiatives to improve the consistency of the customer experience and help drive sales. The move to customer centric retailing (CCR) and the development of a new loyalty program is led by CTR and will greatly improve customer insight capabilities across the enterprise and will guide future growth. Canadian Tire has one of the most loyal customer bases of any retailer in Canada and its loyalty program will evolve to better serve their needs through targeted offers, promotions and value-added services.

Canadian Tire Automotive

The cornerstone of Canadian Tire's core business is automotive. It is a key differentiator and source of competitive advantage and, over the next five years, Canadian Tire will solidify its reputation in the aftermarket as the destination for all things automotive. The Company recently integrated its automotive retail, petroleum, PartSource and roadside assistance assets under a new President of Canadian Tire Automotive to focus its resources and capture a larger share of this growing market.

With a strong, national network of automotive assets that include national reach, the number one brand in the aftermarket and best-in-class marketing, Canadian Tire aspires to grow its overall automotive business at 4 to 6 percent per year over the next five years.

A core element of the strategy is to implement the Automotive Infrastructure initiative to deliver a much improved customer experience at the parts and service centres through broader inventory assortment, a faster supply chain and a better technology foundation. The Automotive Infrastructure project is expected to grow CTR sales of tires, parts and auto service labour. It will improve the consistency of the customer experience by giving staff the information and training they need to better meet the needs of customers.


Mark's has added critical mass to Canadian Tire's apparel offering and has grown to nearly $1 billion in sales since its acquisition.

Mark's currently leads the industrial apparel market with a 39 percent share. Mark's also holds a 9.3 percent share of men's casual wear and is now the seventh largest women's retailer in Canada with a share of over 3 percent. Notable about Mark's is that 80 percent of its sales come from its private label brands like Denver Hayes, Dakota, WindRiver, and Ispiri.

Mark's will reinforce the core Canadian Tire retail business through increased co-location, marketing synergies and contributing to new customer centric retailing initiatives. It will also grow its sales by continuing to expand into new sales channels and introducing new product innovations. Mark's will renew its brand moniker and store concept to appeal to a wider men's and women's casual audience with a refreshed in-store experience that highlights the merchandise and innovative products offered.

Canadian Tire Financial Services

The Financial Services business is focused on returning to its targeted level of return on receivables and will pursue growth in receivables and earnings while supporting the core Canadian Tire retail business.

Financial Services expects its return on receivables to increase from 3.6 percent in 2009 to its targeted level of 4.5 to 5 percent over the medium term. It anticipates this will be achievable despite the impacts of new government regulations, sales tax changes and costs associated with the issuance of chip and PIN-enabled credit cards.

Financial Services will focus on its core credit card business with aims of growing average balances, increasing the number of active accounts and supporting retail sales. Initiatives include targeted acquisition and retention of high value customers, selective balance growth programs and in-store financing plans including instant credit, instalment and deferred sales plans that will support both the Retail and Financial Services businesses.

In addition, Financial Services will investigate new opportunities for growth including new card issuance and warranty products that will enhance the Canadian Tire brand.


Going forward, management will apply the same reengineering and productivity methods that were used to develop advanced supply chain processes in other areas across Canadian Tire. Based on expected sales increases CTR has sufficient capacity to support sales growth until the end of 2015 without adding any distribution centres, which means that the supply chain's capital needs will be significantly lower over the next five years.


Canadian Tire ended 2009 in a strong financial position. The strategy will continue to drive performance through growth, operating efficiencies and managing financial flexibility. The Company will generate increasing cash flow by utilizing the current operating infrastructure to drive results without increasing capital operating expense ratios or expenditures from the current level of $280-$300 million per annum. In future, the Company will consider additional options for the use of free cash that will drive profitable shareholder growth.


This document contains forward-looking information that reflects management's current expectations related to matters such as expected future events, financial performance and operating results of the Company. All statements other than statements of historical facts included in this document, including statements regarding the Company's prospects, future plans, business strategy and expected financial position, aspirations, targets and growth rates, may constitute forward-looking information. The forward looking statements contained in this document are presented for the purposes of assisting our security holders and analysts in understanding our strategic priorities and objectives and current growth plan and may not be appropriate for other circumstances.

Forward-looking information includes, but is not limited to, statements concerning management's expectations relating to possible or assumed future results, our strategic goals and our priorities, our actions, the results of our actions and the economic and business outlook for us, for our categories, for each of our business segments and for the economy generally. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made.

By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's predictions, forecasts, projections, expectations and conclusions will not prove to be accurate, that the Company's assumptions may not be correct and that the Company's objectives, strategic goals and priorities will not be achieved. Although the Company believes that the predictions, forecasts, projections, expectations and conclusions reflected in the forward-looking information are based on information and assumptions which are current, reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's predictions, forecasts, projections, expectations and conclusions as set forth in such forward-looking information for a variety of reasons. Some of the factors - many of which are beyond our control and the effects of which can be difficult to predict - include (a) credit, market, currency, operational, liquidity and funding risks, including changes in interest rates or tax rates; (b) the ability of Canadian Tire to attract and retain quality employees, Dealers, Canadian Tire Petroleum agents and PartSource and Mark's Work Wearhouse store operators and franchisees; (c) the willingness of customers to shop at our stores or acquire our financial products and services; (d) our sales and those of our competitors; (e) risks and uncertainties relating to information management, technology, product safety, changes in law, competition, seasonality, commodity price and business disruption, consumer credit, changes in relationships with our suppliers and manufacturers, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by Canadian Tire, the cost of store network expansion and retrofits, securitization funding, and foreign currency; and (f) our share price. The key risks and uncertainties that could cause actual results or the material factors and assumptions applied in preparing forward-looking information to differ materially from predictions, forecasts, projections, expectations or conclusions are discussed in the "Risk Factors" section of our Annual Information Form for fiscal 2009 and in our 2009 Management's Discussion and Analysis. We caution that the foregoing list is not exhaustive of all possible factors.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof including assumptions about the Canadian economy, interest rates, foreign exchange rates, inflation rate, corporate tax rates, our financial arrangements with our dealers, agents and franchisees, our sales and those of our competitors, our relationships with our suppliers and manufacturers, our return on invested capital, our share price and annual shareholder return, our competitors and their business models, sales and margin, the growth of certain business categories and market segments, our productivity enhancements, our loyalty program, our attrition rate, our supply chain, investments in technology and process and the results of such investments, our product assortment and product innovation, our ability to attract and retain quality employees, Dealers, agents and franchisees, the cost of store network expansion and retrofits, our level of capital investment, our capital structure, our funding strategy and our cost management programs.

We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information. Statements that include forward-looking information do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.

For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the Company's public filings available at and at

The Company does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities laws.

Canadian Tire Corporation, Limited (TSX: CTC.a, CTC), Canadian Tire is one of Canada's most shopped general retailers with 479 stores across the country. Our core retail and automotive operation is strengthened by PartSource, an automotive parts speciality chain; Canadian Tire Petroleum, one of the country's largest independent retailers of gasoline; Mark's "Clothes That Work" is a leading retailer of men's, women's and work apparel; and, Canadian Tire Financial Services, which has issued over five million Canadian Tire MasterCard credit cards. More than 58,000 Canadians work across Canadian Tire's organization from coast-to-coast in the enterprise's retail, financial services and petroleum businesses.

Investor Conference Webcast: April 7, 2010, at 8 a.m.
    -   The live webcast and presentation materials will be accessible on the
        Investor Relations website at and will be archived for
        twelve months.

    -   The audio portion is also accessible by dial-in: 1-800-734-8592
        within Canada and U.S. or +1 416-359 1281 outside of Canada and U.S.
        Reservation Number: 21464829

%SEDAR: 00000534EF

For further information: Media: Amy Cole, (m) (416) 997-9825, (416) 544-7655,; Investors: Karen Meagher, (m) (416) 561-6843, (416) 480-8058,
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