Canadian Tire Corporation Unveils its $3.4 Billion Investment Strategy

At its Investor Day, Canadian Tire Corporation, Limited (CTC) announced a major $3.4 billion investment over four years to deliver an improved omnichannel customer experience. CTC’s strategic growth plan impacts multiple aspects of the business and builds upon the Company’s unparalleled brand trust and newly launched brand purpose: to Make Life in Canada Better. In conjunction with the event, the Company is announcing new long-term financial aspirations.

“Over the past two years, we have further strengthened our highly competitive, powerful market positioning and unrivalled understanding of the Canadian consumer. We are making strategic investments that will create better customer experiences, deeper customer connections, and drive long-term growth and value for our shareholders. Additionally, our investments in the communities we serve will create jobs and help drive local economies,” said Greg Hicks, President & Chief Executive Officer, Canadian Tire Corporation. “Through our strategy, we will continue to evolve from a collection of banners, brands and channels into one integrated Company – one in which all our assets render each other more valuable to create a truly differentiated customer experience.”

Long-Term Financial Aspirations

Canadian Tire Corporation expects to achieve the following by 2025:

• Consolidated comparable sales growth1 (excluding Petroleum) of more than 4%, averaged annually
• Retail Return on Invested Capital (ROIC)2 of 15%+ compared to ROIC of 13.6% in 2021
• Diluted EPS of $26.00+, more than double 2019 diluted EPS of $12.58, (2021 diluted EPS of $18.38, and normalized3 $18.91)

“We have clearly laid out our strategic growth plan, and we firmly believe that investments targeting organic growth in the right places represent the best use of capital,” said Gregory Craig, Executive Vice President & Chief Financial Officer, Canadian Tire Corporation. “Our focus on investing in the business will be coupled with our balanced approach to dividends and share buybacks which positions us to continue to generate attractive returns to shareholders over the longer-term.”

Strategic Growth Plan

Growing differentiated and innovative Owned Brands portfolio by ~$2 billion

• Building on its Owned Brands portfolio, which represents $5.7 billion in retail sales1, CTC will grow its consolidated Owned Brand penetration1 from ~38% to more than 43% by scaling up existing Owned Brands and introducing new products designed to make life in Canada better
• Acceleration of new product launches with over 12,000 new Owned Brand products introduced by 2025 across all banners, developed with insights from CTC’s Tested for Life in Canada product testers program and customer panel, one of the largest retail customer panels in North America
• Helly Hansen is executing on its growth strategy and expects to triple its business in Canada since acquisition, and grow market share in the United States and other select international markets
• Partnering to build and enhance select National Brands across the retail portfolio, including Levi’s, Petco and Reebok

Investing ~$2.2 billion to create a connected omnichannel customer experience

• Expanding Triangle Rewards to drive customer engagement and fuel growth across banners
  • Strengthening data-led personalized marketing capabilities with a world-class partnership network
  • National rollout of Triangle Select – a new premium annual fee-based membership program – to deliver an enhanced value proposition across CTC banners
  • Expanding CT Bank product offerings to include extension of existing Buy Now Pay Later (BNPL) product for financing member spend on travel and vacation expenses, and the introduction of Global Money Transfer on Triangle Mastercard with the ability to send money to over 100 countries around the world
  • Driving loyalty sales as a percent of retail sales4 from 58% to greater than 63% – growing the Company’s wealth of first party data
• ~$1.2 billion of CTC’s investment will be allocated to improving the connection of digital and physical channels and driving an enhanced customer experience
  • Rollout of its new store format “Concept Connect” to approximately 225 Canadian Tire stores
  • Introduction of new large format “Remarkable Retail” stores which are over 100,000 square feet, opening in Ottawa and Welland in 2022, with Calgary targeted for 2025
  • Improving speed and experience for same-day customer pick-up options, including text enabled Curbside Pickup and rollout of automated click & collect lockers
  • Accelerating digitization to create “connected stores”, including further use of electronic shelf labels, digital appointment scheduling, digital wayfinding, and an enhanced in-store mobile app experience through redemption of eCTM, including loyalty offer swapping
  • Driving inventory localization through market-specific, AI-generated store assortments
• Transforming online user experience across all banners with rollout of CTC’s One DigitalPlatform

Investing ~$675 million to strengthen supply chain fulfillment infrastructure and automation

• Adding 1.6 million sq ft of incremental warehouse space across the country:
  • Opening of a 1.3 million square foot state-of-the-art eCommerce fulfillment facility in the Greater Toronto Area
  • 322,000 sq ft expansion of Montreal distribution centre (DC)
  • Implementation of innovative robotics automated system in Calgary, Brampton and Montreal DCs
  • Continued expansion of capabilities in Western Canada, including development of Ashcroft Terminal
• Enhanced order fulfillment through a common single platform used by all CTC banners

Investing ~$500 million to modernize IT infrastructure and drive efficiency in how CTC operates

• Implementation of large-scale enterprise infrastructure in key areas of the business, including One Digital Platform, Transportation Management, and Human Capital Management
• Investment in a new Digital Core Banking platform
• Continued investment in data & analytics to power Triangle’s personalization efforts

As the Company prioritizes investments in its core retail businesses, operating capital expenditures5 will be in the range of $825 to $875 million in 2022, compared to the equivalent 2021 operating capital expenditures of $670 million. The Company’s growth strategy ensures that the balance sheet will continue to support returns to shareholders.

CTC is also maintaining its commitment to its operational efficiency program, after it achieved its targeted $200+ million in annualized savings ahead of its 2022 target. The Company continues to expect to deliver an additional $100 million in savings by the end of 2022. As CTC moves through the third year of the operational efficiency program, it is seeing more broad-based system transformation and efficiency initiatives that will enable it to continue to set the course for increased competitiveness in the future.

For the complete press release, click here.

About Canadian Tire Corporation

Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or “CTC”, is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark’s, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The more than 1,700 retail and gasoline outlets are supported and strengthened by CTC’s Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees and petroleum retailers. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.

Contact:

Jane Shaw – Media Contact – jane.shaw@cantire.com – (416) 480-8581

Source: Canadian Tire Corporation Limited