Canadian Tire releases first quarter earnings - Canadian Tire retail sales up 4.0%; Shipments up 2.0%; Quarterly dividend maintained at 21 cents



    TORONTO, May 14 /CNW/ - Canadian Tire Corporation, Limited (CTC, CTC.a)
released its first quarter results today. While CTC's retail sales were down
2.7% compared to the same period last year principally due to significantly
lower gas prices at Petroleum, sales at Canadian Tire Retail were up 4.0%
reflecting strong sales for much of the quarter and an increase in sales
across cornerstone categories and seasonal merchandise. Adjusted consolidated
net earnings for the quarter were down 10.9% compared to the first quarter
2008 principally due to higher distribution and operating expenses at Canadian
Tire Retail and increased write-offs and bankruptcies at Financial Services.
    "Our focus in the first quarter, which is our smallest in terms of retail
sales, was twofold: to continue our sales momentum in Canadian Tire Retail and
to effectively manage our credit card receivables," said Stephen Wetmore,
president and CEO, Canadian Tire. "On both accounts the Company has performed
well and results are in line with our expectations. As we head into to the
important second quarter, our businesses are well-positioned to continue to
offer customers the products and services they need during these challenging
times."

    
                                    -----------------------------------------
    Consolidated                          2009           2008(2)
    Highlights(1):                    1st Quarter     1st Quarter     Change
    -------------------------------------------------------------------------

    CTC retail sales                 $1.79 billion   $1.84 billion     (2.7)%
    Gross operating revenue          $1.76 billion   $1.83 billion     (3.7)%
    Adjusted earnings before income
     taxes (excludes non-operating
     gains and losses)(3)            $66.1 million   $82.4 million    (19.8)%
    Net earnings                     $49.7 million   $67.1 million    (25.9)%
    Adjusted net earnings (excludes
     non-operating gains and
     losses)(3)                      $49.6 million   $55.6 million    (10.9)%
    Basic earnings per share                 $0.61           $0.82    (26.0)%
    Adjusted basic earnings per share
     (excludes non-operating gains
     and losses)(3)                          $0.61           $0.68    (11.0)%

    (1) All dollar figures in this table are rounded.
    (2) The 2008 earnings figures have been restated for implementation, on a
        retrospective basis, of the CICA HB 3064 - Goodwill and Intangible
        Assets and the amendments to CICA HB 1000 - Financial Statement
        Concepts. Please refer to Note 2 in the Consolidated Financial
        Statements.
    (3) Non-GAAP measure. Please refer to section 15.0 of Management's
        Discussion and Analysis.


    Business Overview

    CANADIAN TIRE RETAIL
    ($ in millions)                        Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Retail sales(1)                       $1,267.9     $1,218.8          4.0%

    Same store sales(2) (year-over-year
     % change)                                 2.5%       (4.0)%

    Gross operating revenue               $1,099.3     $1,071.3          2.6%

    Net shipments (year-over-year
     % change)                                 2.0%       (0.2)%

    Earnings before income taxes and
     minority interest                       $32.8        $43.6       (24.8)%
    -------------------------------------------------------------------------
    Less adjustment for:
      Non-operating gains and losses(3)      (0.4)          3.9

      Former CEO retirement obligations        0.5          0.4
    -------------------------------------------------------------------------
    Adjusted earnings before income taxes
     and minority interest(4)                $32.7        $39.3       (16.7)%
    -------------------------------------------------------------------------
    (1) Includes sales from Canadian Tire stores, PartSource stores, and the
        labour portion of CTR's auto service sales.
    (2) Same store sales include sales from all stores that have been open
        for more than 53 weeks.
    (3) Includes fair market value adjustments and impairments on property
        and equipment.
    (4) Non-GAAP measure. Please refer to section 15.0 in Management's
        Discussion and Analysis.
    

    Canadian Tire Retail's sales increased 4.0% over the same quarter in 2008
reflecting strong sales for much of the quarter, particularly in the
automotive and leisure categories. Overall same store sales were up 2.5%
compared to the first quarter of 2008. Shipment levels for the quarter
experienced modest growth of 2.0% compared with the first quarter in 2008.
Canadian Tire Retail's first quarter adjusted earnings before taxes were $32.7
million, down $6.6 million compared to a year ago. Despite strong margins,
increased promotional expenses and expenses associated with the opening of the
new Eastern Canada Distribution Centre led to the earnings decline.
    Canadian Tire Retail opened three new stores in the quarter, one Small
Market store and two Smart stores, one of which contains a full-size Mark's
Work Wearhouse offering. While it is still early days, customer reaction to
both the Smart store and Small Market store has been very positive with both
new concepts performing above expectations.
    PartSource experienced double-digit sales growth and a strong same store
sales increase driven by strong commercial and retail sales and increased
sales to Canadian Tire Retail stores. PartSource opened one new hub store in
the quarter bringing the network total to 87 locations.

    
    CANADIAN TIRE PETROLEUM (Petroleum)

    ($ in millions)                        Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Sales volume (millions of litres)        408.8        413.8        (1.2)%
    Retail sales                            $353.4       $449.0       (21.3)%
    Gross operating revenue                 $321.9       $422.8       (23.9)%
    Earnings before income taxes              $6.0         $5.0         20.4%
    -------------------------------------------------------------------------
    Less adjustment for:
      Non-operating gains and losses(1)          -        (0.2)
    -------------------------------------------------------------------------
    Adjusted earnings before income taxes(2)  $6.0         $5.2         15.5%
    -------------------------------------------------------------------------
    (1) Includes asset impairment losses.
    (2) Non-GAAP measure. Please refer to section 15.0 in Management's
        Discussion and Analysis.
    

    While sales volume was relatively flat compared to the same quarter in
2008, Petroleum experienced declines of more than 20% in gross operating
revenues and retail sales due to the significant decrease in pump pricing
during the quarter, which were only partially offset by strong car wash and
convenience store sales.
    Despite the decrease in sales and revenues, Petroleum recorded pre-tax
petroleum earnings of $6.0 million compared to $5.0 million a year ago, based
on continued healthy margins and good expense management.
    Petroleum opened one new gas bar and refurbished three gas stations
during the quarter bringing the total number of gas bars in the network to
274.

    
    MARK'S WORK WEARHOUSE (Mark's)

    ($ in millions)                        Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Total retail sales(1)                   $168.5       $172.5        (2.3)%
    Same store sales (2) (year-over-year
     % change)                               (4.1)%       (7.0)%
    Gross operating revenue(3)              $147.1       $147.5        (0.3)%
    -------------------------------------------------------------------------
    Earnings (loss) before income taxes     $(4.9)       $(3.4)       (43.9)%
    -------------------------------------------------------------------------
    Less adjustment for:
     Non-operating gains and losses          (0.2)           -
    -------------------------------------------------------------------------
    Adjusted earnings (loss) before income
     taxes(4)                               $(4.7)       $(3.4)       (39.7)%
    -------------------------------------------------------------------------
    (1) Includes retail sales from corporate and franchise stores.
    (2) Mark's same store sales exclude new stores, stores not open for the
        full period in each year and store closures.
    (3) Gross operating revenue includes retail sales at corporate stores
        only.
    (4) Non-GAAP measure. Please refer to section 15.0 in Management's
        Discussion and Analysis.
    

    Mark's first quarter total retail sales were $168.5 million down 2.3%
from the $172.5 million recorded a year ago, as sales growth in Eastern Canada
was offset by significantly lower sales in Alberta and British Columbia. At
the category level, a decrease in men's casual wear and soft industrial
clothing sales particularly in Western Canada were partially offset by strong
ladies wear sales, which were up 7.8%.
    Adjusted pre-tax earnings were a loss of $4.7 million. Overall the gross
margin rate on merchandise sold was very strong, up 330 basis points as Mark's
focused on maintaining margin, rather than discounting simply to drive
unprofitable sales. Despite higher margin dollars, operating earnings were
down, however, due higher operating costs associated with the continued
expansion of the store network and backline infrastructure.
    During the quarter, Mark's opened three new stores and relocated two
stores bringing the total number of stores in the network to 374. One of the
new stores and one of the relocated stores were combo stores with Canadian
Tire Retail.

    
    CANADIAN TIRE FINANCIAL SERVICES (Financial Services)

    ($ in millions)                        Q1 2009   Q1 2008(1)       Change
    -------------------------------------------------------------------------
    Total managed portfolio end of
     period                               $3,979.1     $3,783.9          5.2%

    Gross operating revenue                 $217.3       $208.7          4.1%

    Earnings before income taxes             $32.5        $54.2       (40.1)%
    -------------------------------------------------------------------------
    Less adjustment for:

      Net effect of securitization             0.5         12.9
       activities(2)

      Non-operating gains and losses         (0.1)            -
    -------------------------------------------------------------------------
    Adjusted earnings before income
     taxes(3)                               $32.1         $41.3       (22.3)%
    -------------------------------------------------------------------------
    (1) 2008 figures have been restated for implementation, on a
        retrospective basis, of the CICA HB 3064 Goodwill and Intangible
        Assets and the amendments to CICA HB 1000- Financial Statement
        Concepts. Please refer to Note 2 in the Consolidated Financial
        Statements.
    (2) Includes initial gain/loss on the sale of loans receivable,
        amortization of servicing liability, change in securitization reserve
        and gain/loss on reinvestment.
    (3) Non-GAAP measure. Please refer to section 15.0 in Management's
        Discussion and Analysis.
    

    Financial Services' total managed portfolio of loans receivable was $4.0
billion at the end of the first quarter, a 5.2% increase over the $3.8 billion
portfolio at the end of the comparable 2008 period.
    Financial Services' gross operating revenue was $217.3 million in the
quarter, a 4.1% increase over the $208.7 recorded in the prior year.
    Adjusted pre-tax earnings for the quarter were $32.1 million, 22.3% lower
than the first quarter of 2008 due principally to higher bankruptcies and
increased allowances for future write-offs.
    The net write-off rate for the total managed portfolio on a rolling
12-month basis was 6.52%, compared to 5.83% in the comparable 2008 period.
Overall aging of past due accounts deteriorated by 24 basis points.
    Financial Services continues to take a number of actions to mitigate
credit risk exposure which may arise due to current economic conditions
including: reducing credit limits for cardholders; enhancing predictive
scorecards to identify high risk customer behaviour; and further enhancing
collection strategies.
    While bankruptcy costs increased, analysis of the Division's performance
versus national statistics indicates that Financial Services experienced lower
costs than would be expected due to its effective risk strategies.
    Financial Services continued its investment in the retail banking pilot
and at quarter-end had more than $233 million in retail deposits, $163 million
in mortgages and approximately $1.3 billion in broker deposits. The average
term of maturity for the broker deposits is 30 months and total costs,
including commissions and the cost of liquidity reserves, are now below 5%.
Additional funding for Financial Services is being provided through retail
high rate savings, retail GIC's and Glacier commercial paper programs.

    FUNDING UPDATE

    At the CTC level, total committed bank lines remain in excess of $1.2
billion and negotiations to extend the term on $775 million of these lines for
two years are now in the final stages of completion.
    Management remains confident that given the various funding sources
available, particularly for Financial Services, the Corporation has more than
sufficient cost-effective funding to support its businesses for the
foreseeable future.

    QUARTERLY DIVIDEND

    Canadian Tire Corporation has declared a quarterly dividend of $0.21 per
share on each Common and Class A Non-Voting share. The dividend is payable
September 1, 2009 to Common and Class A shareholders of record as of July 31,
2009. The dividend is considered an "eligible dividend" for tax purposes.

    FORWARD-LOOKING STATEMENTS

    This disclosure contains statements that are forward-looking. Actual
results or events may differ materially from those forecasted in this
disclosure because of the risks and uncertainties associated with Canadian
Tire's business and the general economic environment. Risks and uncertainties
are disclosed in other public filings by the Company, such as Management's
Discussion and Analysis ("the MD&A") and the 2008 Financial Report and
include, but are not limited to: changes in interest, currency exchange and
tax rates; the ability of Canadian Tire to attract and retain quality
employees, Associate Dealers, Petroleum agents and PartSource and Mark's Work
Wearhouse store operators and franchisees; and the willingness of customers to
purchase the Company's merchandise, financial products and services.
    Risk factors associated with the assumptions that underlie Canadian
Tire's expected performance in 2009 that have the potential to affect the
operating performance and financial results of the Company's divisions are
outlined in Section 11.0 of the MD&A.

    REVIEW BY BOARD OF DIRECTORS

    The Canadian Tire Board of Directors, on the recommendation of its Audit
Committee, has approved the contents of this disclosure.

    CONFERENCE CALL

    Canadian Tire will conduct a conference call to discuss information
included in this news release and related matters at 3:30 p.m. EDT on
Thursday, May 14th, 2008. The conference call will be available simultaneously
and in its entirety to all interested investors and the news media through a
webcast at http://corp.canadiantire.ca/EN/investors, and will be available
through replay at this website for 12 months.

    Canadian Tire Corporation, Limited (TSX: CTC.a, CTC), operates more than
1,200 general merchandise and apparel retail stores and gas stations in an
inter-related network of businesses engaged in retail, financial services and
petroleum. Canadian Tire Retail, Canada's most shopped general merchandise
retailer, with 476 stores operated by Dealers across Canada offers a unique
mix of products and services through three specialty categories in which the
organization is the market leader - Automotive, Sports and Leisure, and Home
Products. www.canadiantire.ca offers Canadians the opportunity to research
more than 25,000 products online. PartSource is an automotive parts specialty
chain with 87 stores designed to meet the needs of purchasers of automotive
parts - professional automotive installers and serious do-it-yourselfers.
Canadian Tire Petroleum is one of the country's largest and most productive
independent retailers of gasoline, operating 274 gas bars, 267 convenience
stores and kiosks, and 74 car washes. Mark's Work Wearhouse is one of the
country's leading apparel retailers operating 374 stores in Canada. Under the
Clothes that Work(TM) marketing strategy, Mark's sells apparel and footwear in
work, work-related, casual and active-wear categories, as well as health-care
and business-to-business apparel. www.marks.com offers Canadians the
opportunity to shop for Mark's products online. Canadian Tire Financial
Services has issued over five million Canadian Tire MasterCard credit cards
and also markets related financial products and services for retail and
petroleum customers. Canadians can also access Financial Services online at
www.ctfs.com. More than 57,000 Canadians work across Canadian Tire's
organization from coast-to-coast in the enterprise's retail, financial
services, and petroleum businesses.

    
    Management's discussion and analysis (MD&A)
    -------------------------------------------------------------------------
    

    Introduction

    This Management's Discussion and Analysis (MD&A) provides management's
perspective on our Company, our performance and our strategy for the future.

    Definitions

    In this document, the terms "we", "us", "our", "Company" and "Canadian
Tire" refer to Canadian Tire Corporation, Limited and its business units and
subsidiaries. For commonly used terminology (such as retail sales and same
store sales), see section 5.3 (Business segment performance) and our Glossary
of Terms (pages 93 to 95) in our 2008 Financial Report, which can be found
online on SEDAR's website at www.sedar.com and our Canadian Tire website in
our Investor Relations section at http://corp.canadiantire.ca/en/investors.

    Review and approval by the Board of Directors

    The Board of Directors, on the recommendation of its Audit Committee,
approved the contents of this MD&A on May 14, 2009.

    Quarterly and annual comparisons in this MD&A

    Unless otherwise indicated, all comparisons of results for the first
quarter (13 weeks ended April 4, 2009) are against results for the first
quarter of 2008 (13 weeks ended March 29, 2008).

    Restated figures

    Certain of the prior period's figures have been reclassified or restated
to conform to the current year's presentation or to be in accordance with the
adoption of the Canadian Institute of Chartered Accountants (CICA) new
accounting standards. See section 14.1 and 14.2 of this MD&A and notes 2 and
16 in the Notes to the Consolidated Financial Statements for further
information.

    Accounting estimates and assumptions

    The preparation of consolidated financial statements that conform with
Canadian generally accepted accounting principles (GAAP) requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent liabilities at the date of the
Consolidated Financial Statements and the reported amounts of revenue and
expenses during the reporting period. See section 12.0 in this MD&A for
further information.

    Forward-looking statements

    This MD&A contains statements that are forward-looking. Actual results or
events may differ materially from those forecasted in this disclosure because
of the risks and uncertainties associated with Canadian Tire's business and
the general economic environment. See section 17.0 for additional important
information and a caution on the use of forward-looking information. This is
especially important in view of the current uncertain economic environment.
    We cannot provide any assurance that forecasted financial or operational
performance will actually be achieved, or if it is, that it will result in an
increase in the price of Canadian Tire shares.

    1.0 Our Company

    1.1 Overview of the business

    Canadian Tire has been in business for over 85 years, offering everyday
products and services to Canadians through its growing network of interrelated
businesses. Canadian Tire, our Dealers, store operators, franchisees and
Petroleum agents operate more than 1,200 general merchandise and apparel
retail stores and gas bars. The Canadian Tire Financial Services(R) (Financial
Services) division of the Company also offers a variety of financial services
to Canadians, primarily its proprietary Options(R) MasterCard(R), personal
loans, lines of credit, insurance and warranty products, guaranteed investment
certificates (GICs) offered through third-party brokers, and a retail banking
pilot offering products to customers in certain test markets.
    Canadian Tire's four main businesses are described below.

    Canadian Tire Retail (CTR) is Canada's most shopped general merchandise
retailer with a network of 476 Canadian Tire stores that are operated by
Dealers, who are independent business owners. Dealers buy merchandise from the
Company and sell it to consumers in Canadian Tire stores. CTR also includes
our online distribution channel and PartSource. PartSource is a chain of 87
specialty automotive hard parts stores that cater to serious
"do-it-yourselfers" and professional installers of automotive parts. The
PartSource network consists of 31 franchise stores and 56 corporate stores.

    Mark's Work Wearhouse (Mark's) is one of Canada's leading clothing and
footwear retailers, operating 374 stores nationwide, including 331 corporate
and 43 franchise stores that offer men's wear, women's wear and industrial
wear. Mark's operates under the banner "Mark's", and in Quebec,
"L'Equipeur(R)". Mark's also conducts a business-to-business operation under
the name "Imagewear, a Division of Mark's Work Wearhouse(TM)".

    Canadian Tire Petroleum (Petroleum) is one of Canada's largest
independent retailers of gasoline with a network of 274 gas bars, including
267 convenience stores and kiosks, 74 car washes, 13 Pit Stops and 86 propane
stations. The majority of Petroleum's sites are co-located with Canadian Tire
stores as a strategy to attract customers to Canadian Tire stores.
Substantially all of Petroleum's sites are operated by agents.

    Canadian Tire Financial Services (Financial Services) markets a range of
Canadian Tire-branded credit cards, including the Canadian Tire Options
MasterCard and Gas Advantage(R) MasterCard. Financial Services also markets
personal loans, lines of credit, insurance and warranty products and an
emergency roadside assistance service called Canadian Tire Roadside
Assistance(R). Canadian Tire Bank(R) (CTB), a wholly-owned subsidiary, is a
federally regulated bank that manages and finances Canadian Tire's consumer
MasterCard and retail credit card portfolios, the personal loan and line of
credit portfolios and is the issuer of GIC's offered through third-party
brokers. CTB also offers high-interest savings accounts, retail GICs and
residential mortgages as well as the Canadian Tire One-and-Only(TM) account,
which consolidates customers' chequing, savings, loans and mortgage loan
balances into one account, in three pilot markets.

    
    1.2 Store network at a glance

                                                        April 4,    March 29,
    Number of stores and retail square footage             2009         2008
    -------------------------------------------------------------------------
    Consolidated store count
      CTR retail stores(1)                                  476          473
      PartSource stores                                      87           74
      Mark's retail stores(1)                               374          360
      Petroleum gas bar locations                           274          266
    -------------------------------------------------------------------------
    Total stores                                          1,211        1,173
    Consolidated retail square footage (in millions)
      CTR                                                  18.8         17.8
      PartSource                                            0.3          0.3
      Mark's                                                3.2          3.0
    -------------------------------------------------------------------------
    Total retail square footage(2)                         22.3         21.1
    -------------------------------------------------------------------------
    (1) Store count numbers reflect individual selling locations; therefore,
        both CTR and Mark's totals include stores that are co-located.
    (2) The average retail square footage for Petroleum's convenience stores
        was 455 square feet per store in Q1 2009 (400 square feet per store
        in Q1 2008). It has not been included in the total above.

    1.3 Business unit performance at a glance

    (year-over-year percentage change)                  Q1 2009      Q1 2008
    -------------------------------------------------------------------------
    CTR retail sales(1)                                    4.0%       (1.9)%
    CTR gross operating revenue                            2.6%         0.0%
    CTR net shipments                                      2.0%       (0.2)%
    Mark's retail sales(2)                               (2.3)%       (3.2)%
    Petroleum retail sales                              (21.3)%        16.5%
    Petroleum gasoline volume (litres)                   (1.2)%       (0.4)%
    Financial Services' credit card sales                  4.5%         7.3%
    Financial Services' gross average receivables          4.6%         8.9%
    -------------------------------------------------------------------------
    (1) Includes sales from Canadian Tire stores, PartSource stores and the
        labour portion of CTR's auto service sales.
    (2) Includes retail sales from Mark's corporate and franchise stores.
    

    2.0 Our Strategic Plan

    2.1 Rolling Five-Year Strategic Plan to 2013 (2013 Plan)

    The 2013 Plan outlines our strategy to build Canadian Tire through a
continued focus on growth and productivity throughout the Plan period. The key
growth initiatives of the 2013 Plan include network expansion across all of
our retail businesses (CTR and PartSource, Petroleum and Mark's), store
concept renewals and the continued evolution of products and services at
Financial Services. Key productivity initiatives include continued upgrading
of our automotive supply chain, renewing our technology infrastructure and
streamlining our organizational design.
    Specific objectives related to these programs are included in section 3.3
of this MD&A and section 4.0 of the MD&A contained in the 2008 Financial
Report.

    2.2 Financial aspirations

    The 2013 Plan includes financial aspirations for the Company for the
five-year period ending in December 2013. In light of the credit market
disruption experienced since August 2007 and the subsequent economic downturn,
management is currently re-assessing its long-term financial aspirations in
the context of its annual review of our Strategic Plan.

    3.0 Our performance in 2009

    3.1 Consolidated financial results

    
    ($ in millions except per share
     amounts)                              Q1 2009    Q1 2008(1)      Change
    -------------------------------------------------------------------------
    Retail sales(2)                      $ 1,789.8    $ 1,840.3       (2.7)%
    Gross operating revenue                1,758.1      1,825.3       (3.7)%
    EBITDA(3)                                156.1        174.5      (10.5)%
    Earnings before income taxes              66.4         99.4      (33.3)%
    Effective tax rate                       25.1%        32.5%
    Net earnings                         $    49.7    $    67.1      (25.9)%
    Basic earnings per share             $    0.61    $    0.82      (26.0)%
    Adjusted basic earnings per share(3) $    0.61    $    0.68      (11.0)%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2008 figures have been restated for the implementation, on a
        retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets
        and the amendments to CICA HB 1000 - Financial Statement Concepts.
        See section 14.1 and 14.2 for additional information.
    (2) Represents retail sales at CTR (which includes PartSource), Mark's
        corporate and franchise stores and Petroleum's sites.
    (3) See section 15.0 for non-GAAP measures.
    

    Consolidated gross operating revenue

    Gross operating revenue declined 3.7 percent from the prior year
primarily as a result of a 23.9% decline in Petroleum's revenue, due to lower
pump prices compared with the first quarter of 2008. This was partly offset by
modest growth in CTR (shipments to Dealers up 2.0 percent) and Financial
Services (up 4.1 percent due to an increase in interest-bearing loan
balances). Mark's gross operating revenues were relatively stable.

    Consolidated net earnings

    Consolidated net earnings declined from the prior year by 25.9%. This was
attributable to higher loan loss provisioning at Financial Services due to the
economic environment, increased occupancy and depreciation costs at Mark's due
to network expansion and higher interest expense, partly due to the rapid
expansion of broker deposits at Financial Services which are being used to
prefund the maturation of the Glacier notes in late 2009. These were partially
offset by margin improvements in CTR, Petroleum and Mark's and higher gross
operating revenue at Financial Services.
    Consolidated net earnings were also impacted by non-operating items as
noted below.

    Impact of non-operating items

    The following table shows our adjusted consolidated earnings on a pre-tax
and after-tax basis.

    
    Adjusted consolidated earnings before and after income taxes(1)

    ($ in millions except per share
     amounts)                              Q1 2009    Q1 2008(2)      Change
    -------------------------------------------------------------------------
    Earnings before income taxes         $    66.4    $    99.4      (33.3)%
    Less pre-tax adjustment for:
      Former CEO retirement
       obligation(3)                           0.5          0.4
      Net effect of securitization
       activities(4)                           0.5         12.9
      Gain (loss) on disposals of
       property and equipment                 (0.7)         3.7
    -------------------------------------------------------------------------
    Adjusted earnings before income
     taxes(1)                            $    66.1    $    82.4      (19.8)%
    Income taxes                              16.5         26.8
    -------------------------------------------------------------------------
    Adjusted earnings after income
     taxes(1)                            $    49.6    $    55.6      (10.9)%
    -------------------------------------------------------------------------
    Basic earnings per share             $    0.61    $    0.82      (26.0)%
    Adjusted basic earnings per
     share(1)                            $    0.61    $    0.68      (11.0)%
    -------------------------------------------------------------------------
    (1) See section 15.0 on non-GAAP measures.
    (2) 2008 figures have been restated for the implementation, on a
        retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets
        and the amendments to CICA HB 1000 - Financial Statement Concepts.
        See section 14.1 and 14.2 for additional information.
    (3) See section 3.3.1 on CTR's performance.
    (4) Includes initial gain/loss on the sale of loans receivable,
        amortization of servicing liability, change in securitization reserve
        and gain/loss on reinvestment.
    

    Consolidated net earnings were negatively affected by a marginal loss on
the sale of property, plant and equipment in the first quarter compared with a
pre-tax gain of $3.7 million in the prior year comparative, as well as a
decrease of $12.4 million with respect to securitization activities. Partly
offsetting these effects was a favourable tax adjustment of $4.6 million
related to the taxation of capital gains realized from the disposition of
MasterCard shares in 2006 and 2007.

    Seasonal impact

    The second quarter and fourth quarters of each year are typically when we
experience stronger revenues and earnings in our retail businesses because of
the seasonal nature of some merchandise at CTR and Mark's and the timing of
marketing programs. The following table shows our financial performance by
quarter for the last two years.

    
    Consolidated quarterly results(1)

    ($ in millions except       Q1           Q4           Q3           Q2
     per share amounts)        2009         2008         2008         2008
    -------------------------------------------------------------------------
    Gross operating revenue $ 1,758.1    $ 2,587.8    $ 2,257.5    $ 2,450.7
    Net earnings                 49.7        101.7        109.0         98.1
    Basic earnings per share     0.61         1.25         1.34         1.20
    Fully diluted earnings
     per share                   0.61         1.25         1.34         1.20
    -------------------------------------------------------------------------


    ($ in millions except       Q1           Q4           Q3           Q2
     per share amounts)        2008         2007         2007         2007
    -------------------------------------------------------------------------
    Gross operating revenue $ 1,825.3    $ 2,503.1    $ 2,049.2    $ 2,314.1
    Net earnings                 67.1        131.3        102.2        122.5
    Basic earnings per share     0.82         1.61         1.25         1.50
    Fully diluted earnings
     per share                   0.82         1.61         1.25         1.50
    -------------------------------------------------------------------------
    (1) 2008 quarterly results have been restated for the implementation, on
        a retrospective basis, of CICA HB 3064 - Goodwill and Intangible
        Assets and the amendments to CICA HB 1000 - Financial Statement
        Concepts. See section 14.1 and 14.2 for additional information. 2007
        results have not been restated as the information required to
        calculate the restatement on a quarterly basis is not readily
        available.

    Items that affected the usual seasonal pattern noted above include:

    -   Q2 2008 being negatively impacted by a $12.0 million pre-tax book-to-
        physical inventory adjustment at Mark's and Q4 2008 being negatively
        impacted by a $28.7 million pre-tax expense related to a delay-start
        interest rate swap adjustment; and
    -   Q3 2008 was positively impacted by an $8.6 million reduction in the
        tax provision, most of which related to the impact of the sale-
        leaseback transactions entered into since 2005.

    3.2 Business unit Q1 2009 performance overview

    -------------------------------------------------------------------------
    Canadian Tire Retail                 Mark's Work Wearhouse
    -------------------------------------------------------------------------
    Q1 2009 Performance highlights       Q1 2009 Performance highlights

    -   continued development of store   -   opened three new corporate
        network, now with a total of         stores, one of which was a Combo
        476 stores;                          store; and
    -   continued development of new     -   increased total retail space by
        store formats;                       approximately 6.5 percent year-
    -   replaced one traditional and         over-year; store network totals
        one standard store with two          374 locations; and
        new Smart stores, one of which   -   continued focus on Clothes That
        contains a full-size Mark's;         Work campaign, with the
        and                                  introduction of two new Clothes
    -   opened one new incremental           That Work items during the
        Small Market store.                  quarter.

    PartSource Q1 2009 performance
    highlights

    -   converted one corporate store
        to the PartSource banner;
    -   opened one new hub store and
        converted two franchise stores
        to a corporate store; and
    -   approximately 13.7 percent
        year-over-year increase in
        retail square footage.

    -------------------------------------------------------------------------
    Canadian Tire Financial Services     Petroleum
    -------------------------------------------------------------------------
    Q1 2009 Performance highlights       Q1 2009 Performance highlights

    -   continued increases in gross     -   growth of network to 274 gas
        average receivables for the          bars and 267 convenience
        total managed portfolio;             stores;
    -   continued increase in            -   opened one new gas bar and
        insurance and warranty               refurbished three gas bars
        products;                            as part of the initiative to
    -   continued growth in the              improve the overall customer
        broker GIC portfolio; and            experience at Petroleum's
    -   continued testing of the             sites; and
        retail banking initiative.       -   grew convenience store
                                             business by 16.8 percent over
                                             the prior year.
    -------------------------------------------------------------------------
    

    The following sections outlining the Company's business segment
performance highlight the respective segment's achievements to date against
key initiatives identified in the 2013 Strategic Plan. The initiatives have
been divided into growth (increase sales primarily through network growth, new
stores and new products) and productivity (improve customer service metrics,
service levels, cost-effectiveness and rates of return).

    3.3 Business segment performance

    3.3.1 Canadian Tire Retail

    3.3.1.1 Q1 2009 Strategic Plan performance

    The following outlines CTR's performance for the first quarter of 2009 in
the context of our 2013 Strategic Plan.

    
    -------------------------------------------------------------------------
    Canadian Tire Retail Growth Initiatives
    -------------------------------------------------------------------------
    New store program

    20/20 stores have been the cornerstone of CTR's growth agenda since 2003.
    This program is now complete and CTR has developed new store concepts
    which are designed to build on the successes of the 20/20 store with a
    greater focus on improving sales and productivity at a lower capital
    cost. Plans for 2009 include opening new Smart stores that will have the
    same focus of improving sales and productivity, as well as providing a
    more exciting customer experience, and Small Market stores with the
    further goal of expanding our presence in smaller markets.
    -------------------------------------------------------------------------
    2009 Key initiatives                 2009 Performance
    -------------------------------------------------------------------------
    With the completion of the 20/20     First quarter
    program in 2008, CTR's strategy is
    to test/rollout the next versions    During the first quarter CTR
    of the CTR store. This includes      replaced one traditional store and
    building of and conversion to the    one standard store with two new
    new Smart stores and new Small       Smart stores bringing the total
    Market stores which are an           number of Smart stores to four. We
    important aspect of the 2013 Plan.   opened one new incremental Small
                                         Market store bringing the total to
                                         five.

                                         The store network now totals 476
                                         stores, 48 of which include a
                                         Mark's component.
    -------------------------------------------------------------------------
    Customers for Life

    Canadian Tire is committed to building customer loyalty through fostering
    a positive, consistent and memorable customer experience. In 2008, CTR
    began working on a new strategic model for the organization that will
    lead to a stronger focus on customer service and improvements in
    generating Customers for Life and will continue this work through 2009.
    -------------------------------------------------------------------------
    2009 Key initiatives                 2009 Performance
    -------------------------------------------------------------------------
    CTR plans to continue to make key    First quarter
    improvements to the customer
    experience.                          CTR survey results show a 2.2 per
                                         cent improvement in overall
                                         satisfaction when compared to 2008
                                         results. The Store Support and
                                         Dealer Relations teams continued
                                         working with the Canadian Tire
                                         Dealers Association to address
                                         issues that will improve the overall
                                         process and future survey results.
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    PartSource network expansion

    PartSource will continue its expansion into new markets through a
    combination of new stores and small-scale acquisitions. PartSource's
    strategy to buy small local businesses and convert them to the PartSource
    banner has proven successful, with high rates of customer retention after
    conversion.
    -------------------------------------------------------------------------
    2009 Key initiatives                 2009 Performance
    -------------------------------------------------------------------------
    Key initiatives for PartSource       First quarter
    include building CTR as a new
    commercial account for emergency     During the quarter, PartSource
    shipments, updating the              continued making significant
    organizational structure, testing    progress on building the CTR
    new operating systems and a new      commercial account and is now used
    auto parts catalogue.                by 200 Canadian Tire stores for
                                         emergency auto parts. Progress on
                                         this initiative will continue
                                         building throughout the year.

                                         PartSource rebranded one corporate
                                         store to the PartSource banner,
                                         opened one new hub store and
                                         converted two franchise stores to
                                         corporate stores during the quarter.
                                         This brings the network total to 87
                                         stores, including nine hub stores.
                                         (Details of the hub store are
                                         discussed below in the "Automotive
                                         Infrastructure initiative" section.)
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Canadian Tire Retail Productivity Initiatives
    -------------------------------------------------------------------------
    CTR Change program

    During 2007, CTR began to implement its multi-year productivity effort
    with projects designed to overhaul and upgrade internal processes and IT
    systems. The benefits of these projects include the ability to make
    faster and better decisions and improve our agility and speed to market.
    -------------------------------------------------------------------------
    2009 Key initiatives                 2009 Performance
    -------------------------------------------------------------------------
    In 2009, CTR plans to implement      First quarter
    productivity/control initiatives in
    the area of sales and operational    Progress made on the CTR Change
    planning; and analyze and build      Program included:
    requirements for 2010                -   Completed and implemented
    implementation in the areas of           first phase of sales and
    promotional planning and vendor          operational planning
    relationship management.                 enhancements (Integrated
    	                                         Planning);
                                         -   completed design of vendor
                                             relationship management
                                             capability, and began
                                             process design work; and
                                         -   completed analysis for
                                             promotional planning
                                             capability and began
                                             process & systems design work.
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Automotive Infrastructure initiative

    Revitalizing the cornerstone automotive business is a key priority over
    the 2013 Plan period as CTC continues to expand the network through
    opening PartSource hub stores. Regional hub stores are larger than
    traditional PartSource stores and are designed to provide a broader
    assortment of automotive parts to service both CTR and PartSource
    customers. In 2009, CTR plans to open an additional eight hub stores. In
    addition, the Company is investing in infrastructure, technological
    enhancements and re-engineering customer facing processes.

    -------------------------------------------------------------------------
    2009 Key initiatives                 2009 Performance
    -------------------------------------------------------------------------
    Throughout 2009, CTC plans to open   First quarter
    eight hub stores. In addition,
    there will be further investment     Progress on the Automotive
    in the physical retrofit of the      Infrastructure initiative included:
    automotive distribution centres as
    well as a new project commissioned   Emergency supply implementation:
    to implement the Manhattan           -   opened one PartSource hub store
    warehouse management software into       bringing the total number of hub
    the Calgary auto parts distribution      stores to nine; and
    centre. The investment in            -   completed rollout of do-it-
    distribution assets will support an      yourself emergency supply
    increase in the auto parts sku           processes to CTR stores in seven
    assortment by an additional 20%.         of nine hub store markets.
    Work to implement an industry-
    leading automotive hard parts        Corporate assortment expansion:
    catalogue will be completed and      -   increased auto parts SKU count
    rolled out to the CTR stores in          by five per cent; and
    2010.                               -   initiated work to implement a
                                             new warehouse management system
                                             in the Calgary auto parts
                                             distribution centre.

                                         Customer Experience processes:
                                         -   completed and approved the
                                             business requirements needed to
                                             select and implement
                                             commercially available
                                             automotive parts and customer
                                             service technology
                                         -   reviewed and summarized
                                             functional gaps between the
                                             requirements and a preferred
                                             software solution; and
                                         -   engaged the preferred software
                                             vendor to work with CTR on the
                                             solution design.
    -------------------------------------------------------------------------

    3.3.1.2 Key performance indicators

    The following are key measures of CTR's sales productivity:

    -   total same store sales growth;
    -   average retail sales per store; and
    -   average sales per square foot of retail space

    CTR total retail and same store sales

    (year-over-year percentage change)                  Q1 2009      Q1 2008
    -------------------------------------------------------------------------
    Total retail sales(1)                                  4.0%       (1.9)%

    Same store sales(2)                                    2.5%       (4.0)%
    -------------------------------------------------------------------------
    (1) Includes sales from Canadian Tire and PartSource stores and the
        labour portion of CTR's auto service sales.
    (2) Includes sales from Canadian Tire and PartSource stores, but excludes
        sales from CTR's online web store and the labour portion of CTR's
        auto service sales.
    

    CTR retail sales

    First quarter

    While our retail stores continue to be influenced by the challenging
economic conditions that are currently affecting Canada, CTR experienced
increased retail sales during the first quarter.
    CTR's retail sales increased 4.0% over the same quarter in 2008
reflecting strong growth in the automotive and leisure categories. Exercise
equipment, automotive accessories, kitchen and pet care products were
particularly robust this quarter. Overall same store sales were up 2.5%
compared to the first quarter of 2008.
    On a regional basis we experienced stronger sales in Newfoundland, Nova
Scotia, Saskatchewan and Manitoba and weaker sales in Alberta and in British
Columbia than in the prior year.
    PartSource experienced another quarter of year-over-year double-digit
sales increases driven by both the continued expansion of the network and
growth in the commercial customer segment. In addition, PartSource shipments
to CTR Dealers continue to increase as components of the Automotive
Infrastructure initiative project are rolled out.

    CTR store network definitions

    As our store network has evolved, we have introduced new store formats
into our store categories, which we define as follows:

    
    -------------------------------------------------------------------------
    Smart store format (late 2008)       Small Market store format
    Average retail square footage:       (mid-2008) Average retail square
    68,000                               footage: 18,000
    -------------------------------------------------------------------------
    Next store concept renewal,          Smaller format launched in July
    building off the 20/20 store with    2008, ranging in size from 14,000
    a focus on growth and improving      to 19,000 square feet. Small Market
    productivity through inspiring       stores meet the needs of underserved
    layouts, refreshed assortments and   rural markets and include customized
    more environmentally responsible     product selection to serve a
    options. Stores range in size from   particular region, easy-to navigate
    44,000 to 83,000 square feet. There  signage and walkways, prominent
    are currently four Smart stores in   heritage departments (e.g.: hockey)
    the network the first of which       and generously sized outdoor areas
    opened in November 2008.             that "expand" the store in peak
                                         periods. There are currently five
                                         Small Market stores in the network.
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Updated & Expanded store format      Traditional store format (1994 and
    (1994 to mid-2008) Average retail    prior) Average retail square
    square footage: 44,000               footage: 16,000
    -------------------------------------------------------------------------
    A combination of our newer format    Smaller than the "updated and
    stores, including "20/20",           expanded store" format on average.
    "Class-of" and "Next Generation"     Traditional stores have various
    stores. These stores, previously     sizes and layouts ranging in size
    referred to as "standard stores",    from 3,000 to 49,000 square feet.
    range in size from 16,000 to         Traditional stores make up
    89,000 square feet, most of which    approximately 6.5 per cent of the
    were opened or converted to these    retail square footage in the CTR
    formats between 1994 and mid-2008.   network (excluding PartSource).
    Updated and expanded format stores
    make up approximately 91.6 per cent
    of the retail square footage in the
    CTR network (excluding PartSource).
    -------------------------------------------------------------------------


    -------------------------------------
    PartSource stores (2008 and prior)
    Average retail square footage:
    7,000
    -------------------------------------
    PartSource is an automotive parts
    specialty store designed to meet
    the needs of major purchasers of
    auto parts, professional automotive
    installers and serious do-it-
    yourselfers. Stores carry a
    tailored product assortment based on
    local vehicle needs and are easily
    recognizable with the checkerboard
    flooring design. Beginning in 2007,
    new larger warehouse locations (hub
    stores) were opened to help bring
    more parts inventory closer to
    customers at both CTR and PartSource
    stores.
    -------------------------------------


    CTR store count

                           Q1 2009(1)   2008(2)   2007(2)   2006(2)   2005(2)
    -------------------------------------------------------------------------
    Updated and expanded
     stores                      392       393       381       363       345
    Traditional stores            75        76        92       105       117
    Small Market stores            5         4         -         -         -
    Smart stores                   4         2         -         -         -
    -------------------------------------------------------------------------
    Total updated and
     expanded, traditional,
     Small Market and
     Smart stores                476       475       473       468       462
    PartSource stores             87        86        71        63        57
    -------------------------------------------------------------------------
    (1) Store count at the end of Q1 2009.
    (2) Store count at the end of the year.
    

    CTR continues to expand and retrofit its store network with a focus on
converting selected new or replacement stores and "updated and expanded"
format stores to the latest formats. The 20/20 store format was completed by
the end of 2008 and the two new formats continue to be piloted in 2009 and
will be rolled out later this year and in subsequent years, consistent with
the goals of the 2013 Plan.

    
    Average retail sales per Canadian Tire store(1),(2)

                                                     For the 12   For the 12
                                                         months       months
                                                          ended        ended
                                                        April 4,    March 29,
    ($ in millions)                                        2009         2008
    -------------------------------------------------------------------------
    Updated and expanded stores                       $    14.6    $    14.6
    Traditional stores                                      7.9          8.0
    -------------------------------------------------------------------------
    (1) Retail sales are shown on a 52-week basis in each year and exclude
        sales from PartSource stores, CTR's online web store and the labour
        portion of CTR's auto service sales.
    (2) Only includes stores that have been open for a minimum of two years
        as at the end of the quarter.

    The updated and expanded stores typically experience higher customer
traffic and increases in average transaction value compared to traditional
store formats.  For the rolling 12-month period, the average retail sales for
the updated and expanded stores remained flat while the average retail sales
per traditional stores suffered a slight decline.

    Average sales per square foot of Canadian Tire retail space(1),(2),(3)

                                                     For the 12   For the 12
                                                         months       months
                                                          ended        ended
                                                        April 4,    March 29,
                                                           2009         2008
    -------------------------------------------------------------------------
    Retail square footage(1),(3) (millions of square
     feet)                                                 18.8         17.8
    Updated and expanded stores(2),(3) ($ sales per
     square foot)                                     $     413    $     411
    Traditional stores(2),(3)                               491          492
    -------------------------------------------------------------------------
    (1) Retail square footage is based on the total retail square footage
        including stores that have not been open for a minimum of two years.
        It represents a point in time (instead of a rolling 12-month period)
        as at the end of the quarter.
    (2) Retail sales are shown on a 52-week basis in each year for those
        stores that have been open for a minimum of two years as at the end
        of the current quarter. Sales from PartSource stores, CTR's online
        web store and the labour portion of CTR's auto service sales are
        excluded.
    (3) Retail space does not include warehouse, garden centre and auto
        service areas.
    

    Retail square footage increased by approximately 1.0 million square feet
over the rolling 12-month period noted above.
    Average sales per square foot of retail space in the larger standard
store formats are lower than in traditional stores because additional space is
designed to display more merchandise, accommodate wider aisles, include more
appealing product displays and provide a more compelling shopping experience
overall. The larger updated and expanded stores do however, on average,
generate more total sales and have a lower operating cost for Dealers per
retail square foot.

    
    3.3.1.3 CTR's financial results

    ($ in millions)                        Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Retail sales                         $ 1,267.9    $ 1,218.8         4.0%
    Net shipments (year-over-year %
     change)                                  2.0%       (0.2)%
    Gross operating revenue              $ 1,099.3    $ 1,071.3         2.6%
    EBITDA(1)                                 96.8        102.1       (5.2)%
    -------------------------------------------------------------------------
    Earnings before income taxes              32.8         43.6      (24.8)%
    Less adjustment for:
      Gain (loss) on disposals of
       property and equipment                 (0.4)         3.9
      Former CEO retirement obligation         0.5          0.4
    -------------------------------------------------------------------------
    Adjusted earnings before income
     taxes(1)                            $    32.7    $    39.3      (16.7)%
    -------------------------------------------------------------------------
    (1) See section 15.0 on non-GAAP measures.
    

    Explanation of CTR's financial results

    First quarter

    First quarter gross operating revenue increased 2.6 percent, primarily as
a result of higher net shipments to Dealers, particularly in the automotive
and home categories.
    Canadian Tire Retail's first quarter adjusted earnings before taxes were
$32.7 million, down $6.6 million compared to a year ago. Despite strong
margins, increased promotional expenses and expenses associated with the
opening of the new Eastern Canada Distribution Centre led to the earnings
decline.

    3.3.1.4 CTR's business risks

    CTR is exposed to a number of risks in the normal course of its business
that have the potential to affect its operating performance. These include,
but are not limited to, supply chain disruption, seasonality and environmental
risks. Please see section 5.3.1.6 of our 2008 Financial Report for an
explanation of these business-specific risks. See also section 11.0 of this
MD&A for a discussion on Enterprise risk management and section 14.0 of our
2008 Financial Report for a discussion of some other industry-wide and
Company-wide risks affecting the business.

    3.3.2 Mark's Work Wearhouse

    3.3.2.1 Q1 2009 Strategic Plan performance

    The following outlines Mark's performance for the first quarter of 2009
in the context of our 2013 Strategic Plan.

    
    -------------------------------------------------------------------------
    Mark's Work Wearhouse Growth Initiatives
    -------------------------------------------------------------------------
    Network expansion

    A critical aspect of Mark's growth plan revolves around its objective of
    capturing an increasingly significant share of overall apparel sales in
    each geographic market in which Mark's competes. To increase Mark's
    market presence, the Company plans to continue with its aggressive goal
    of expanding the network of Mark's stores.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    Mark's will continue network         First quarter
    development through opening new
    stores, relocating or expanding      -   opened three new corporate
    existing stores and renovating           stores, one of which was a
    older stores to the newest Mark's        Combo store; and
    format. For 2009, we plan to:        -   relocated two corporate stores,
    -   Open 14 new stores;                  one of which was a Combo store.
    -   Relocate 10 stores;
    -   Expand 3 stores; and             Mark's total retail square footage
    -   Grow the retail square footage   at the end of the quarter was
    -   by 5%                            3.2 million square feet, an
                                         increase of 6.5% vs. Q1 2008.
    -------------------------------------------------------------------------
    New store concepts

    In addition to adding incremental stores to the total network, Mark's is
    in the process of developing new store concepts that will be rolled out
    over the Plan period.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    While participating in the Mark's    First quarter
    portion of the newly-developed
    concepts for CTR/Mark's combo        Mark's opened two new Mark's-
    stores, such as Smart stores and     inside-a-CTR stores, one as part
    Small Market stores, Mark's is       of CTR's Small Market store network
    developing a new, stand-alone        expansion and one as part of CTR's
    "CLOTHES THAT WORK(R)" store that    Smart store concept (both included
    will be tested in 2009.              in total above).
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Mark's Work Wearhouse Productivity Initiatives
    -------------------------------------------------------------------------
    Category expansion

    Mark's has set aggressive growth goals for the 2013 Plan period which
    will be supported by its plans for category expansion in its three major
    product lines. Although growth was modest in 2007 and 2008, women's wear
    is still expected to be the fastest growing segment of the business over
    the plan period as it is the least developed of the Mark's main category
    lines. Improvements in the product assortment in the women's wear
    category are expected to bring continued growth during the Plan period.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    In 2009, Mark's will continue to     First quarter - corporate sales
    expand its product assortment in
    the three main categories of         -   sales of women's wear increased
    apparel and footwear with a focus        by 7.8 percent;
    on the Clothes That Work campaign.   -   sales of industrial wear
                                             decreased by 0.5 percent and
                                         -   sales of men's wear decreased by
                                             6.2 percent.

                                         In the first quarter of 2009, Mark's
                                         continued to leverage previously
                                         launched products such as
                                         CURVETECH(TM) shape-enhancing
                                         technology for women and QUAD
                                         COMFORT(R) footwear for men and
                                         women, while extending its
                                         dri-WEAR(R) technology from
                                         underwear to t-shirts and
                                         introducing two new CLOTHES THAT
                                         WORK(R)" items.
    -------------------------------------------------------------------------

    3.3.2.2 Key performance indicators

    The following are key performance indicators for Mark's:
    - retail and same store sales growth;
    - average sales per corporate store; and
    - average sales per square foot of retail space

    Mark's retail and same store sales growth

    (year-over-year percentage change)                  Q1 2009      Q1 2008
    -------------------------------------------------------------------------
    Total retail sales(1)                                (2.3)%       (3.2)%

    Same store sales(2)                                  (4.1)%       (7.0)%
    -------------------------------------------------------------------------
    (1) Includes retail sales from corporate and franchise stores.
    (2) Mark's same store sales excludes new stores, stores not open for the
        full period in each year and store closures.
    

    First quarter

    Mark's retail sales during the first quarter of 2009 continued to be
impacted by further softening of retail and economic conditions across many
parts of Canada. Corporate store sales in industrial wear were down slightly,
with men's industrial work wear suffering the largest-dollar decrease.
Corporate store sales of men's casual clothing also declined in categories
such as outerwear, sweaters, casual bottoms and t-shirts. A redeeming factor
this quarter was that ladies' wear corporate store sales increased and
performed better than men's wear across all major categories. The largest
dollar corporate store sales increases came from ladies accessories,
healthwear and casual/dress bottoms.
    From a geographical perspective, Mark's enjoyed sales increases in
Quebec, the Atlantic Provinces, and certain pockets in Ontario, but sales were
down significantly in Mark's normally-strong home base of Alberta and British
Columbia due to the disproportionate impact of the economic downturn in those
regions.

    
    Average corporate store sales(1)

                                        For the 12   For the 12   For the 12
                                            months       months       months
                                             ended        ended        ended
                                           April 4,    March 29,    March 31,
                                              2009         2008         2007
    -------------------------------------------------------------------------
    Average retail sales per
     store ($ thousands)(2)             $    2,716   $    2,743   $    2,817
    Average sales per square foot ($)(3)       314          327          347
    -------------------------------------------------------------------------
    (1) Calculated on a rolling 12-month basis.
    (2) Average retail sales per corporate store include corporate stores
        that have been open for 12 months or more.
    (3) Average sales per square foot is based on sales from corporate
        stores. We have prorated square footage for corporate stores that
        have been open for less than 12 months.
    

    Mark's average retail sales per store and average sales per square foot
have been declining slowly since the end of the second quarter of 2007,
primarily due to the economic slow down which began then, combined with the
fact that Mark's has, through new stores, store relocations, store expansions
and franchise repatriations, increased its corporate store retail square
footage by 20% over that time frame.
    According to Trendex, Mark's continued to increase its market share of
the total Canadian apparel market in 2008 and Mark's believes that with its
continued network expansion during slower economic times, it will be well
positioned to significantly increase its market share and resume improving its
average retail sales per store and average sales per square foot as the
Canadian apparel market recovers from the current recession.

    3.3.2.3 Mark's financial results

    
    ($ in millions)                        Q1 2009      Q1 2008      Change
    -------------------------------------------------------------------------
    Retail sales(1)                     $    168.5   $    172.5       (2.3)%
    Gross operating revenue(2)               147.1        147.5       (0.3)%
    EBITDA(3)                                  2.2          3.0      (27.3)%
    -------------------------------------------------------------------------
    Loss before income taxes                  (4.9)        (3.4)     (43.9)%
    Less adjustment for:
      Loss on disposals of property
       and equipment                          (0.2)           -
    -------------------------------------------------------------------------
    Adjusted loss before income
     taxes(3)                           $     (4.7)  $     (3.4)     (39.7)%
    -------------------------------------------------------------------------
    (1) Includes retail sales from corporate and franchise stores.
    (2) Gross operating revenue includes retail sales at corporate stores
        only.
    (3) See section 15.0 on non-GAAP measures.
    

    Explanation of Mark's financial results

    First quarter

    Mark's pre-tax earnings decreased in the first quarter of 2009 primarily
as a result of the decrease in same store sales and higher expenses associated
with the continued expansion of the store network and backline infrastructure.
Overall, the gross margin rate on merchandise sold was very strong, up 7.7%
thanks, in part, to improved markdown management, but that was not sufficient
to offset the weaker sales and increased occupancy, depreciation, system and
other costs.

    3.3.2.4 Mark's business risks

    Mark's is exposed to a number of risks in the normal course of its
business that have the potential to affect its operating performance. These
include, but are not limited to, seasonality and market obsolescence risks.
Please see section 5.3.2.5 of our 2008 Financial Report for an explanation of
these business-specific risks. See also section 11.0 of this MD&A for a
discussion on Enterprise risk management and section 14.0 of our 2008
Financial Report for a discussion of some other industry-wide and Company-wide
risks affecting the business.

    3.3.3 Canadian Tire Petroleum

    3.3.3.1 Q1 2009 Strategic Plan performance

    Petroleum plays a strategic role in increasing customer loyalty and
driving traffic and transactions for CTR and Financial Services. Petroleum
increases Canadian Tire's total value proposition by offering Canadian Tire
'Money' loyalty rewards on gas purchases paid for in cash or by Canadian
Tire's Options MasterCard. Petroleum also supports other cross-marketing
promotions and joint product launches, such as Canadian Tire's Gas Advantage
MasterCard, which has gained wide popularity since its introduction in Ontario
in mid-2006. Customers who have a Canadian Tire MasterCard and purchase gas at
Petroleum are Canadian Tire's most loyal and profitable customers.
    The following outlines Petroleum's performance for the first quarter of
2009 in the context of our 2013 Strategic Plan.

    
    -------------------------------------------------------------------------
    Canadian Tire Petroleum Growth Initiatives
    -------------------------------------------------------------------------
    Network renewal and new store concept

    Petroleum's business is an integral part of the Canadian Tire
    organization as customers that use Petroleum's gas bars drive sales and
    traffic to our other business units. Over the 2013 Plan period, Petroleum
    will continue to develop its real estate plan, focusing on introducing
    new store concepts into its existing network of locations, while
    continuing to focus on renewing its current sites.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    In 2009, Petroleum will continue to  First quarter
    strengthen the existing network by
    opening new sites and refurbishing   -   opened one new gas bar; and
    or rebuilding existing sites.        -   refurbished three gas bars.

                                         At the end of the quarter, Petroleum
                                         had 274 gas bars, including 38
                                         re-branded sites.
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Canadian Tire Petroleum Productivity Initiatives
    -------------------------------------------------------------------------
    Enhancing interrelatedness

    Petroleum's business is integrated with CTR and Financial Services
    through Canadian Tire 'Money' and various cross-marketing programs
    designed to build customer loyalty. Petroleum is in the process of
    enhancing its interrelatedness strategy to further extend its marketing
    leverage across the Company.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    In 2009, Petroleum will aggressive-  First quarter
    ly seek out additional cross-
    marketing opportunities to further   -   executed cross-marketing
    leverage its interrelatedness            national contest at gas bars
    strategy to drive customer traffic,      driving traffic to CTR and
    drive customer traffic,                  Mark's stores and Financial
    transactions, customer loyalty and       Services' Options MasterCard
    earnings across the enterprise.      -   issued multiplier coupons that
                                             increase the Canadian Tire
                                             'Money' offered on gas purchases
                                             paid for in cash or by Canadian
                                             Tire Options MasterCard; and
                                         -   offered discount coupons on
                                             Canadian Tire merchandise with
                                             the purchase of gas.
    -------------------------------------------------------------------------

    3.3.3.2 Key performance indicators

    Gasoline sales volume is a top-line performance indicator for Petroleum,
as measured by the number of gasoline litres sold. Fluctuations in the
wholesale and retail price of gasoline may result in fluctuations in
Petroleum's margin and profitability.

    Gasoline sales volume
                                           Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Sales volume (millions of litres)        408.8        413.8       (1.2)%
    -------------------------------------------------------------------------

    Gasoline sales volumes during the first quarter were down slightly,
consistent with industry gasoline volume declines reported by Statistics
Canada. Even though the average retail gas price has declined significantly
since Q1 2008, gas prices have stabilized since late 2008.

    Petroleum's convenience and car wash sales

    (year-over-year percentage change)                  Q1 2009      Q1 2008
    -------------------------------------------------------------------------
    Total retail sales
      Convenience store sales                             16.8%        11.6%
      Car wash sales                                      16.4%      (24.4)%
    -------------------------------------------------------------------------
    Same store sales
      Convenience                                         14.1%         9.7%
      Car wash                                            16.4%      (24.8)%

    Convenience store sales were very strong in the first quarter of 2009 as a
result of a better in-stock position and a shifting of a national contest into
the first quarter. The increase in car washes is largely attributable to the
more favourable car wash weather conditions in the quarter versus the prior
year.

    3.3.3.3 Petroleum's financial results

    ($ in millions)                        Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Retail sales                         $   353.4    $   449.0      (21.3)%
    Gross operating revenue                  321.9        422.8      (23.9)%
    EBITDA(1)                                 10.4          9.0        15.1%
    -------------------------------------------------------------------------
    Earnings before income taxes               6.0          5.0        20.4%
    Less adjustment for:
      Loss on disposals of property
       and equipment                             -         (0.2)
    -------------------------------------------------------------------------
    Adjusted earnings before income
     taxes(1)                            $     6.0    $     5.2        15.5%
    -------------------------------------------------------------------------

    (1) See section 15.0 on non-GAAP measures.
    

    Explanation of Petroleum's financial results

    First quarter

    Retail sales and gross operating revenues declined more than 20% in the
first quarter of 2009, mostly due to a 23.7 percent decrease in retail
gasoline prices year-over-year. However, despite this dramatic decrease in
pump-prices, Petroleum enjoyed a 20.4 percent increase in pre-tax earnings as
gasoline margins were stronger this quarter versus last year. This was
partially offset by an increase in operating and environmental expenses.

    3.3.3.4 Petroleum's business risks

    Petroleum is exposed to a number of risks in the normal course of its
business that have the potential to affect its operating performance. These
include, but are not limited to, environmental and commodity price and
disruption risks. Please see section 5.3.3.5 of our 2008 Financial Report for
an explanation of these business-specific risks. See also section 11.0 of this
MD&A for a discussion on Enterprise risk management and section 14.0 of our
2008 Financial Report for a discussion of some other industry-wide and
Company-wide risks affecting the business.

    3.3.4 Canadian Tire Financial Services

    3.3.4.1 Q1 2009 Strategic Plan performance

    The following outlines Financial Services' performance for the first
quarter of 2009 in the context of our 2013 Strategic Plan.

    
    -------------------------------------------------------------------------
    Canadian Tire Financial Services Growth Initiatives
    -------------------------------------------------------------------------
    Total managed portfolio of loans receivable (credit card, personal, line
    of credit and mortgage loans)

    Financial Services plans to grow its portfolio through increases in
    average balances, new account acquisition and the introduction of new
    credit cards.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    For 2009, Financial Services has     First quarter
    targeted increasing gross average
    credit card receivables mainly       Gross average loans receivable were
    through increases in the average     $4.0 billion in the first quarter.
    account balances.                    The growth reflects a 7.3 percent
                                         increase in the average account
                                         balance, partially offset by a
                                         decrease in the number of accounts
                                         carrying a balance.
    -------------------------------------------------------------------------
    Retail banking

    Financial Services began offering retail banking products including high-
    interest savings accounts, retail GICs and residential mortgages in two
    pilot markets in October 2006. In 2007, the pilot was expanded to include
    a third market in Ontario along with the launch of the Canadian Tire One-
    and-Only account. The retail banking business leverages the trust and
    credibility Canadian Tire Financial Services earned over the last 40
    years providing financial services to millions of customers.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    Financial Services' retail banking   First quarter
    plans include increasing the ending
    mortgage portfolio balance and       Financial Services had accumulated
    retail deposit balances.             over $233 million in retail deposits
                                         and over $163 million in mortgages
    Financial Services will incur        as at the end of the first quarter
    approximately $17 million in net     of 2009.
    expenses associated with the
    marketing and operations of the      Financial Services incurred
    retail banking initiative in 2009.   $3.9 million in net expenses
                                         associated with the marketing and
                                         operation of the retail banking
                                         initiative during the first quarter
                                         of 2009.
    -------------------------------------------------------------------------
    Canadian Tire Financial Services Productivity Initiatives
    -------------------------------------------------------------------------
    Insurance and other ancillary products

    Financial Services plans to enhance its insurance and warranty product
    offering to credit card customers. Revenues from insurance and warranty
    products have increased significantly in the last five years through
    direct marketing to Canadian Tire's growing base of customers.
    -------------------------------------------------------------------------
    2009 Key initiatives                 Q1 2009 Performance
    -------------------------------------------------------------------------
    Financial Services plans to          Revenues from insurance and warranty
    increase revenues from insurance     products increased 6.9 percent in
    and warranty products during 2009.   the first quarter versus the same
                                         period last year.
    -------------------------------------------------------------------------

    3.3.4.2 Key performance indicators

    The following are key indicators of Financial Services' performance:

    -   size of the total managed portfolio
    -   profitability of the portfolio
    -   quality of the portfolio

    Financial Services' total managed portfolio of loans receivable

    ($ in millions, except where noted)    Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Average number of accounts with a
     balance (thousands)                     1,804        1,849       (2.4)%
    Average account balance ($)          $   2,222    $   2,072         7.3%
    Gross average receivables (GAR)        4,009.1      3,831.7         4.6%
    Total managed portfolio (end
     of period)                            3,979.1      3,783.9         5.2%
    Net managed portfolio (end of period)  3,872.0      3,685.1         5.1%
    -------------------------------------------------------------------------
    

    As management believes that the full picture of trends in Financial
Services' business can best be derived by evaluating the performance of both
securitized and non-securitized loans receivable portfolios, the portfolios
have been presented to include all securitized loans receivable. Financial
Services presents loans receivable information on a managed basis to evaluate
the credit performance and overall financial performance of the underlying
loans.
    Financial Services' gross average receivables were up in the first
quarter, due primarily to an increase in credit sales and increased mortgage
volumes. The continued success of the Gas Advantage MasterCard and an increase
in balance transfers also contributed to the total portfolio growth, partially
offset by a decline in personal loan accounts and balances.
    Financial Services' future growth will be driven by increases in average
account balances, modest increases in new accounts and the introduction of new
credit card and insurance products. Management regards new retail banking
products as another potential channel for growth in the longer term.

    
    Financial Services' portfolio of credit card loans receivable

    ($ in millions, except where noted)    Q1 2009      Q1 2008       Change
    -------------------------------------------------------------------------
    Average number of accounts with a
     balance (thousands)                     1,773        1,809       (2.0)%
    Average account balance ($)          $   2,120    $   2,004         5.8%
    Gross average receivables              3,758.9      3,625.3         3.7%
    Total managed portfolio (end
     of period)                            3,725.1      3,572.0         4.3%
    -------------------------------------------------------------------------
    

    Gross average credit card loans receivable grew 3.7 percent to $3.8
billion at the end of the quarter primarily due to a 5.8 percent increase in
the average account balance during the quarter compared to the previous year. 
The increase in average account balances is largely a result of marketing
programs designed to increase average balances.

    
    Financial Services' profitability

    Financial Services' profitability measures are tracked as a percentage of
GAR, shown in the table below.

    Profitability of total managed portfolio(1)

                     Q1 2009     Q1 2008     Q1 2007     Q1 2006     Q1 2005
    -------------------------------------------------------------------------
    Total revenue
     as a % of GAR(2) 24.59%      24.54%      24.96%      25.22%      26.55%
    Gross margin
     as a % of GAR(2) 12.02%      12.63%      13.12%      13.31%      13.78%
    Operating expenses
     as a % of GAR(3)  7.33%       7.80%       7.89%       8.33%       9.06%
    Return on average
     total managed
     portfolio
     (2),(3),(4)       4.71%       4.84%       5.25%       4.98%       4.72%
    -------------------------------------------------------------------------
    (1) Figures are calculated on a rolling 12-month basis and comprise the
        total managed portfolio of loans receivable.
    (2) Excludes the net effect of securitization activities and gain on
        disposal/redemption of investment.
    (3) Figures have been restated for the implementation, on a retrospective
        basis, of CICA HB 3064 - Goodwill and Intangible Assets and the
        amendments to CICA HB 1000 - Financial Statement Concepts. See
        section 14.1 and 14.2 for additional information.
    (4) Return is calculated as adjusted earnings before taxes as a
        percentage of GAR.
    

    The decline in the return on the total managed portfolio is principally
due to an increase in the provision for credit losses in the quarter.
    Financial Services' MasterCard accounts provide increased earnings
potential through cross-selling of balance-based insurance products and other
financial services being offered by Financial Services. As Financial Services
introduces lower rate credit cards and other loans receivable, the reduction
in revenue and gross margin as a percentage of gross average receivables will
be offset by continued growth in loans receivable, higher sales of insurance
and warranty products and ongoing improvements in the operating expense ratio.
    As part of the strategic planning process, management set a long-term
goal of managing Financial Services' pre-tax return on the average total
managed portfolio in the target range of 4.5 to 5.0 percent. As shown in the
table above, Financial Services has met or exceeded this target in the first
quarters over the last five years.

    
    Portfolio quality

                     Q1 2009     Q1 2008     Q1 2007     Q1 2006     Q1 2005
    -------------------------------------------------------------------------
    Net write-off
     rate (rolling
     12-month basis)   6.52%       5.83%       5.95%       5.98%       5.96%
    Account balances
     less than 30 days
     overdue at end
     of period        95.86%      96.10%      96.29%      96.31%      96.01%
    Allowance rate     2.69%       2.61%       2.48%       2.55%       2.67%
    -------------------------------------------------------------------------
    

    The target range for the net write-off rate is between 5.0 percent and
6.0 percent. With the exception of 2009, the five-year historic trend
illustrates our successful ability to manage the write-off rates through
initiatives such as improving collections and seeking credit-worthy customers.
    The rolling 12-month net write-off rate on the total loans portfolio was
6.52 percent in the first quarter of 2009, an increase of 69 basis points over
the same period of the previous year. This was caused by a more challenging
economic environment and the resulting increase in consumer bankruptcies,
however a number of actions have already been taken to manage the quality of
the portfolio and write-off rates are expected to return to acceptable levels
over the longer term.
    Periodic fluctuations in write-offs, aging and allowances occur as a
result of a variety of economic influences such as job growth or losses,
personal debt levels and personal bankruptcy rates, as well as changes caused
by adjustments to collection strategies. The increase in the allowance rate
compared to the first quarter of 2008 is due to an increase in the credit card
portfolio aging due to challenging economic conditions and the impact of
changes in collection practices in 2008.

    
    3.3.4.3 Financial Services' financial results

    ($ in millions)                        Q1 2009    Q1 2008(1)      Change
    -------------------------------------------------------------------------
    Gross operating revenue              $   217.3    $   208.7         4.1%
    EBITDA(2)                                 46.7         60.4      (22.5)%
    -------------------------------------------------------------------------
    Earnings before income taxes              32.5         54.2      (40.1)%
    Less adjustment for:
      Loss on disposals of property and
       equipment                              (0.1)           -
      Net effect of securitization
       activities(3)                           0.5         12.9
    -------------------------------------------------------------------------
    Adjusted earnings before income
     taxes(2)                            $    32.1    $    41.3      (22.3)%
    -------------------------------------------------------------------------
    (1) 2008 figures have been restated for the implementation, on a
        retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets
        and the amendments to CICA HB 1000 - Financial Statement Concepts.
        See section 14.1 and 14.2 for additional information.
    (2) See section 15.0 on non-GAAP measures.
    (3) Includes initial gain/loss on the sale of loans receivable,
        amortization of servicing liability, change in securitization reserve
        and gain/loss on re-investment.
    

    Explanation of Financial Services' financial results

    First quarter

    Financial Services' gross operating revenue increased over the first
quarter of 2008 largely as a result of an increase in credit interest earned
due to an increase in interest-bearing loan balances. In addition, ongoing
expenses were well controlled as the first-quarter operating ratio on a
rolling 12-month basis was 47 basis points better compared to the same period
in 2008. These were offset, however, by increased provisioning costs.
    Actions have been taken, including a third-party review of our risk
management practices, to manage potential write-offs during a period in which
higher than historical rates of delinquencies are occurring due to soft
economic conditions and consequent higher unemployment levels.

    3.3.4.4 Financial Services' business risks

    Financial Services is exposed to a number of risks in the normal course
of its business that have the potential to affect its operating performance.
These include, but are not limited to, consumer credit, securitization
funding, interest rate and regulatory risk. Please see section 5.3.4.8 of our
2008 Financial Report for an explanation of these business-specific risks as
well as section 5.1.4 of this MD&A for a description of the securitization
program and Canadian Tire's liquidity and capital market activity. Also see
section 11.0 of this MD&A for a discussion on Enterprise risk management and
section 14.0 of our 2008 Financial Report for a discussion of some other
industry-wide and Company-wide risks affecting the business.

    4.0 Capital management

    In order to support our growth agenda and meet the objectives enumerated
in our 2013 Strategic Plan, the Company actively manages its capital. The
Company's objectives are:

    
    -   minimizing the after-tax cost of capital;
    -   maintaining healthy liquidity reserves and access to capital; and
    -   maintaining flexibility in capital structure to ensure the ongoing
        ability to execute the Strategic Plan.
    

    The definition of capital varies from company to company and from
industry to industry. Our definition of capital includes the current-portion
of long-term debt, long-term debt, long-term deposits, long-term liabilities
that are derivative or hedge instruments related to capital items only, share
capital, contributed surplus, components of accumulated other comprehensive
income (loss) related to capital items only, and retained earnings. For a full
listing of these amounts and further information, please refer to note 9 in
the Notes to the Consolidated Financial Statements.
    As part of existing debt agreements, two key financial covenants are
monitored on an on-going basis by Management to ensure compliance with the
agreements. The Company was in compliance with these covenants during the
first quarter of 2009. Under these covenants, the Company currently has
significant flexibility to fund business growth and increase dividend rates
within our existing dividend policy.
    The Company's wholly-owned subsidiary, CTB, manages its capital under
guidelines established by the Office of the Superintendent of Financial
Institutions Canada (OSFI). The regulatory capital guidelines measure capital
in relation to credit, market and operational risks. CTB has a capital
management policy, capital plan, and procedures and controls which it utilizes
to achieve its goals and objectives. CTB's objectives include:

    
    -   providing sufficient capital to maintain the confidence of
        depositors;
    -   being an appropriately capitalized institution, as measured
        internally, defined by regulatory authorities and compared with CTB's
        peers; and
    -   achieving the lowest overall cost of capital consistent with
        preserving the appropriate mix of capital elements to meet target
        capitalization levels.
    

    During the first quarter of 2009 and for the comparative period, CTB
complied with the capital guidelines issued by OSFI under the "International
Convergence of Capital Measurement and Capital Standards - A Revised
Framework" (Basel II).
    For further information on capital management, see note 9 in the Notes to
the Consolidated Financial Statements and section 7.0 (Capital Management) in
our 2008 Financial Report.

    5.0 Financing

    While the credit markets remain challenged in their lending operations,
Canadian Tire's financing capabilities are strong and have improved since Q4
2008. We have a number of alternative financing sources in order to ensure
that the appropriate level of liquidity is available to meet our strategic
objectives. These sources may be summarized as follows:

    
    Summary of Canadian Tire's financing sources
    -------------------------------------------------------------------------
                                Amount
        Financing Source       Available              Description
    -------------------------------------------------------------------------
    Committed bank lines     $1.22 billion  Provided by 11 domestic and
     of credit                              international financial
                                            institutions and includes support
                                            for the $800 million commercial
                                            paper program noted below which
                                            is covered by the bank lines on a
                                            dollar for dollar basis. There
                                            was $nil drawn on the bank lines
                                            as at April 4, 2009.

    Commercial paper         $800 million   Canadian Tire had $82 million
     program                                outstanding as at April 4, 2009.

    Medium Term Notes        $750 million   A new Shelf Prospectus was
     (MTN) program                          completed as of April 8, 2009,
                                            providing the Company with access
                                            of up to $750 million for the
                                            next 25 months.

    Securitization of        Transaction    Securitization transactions
     receivables              specific      handled through Glacier Credit
                                            Card Trust ("GCCT") have
                                            historically proved to be a
                                            relatively cost-effective form of
                                            financing. Financial Services has
                                            not securitized any credit card
                                            receivables in 2009.

    Broker GIC deposits      No specified   This avenue of fund-raising
                                            ramped limit up in the second
                                            half of 2008 and funds continue
                                            to be readily available through
                                            broker networks. As at the end of
                                            Q1 2009, Financial Services held
                                            $1.3 billion in broker GIC
                                            deposits.

    Sale/leaseback           Transaction    Additional sources of funding
     transactios              specific      available on strategic
                                            transactions involving Company
                                            owned properties as appropriate.
    

    As indicated in the table above, as of April 4, 2009, the Company had
$1.22 billion in committed bank lines of credit, of which $775 million will be
increased in term to two years, with annual renewals, subject only to the
completion of legal documentation. The balance of the lines are committed at
least until late 2009 and most are typically extended on a quarterly basis
thereafter.
    As of April 4, 2009, the GCCT commercial paper program has access of up
to $975 million of the total Canadian Tire committed lines and GCCT had
achieved compliance with DBRS(R) Global Liquidity Standards.

    Debt market conditions

    Access to capital market continues to remain challenging and uncertain,
an extension of the credit crisis linked to problems in the U.S. sub-prime
mortgage market experienced in August 2007. This caused a worldwide
reassessment of the financial risks involved with asset-backed securities and
led to market disruptions, constrictions and increased interest rates for
borrowers looking to refinance their short-term debt.
    Canadian Tire participates in the asset-backed security markets through
the use of commercial paper and issuance of MTNs. Throughout 2008 and 2009,
GCCT has continued to refinance certain of its maturing commercial paper and
had $63 million of commercial paper outstanding as of April 4, 2009, fully
backed by the bank credit lines.
    For 2009, no corporate debt maturities are scheduled, but late in the
year, term notes at GCCT of $625 million will mature, which will result in a
corresponding increase in receivables at Financial Services, unless the notes
are refinanced.
    Should the Company be unable to complete a credit card securitization
transaction in the near-to-medium term due to the unstable financial market
conditions, the Company has access to other sufficient sources of financing as
indicated in the table above.
    In December 2008, Canadian Tire received confirmation from both of its
rating agencies on its various funding programs, all of which had a stable
outlook. As at April 4, 2009 there had been no change in the ratings.

    
    Credit rating summary                     DBRS            S&P
    -------------------------------------------------------------------------
    Canadian Tire
      Commercial paper                      R-1 (low)   A-1 (low) (Cdn)
      Debentures                             A (low)         BBB+
      Medium-term notes                      A (low)         BBB+

    Glacier Credit Card Trust(1)
      Asset-backed commercial paper         R-1 (high)      -----
      Asset-backed senior notes                AAA           AAA
      Asset-backed subordinated notes           A             A

    Trend or outlook                         Stable         Stable
    -------------------------------------------------------------------------
    (1) Asset-backed Series 2002 Senior and Subordinated Notes were
        discontinued on January 2, 2008.
    

    Broker deposits

    CTB has been very successful in gathering broker GICs since the fourth
quarter of 2007. CTB broker deposits raise cash through sales of GICs through
brokers rather than directly to the retail customer and are typically offered
at a higher interest rate compared to retail GICs. Individual balances up to
$100,000 are Canada Deposit Insurance Corporation (CDIC) insured. CTB broker
GICs are offered in varying terms ranging from 30 days to five years, and all
issued GICs are non-redeemable prior to maturity (except in certain rare
circumstances). Given that the overall size of the broker GIC market is
estimated to be $66 billion in Canada, CTB believes that there is ample room
in the market to take advantage of CTB broker GIC deposits as a cost effective
alternative funding source to the securitization of credit card receivables.
    As at the end of the first quarter of 2009, CTB had approximately $1.3
billion in total short-term and long-term CTB broker GIC deposits outstanding.
CTB believes that there is potential to generate further increases in this
funding source in the future, depending on the time of year and on market
conditions.

    Foreign exchange hedging program

    The Company has significant demand for U.S. dollars, due to global
sourcing. To mitigate the impact of fluctuating foreign exchange rates on the
cost of our globally sourced merchandise and, consequently, earnings, the
Company has a comprehensive foreign exchange risk management policy in place
whereby the policy establishes ranges for the proportion of forecast US dollar
purchases that must be hedged for various time periods. Consequently, when
dramatic swings in foreign currency rates occur, as experienced early in the
fourth quarter of 2008, the Company had already fixed the foreign currency
impact for a certain portion of its U.S. dollar-denominated forecast
purchases. The current foreign currency hedge portfolio allows the Company to
have some margin stability for 2009 as a significant amount of the U.S.
dollars required for U.S. dollar-denominated purchases in 2009 are available
at hedge rates more favourable than the current spot reference rate. The
Company may also be able to pass on changes in foreign currency exchange rates
through pricing, subject to competitive conditions.

    5.1 Funding program

    5.1.1 Funding requirements

    We fund our capital expenditures, working capital needs, dividend
payments and other financing needs, such as debt repayments and Class A
Non-Voting Share purchases under the normal course issuer bid (NCIB), from a
combination of sources. In the first quarter of 2009, the primary sources of
funding were:

    
    -   $396 million of cash arising from an increase in net deposits; and
    -   $ 82 million of cash generated from the issuance of commercial
        paper.
    

    5.1.2 Cash and cash equivalents

    At April 4, 2009, the Company's cash and cash equivalents totaled $519.5
million versus $288.6 million at March 29, 2008. There was $81.9 million of
commercial paper outstanding at the end of the first quarter of 2009 versus
$158.2 million at the end of the first quarter of 2008. This change in cash
balance was positively impacted by the increase in net deposits. During the
first quarter of 2009, we used cash primarily for the following:

    
    -   $493 million to fund increased operational working capital
        requirements;
    -   $ 76 million for additions to property and equipment; and
    -   $ 19 million for additions to intangible assets.
    

    In addition, due to the normal cyclical pattern of credit sales and
customer payments on loans receivable, $138 million in cash was generated
during the quarter

    5.1.3 Working capital

    Minimizing our working capital requirements continues to be a long-term
priority in order to maximize cash flow for use in the operations of the
Company. The table below shows the change in the value of our working capital
components at the end of the first quarter of 2009 from the first quarter of
2008.

    
    Comparable working capital components(1)

                                                                   Increase/
                                                                   (decrease)
                                             April        March   in working
    ($ in millions)                        4, 2009     29, 2008      capital
    -------------------------------------------------------------------------
    Accounts receivable                  $   731.0    $   514.5    $   216.5
    Merchandise inventories                1,104.4      1,021.3         83.1
    Prepaid expenses and deposits             73.5         69.3          4.2
    Income taxes recoverable                 109.8         76.5         33.3
    Accounts payable and other            (1,157.9)    (1,236.2)        78.3
    -------------------------------------------------------------------------
                                                                   $   415.4
    -------------------------------------------------------------------------
    (1) 2008 figures have been restated for the implementation, on a
        retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets
        and the amendments to CICA HB 1000 - Financial Statement Concepts.
        See section 14.1 and 14.2 for additional information.

    The increase in accounts receivable was largely attributable to an
increase in amounts due from counterparties for foreign exchange derivatives
and an increase in Dealer receivables as a result of an increase in shipments
over last year.

    The increase in merchandise inventories is due to:

    -   an increase in the amount of globally sourced product, which has
        longer lead times;
    -   Management's decision to keep excess seasonal inventory from the 2008
        spring and summer seasons in storage to sell in 2009 versus heavily
        discounting or otherwise disposing of the goods; and
    -   an inventory accumulation experienced in the second half of 2008.
        Purchases could not be immediately adjusted to reduce this due to
        long lead times with foreign suppliers. Purchases are being managed
        closely and the year-over-year increase in inventory has started to
        decline since Q4 2008 with plans in place to further reduce
        inventories to appropriate levels over the next two quarters.
    

    Accounts payable and other decreased as a result of paying merchandise
vendors promptly to take advantage of early payment term discounts, the
completion of the Eastern Canada Distribution Centre and a lower
mark-to-market liability of certain stock compensation plans as a result of a
lower CTC Class A Non-Voting share price.

    5.1.4 Loans receivable

    Our loans receivable securitization program is designed to provide a
cost-effective source of funding for Financial Services. Loans receivable were
as follows at the indicated dates:

    
                                                          April        March
    ($ in millions)                                     4, 2009     29, 2008
    -------------------------------------------------------------------------
    Securitized                                       $ 2,214.8    $ 2,894.5
    Non-securitized                                     1,657.2        790.6
    -------------------------------------------------------------------------
    Net managed loans receivable                      $ 3,872.0    $ 3,685.1
    -------------------------------------------------------------------------
    

    Net managed loans receivable continued to increase over the last 12
months as customers' use of the Canadian Tire Options MasterCard and Canadian
Tire Gas Advantage MasterCard grew and mortgage volumes increased. At the end
of the first quarter of 2009, net managed loans receivable were 5.1 percent
higher than at the end of the first quarter of 2008.
    CTB sells co-ownership interests in credit card loans to GCCT. The
Company does not have a controlling interest in GCCT, so we do not include
financial results of GCCT in our Consolidated Financial Statements.
    We record the sale of loans receivable in accordance with CICA's
Accounting Guideline 12, "Transfers of Receivables". See note 1 in the Notes
to the 2008 Consolidated Financial Statements.
    We expect the continued growth in the average balances of Canadian Tire
MasterCard credit card accounts to lead to an increase in total loans
receivable in 2009. Financial Services expects to continue to fund this
increase from the sale of co-ownership interests in credit card loans to GCCT,
deposit raising by CTB and bank borrowing. GCCT is a third party trust that
was formed to buy our credit card loans and also issues debt to third party
investors to fund its credit card loans purchases. The success of the
securitization program is dependent on GCCT's ability to obtain funds from
third parties by issuing debt instruments with high credit ratings. Refer to
section 5.0 above for a listing of GCCT's credit ratings and prevailing market
conditions.
    The trustee and custodian for GCCT, Computershare Trust Company of
Canada, manages the co-ownership interest and acts as agent for, and on behalf
of, CTB and GCCT, as the owners of the co-ownership interests. BNY Trust
Company of Canada acts as indenture trustee with respect to GCCT and manages
the security interests of the holders of the senior and subordinated notes
issued by GCCT. We are currently not aware of any events, commitments, trends
or uncertainties that may have a negative impact on our arrangement with GCCT.

    6.0 Equity

    The book value of Common and Class A Non-Voting Shares at the end of the
first quarter of 2009 was $43.61 per share compared to $39.19 at the end of
the first quarter of 2008.
    We have a policy of repurchasing Class A Non-Voting Shares to offset the
dilutive effect of shares issued to fulfill the Company's obligations under
various employee profit sharing, stock option and share purchase plans and the
dividend reinvestment plan. In the long term, these repurchases are expected
to offset the issuance of new Class A Non-Voting Shares. In addition, the
Company may purchase additional Class A Non-Voting Shares if the Board
determines, after consideration of market conditions and the Company's
financial flexibility and investment opportunities, that a purchase of
additional Class A Non-Voting Shares is an appropriate means of enhancing the
value of the remaining Class A Non-Voting Shares.
    On February 12, 2009, we announced our intention to initiate a NCIB to
purchase up to 3.4 million of the issued and outstanding Class A Non-Voting
Shares over the 12-month period ending February 18, 2010.
    A NCIB is a bid by a listed company to buy back its shares, up to a
prescribed number, on a stock exchange, subject to certain rules that protect
investors. A total of approximately 0.5 million Class A Non-Voting Shares were
purchased in 2008 under the previous NCIB.

    
    Shares outstanding
                                                          April        March
                                                        4, 2009     29, 2008
    -------------------------------------------------------------------------
    Class A Non-Voting Shares (CTC.A)
      Shares outstanding at beginning of year        78,178,066   78,048,062
      Shares issued under plans(1)                      218,388      103,395
      Shares purchased under NCIB                      (222,100)    (100,000)
    -------------------------------------------------------------------------
      Shares outstanding at end of quarter           78,174,354   78,051,457
    Common Shares (CTC)
      Shares outstanding at beginning and end
       of the quarter                                 3,423,366    3,423,366
    -------------------------------------------------------------------------
    (1) We issue shares under various employee profit sharing and share
        purchase plans, and the dividend reinvestment plan.
    

    Dividends

    Dividends of approximately $17.1 million were declared on Common and
Class A Non-Voting Shares in the first quarter of 2009 compared to dividends
of $17.1 million in the first quarter of 2008, reflecting the Board of
Directors' decision in February 2009 to maintain the annual dividend rate at
$0.84 per share. The first quarterly dividend at the 2009 rate was declared on
February 12, 2009 in the amount of $0.21 per share payable on June 1, 2009 to
shareholders of record as of April 30, 2009. The second quarterly dividend was
declared on May 14, 2009 in the amount of $0.21 per share payable on September
1, 2009 to shareholders of record as of July 31, 2009.

    Dividend policy

    Canadian Tire's policy is to maintain dividend payments equal to
approximately 15 to 20 percent of the prior year's normalized basic net
earnings per share, after giving consideration to the period-end cash
position, future cash requirements, capital market conditions and investment
opportunities. Normalized earnings per share for this purpose excludes gains
and losses on the sale of credit card and loans receivable and non-recurring
items but includes gains and losses on the ordinary course disposition of
property and equipment.

    7.0 Investing activities

    7.1 Q1 2009 Capital expenditures program

    Canadian Tire's capital expenditures, on an accrual basis, totaled $79
million in the first quarter of 2009 (including intangible assets such as
software acquisitions), approximately 30 percent lower than the $113 million
spent in the first quarter of 2008. These capital expenditures were comprised
of:

    
    -   $59 million for real estate projects, including projects associated
        with the rollout of CTR's new store formats;
    -   $11 million for information technology; and
    -   $9 million for other purposes.
    

    Overall, capital investment has slowed since the first quarter of 2008,
as the large majority of the investment in the construction of the Eastern
Canada Distribution Centre is complete. We have also begun to focus on the
next store concept renewals, including our Small Market stores, which are less
capital-intensive than the 20/20 store rollout.

    7.2 2009 Capital expenditures plan

    In light of current market conditions, the 2009 capital expenditure plan
which had originally been set at $390 million was reduced to $360 million. Our
revised capital plan includes the following expenditures:

    
    -   $174 million for real estate projects, including $130 million
        associated with the rollout of CTR's new store formats;
    -   $67 million for information technology;
    -   $26 million for CTR distribution centres;
    -   $23 million for energy management and lighting;
    -   $19 million for Automotive Infrastructure; and
    -   $51 million for other purposes
    

    8.0 Foreign operations

    The Company has established operations outside of Canada including
offshore activities in Bermuda and the Pacific Rim. For an overview of our
foreign operations, see section 11.0 of the MD&A contained in the 2008
Financial Report.

    9.0 Tax matters

    In the ordinary course of business, the Company is subject to ongoing
audits by tax authorities. While the Company believes that its tax filing
positions are appropriate and supportable, from time to time certain matters
are reviewed and challenged by the tax authorities.
    The main issues challenged by the Canada Revenue Agency (CRA) relate to
the tax treatments of commissions paid to foreign subsidiaries of the Company
(covering periods from 1995 to 2007), and dividends received on an investment
made by a wholly-owned subsidiary of the Company related to reinsurance
(covering periods from 1999 to 2003). The applicable provincial tax
authorities have reassessed and are also expected to issue further
reassessments on these matters for the corresponding periods.
    The Company has agreed with the CRA to settle the commissions issue for
the period 1995-2003, although the determination of the final tax liability
pursuant to the settlement is subject to the verification by the CRA of
certain information provided by the Company. The Company believes the
provincial tax authorities will also reassess on the same basis. The Company
does not have a significant exposure on this issue subsequent to the 2003
taxation year.
    The reassessments with respect to the dividends received issue are based
on multiple grounds, some of which are highly unusual. The Company has
appealed the reassessments and the matter is currently pending before the Tax
Court of Canada. If the CRA (and applicable provincial tax authorities) were
entirely successful in their reassessments - an outcome that the Company and
its tax advisors believe to be unlikely - it is estimated that the total
liability of the Company for additional taxes, interest and penalties could be
approximately $189.6 million. Although the Company has appealed these
reassessments, current tax legislation requires the Company to remit to the
CRA and its provincial counterparts approximately $117.1 million related to
this matter, of which $112.7 million had been remitted by the end of the
quarter.
    The Company regularly reviews the potential for adverse outcomes in
respect of tax matters. The Company believes that the ultimate disposition of
the settlements, finalization on the commissions issue, resolution of the
dividends received issue and other tax matters, will not have a material
adverse effect on its liquidity, consolidated financial position or results of
operations because the Company believes that it has adequate provision for
these tax matters. Should the ultimate tax liability materially differ from
the provisions, the Company's effective tax rate and its earnings could be
affected, positively or negatively, in the period in which the matters are
resolved.
    During the current quarter, the tax provision has been reduced by $4.6
million due to the retroactive change in the taxation of gains realized from
the disposition of shares during 2006 and 2007.

    10.0 Off-balance sheet arrangements

    10.1 Glacier Credit Card Trust

    As noted earlier, GCCT was formed to buy our credit card loans and it
issues debt to third-party investors to fund its credit card loans purchases.
Refer to section 5.1.4 of this MD&A for additional information on GCCT.

    10.2 Trust financing for Dealers

    A financing program has been established to provide an efficient and
cost-effective way for Dealers to access the majority of the financing they
require for their store operations.
    We are aware that the participating banks wish to amend the program on
termination of the existing agreement. They must provide a six month notice
period before any amendments are effective. As a result, while we are under no
contractual obligation to provide financial support to our Dealers who
participate in the arrangement, we are actively working with the Dealers and a
number of banks, including the existing participating banks, to extend the
availability of financing to the Dealers on appropriate terms and conditions.
    Refer to MD&A section 13.2 of our 2008 Financial Report for additional
information on this program.

    10.3 Bank financing for Dealers and PartSource franchisees

    We have guaranteed the bank debt of some Dealers and some PartSource
franchisees. The total is approximately $31 million. Refer to MD&A section
13.3 of our 2008 Financial Report for additional information on this program.

    10.4 Derivative financial instruments

    We use derivative financial instruments to manage our exposure to changes
in interest rates and foreign currency exchange rates. We also use equity
derivative contracts to hedge certain future stock-based compensation
expenses. We do not use hedging to speculate, but rather as a risk management
tool. Refer to MD&A section 13.4 of our 2008 Financial Report for additional
information on derivative financial instruments.

    11.0 Enterprise risk management

    The Company approaches the management of risk strategically through its
Enterprise Risk Management (ERM) framework in order to mitigate the impact of
principle risks on its business and operations. Introduced in 2003, the ERM
framework sets out principles and tools for identifying, evaluating,
prioritizing, monitoring and managing risk effectively and consistently across
the Company.
    The ERM framework and the principal risks that the Company manages on an
ongoing basis are described in detail in sections 14.0 and 14.2, respectively,
of the MD&A in our 2008 Financial Report.
    Management reviews risks on an ongoing basis and did not identify any new
principal risks during the first quarter of 2009. Subsequent to the first
quarter, there was an outbreak of the H1N1 flu virus (Human Swine Flu) with
confirmed cases in Canada. The Company's crisis management and emergency
response structures and protocols are in place to address these and other
types of hazards and business interruptions. These practices are being applied
during this outbreak to protect our employees, customers and suppliers and the
Company is also taking the opportunity to review and enhance our existing
practices.

    11.1 Financial instruments

    The following discussion on risks and risk management includes some of
the required disclosures under the CICA Handbook Section 3862 - Financial
Instruments - Disclosures related to the nature and extent of risks arising
from financial instruments, as required by the standard. Further information
is also available in note 10 of the Notes to the Consolidated Financial
Statements.
    The Company is exposed to a number of risks associated with financial
instruments that have the potential to affect its operating and financial
performance. The Company's primary financial instrument risk exposures are
allowances for credit losses and liquidity risk. The Company also has
financial risk exposures to foreign currency risk and interest rate risk which
may be managed through the use of derivative financial instruments. The
Company does not use derivative financial instruments for trading or
speculative purposes.

    Allowance for credit losses

    The Company's allowances for receivables are maintained at levels which
are considered adequate to provide for future credit losses. A continuity of
the Company's allowances for credit losses is as follows:

    
                                      Credit card loans       Other loans(1)
                                     ----------------------------------------
                                         April     March     April      March
    ($ in millions)                    4, 2009  29, 2008   4, 2009   29, 2008
                                     ----------------------------------------

    Balance, beginning of year        $   51.8  $   51.5  $    3.5  $    2.7
    Provision for credit losses           36.6      15.7       1.7       1.7
    Recoveries                             4.6       3.6       0.2       0.1
    Write-offs                           (32.6)    (25.2)     (2.2)     (1.8)
                                     ----------------------------------------
    Balance, end of period            $   60.4  $   45.6  $    3.2  $    2.7
                                     ----------------------------------------


                                       Accounts receivable        Total
                                     ----------------------------------------
                                         April     March     April     March
    ($ in millions)                    4, 2009  29, 2008   4, 2009  29, 2008
                                     ----------------------------------------

    Balance, beginning of year        $    3.3  $    5.0  $   58.6  $   59.2
    Provision for credit losses            0.7       0.3      39.0      17.7
    Recoveries                               -         -       4.8       3.7
    Write-offs                            (0.2)     (2.3)    (35.0)    (29.3)
                                     ----------------------------------------
    Balance, end of period            $    3.8  $    3.0  $   67.4  $   51.3
                                     ----------------------------------------

    (1) Other loans include personal loans, mortgages loans and lines of
        credit loans.
    

    Foreign currency risk

    The Company has significant demand for foreign currencies, primarily
United States dollars, due to global sourcing. However, it manages its
exposure to foreign exchange rate risk through active hedging programs and
through its ability, subject to competitive conditions, to pass on changes in
foreign currency exchange rates through pricing. Refer to section 5.0 above
for additional information on our foreign currency hedging program.

    Liquidity risk

    The following table summarizes the Company's contractual maturity for its
financial liabilities. The table includes both interest and principal cash
flows.

    
    ($ in millions)                     1 year   2 years   3 years   4 years
                                      ---------------------------------------

    Deposits                          $  665.4  $  203.2  $  159.9  $   94.3
    Accounts payable and other(1)      1,220.5         -         -         -
    Long-term debt                        11.4     459.3      21.4       9.1
    Interest payment(2)                  102.0      84.2      69.2      64.6
    Other                                    -         -         -         -
                                      ---------------------------------------
    Total                             $1,999.3  $  746.7  $  250.5  $  168.0
                                      ---------------------------------------


    ($ in millions)                    5 years Thereafter    Total
                                      -----------------------------

    Deposits                          $  420.8  $      -  $1,543.6
    Accounts payable and other(1)            -         -   1,220.5
    Long-term debt                         7.0     861.6   1,369.8
    Interest payment(2)                  142.4     653.2   1,115.6
    Other                                  4.2         -       4.2
                                      -----------------------------
    Total                             $  574.4  $1,514.8  $5,253.7
                                      -----------------------------

    (1) Includes commercial paper.
    (2) Includes interest payments on deposits and long-term debt.
    

    Interest rate risk

    The Company is exposed to interest rate risk, which it manages through
the use of interest rate swaps. The Company has a policy in place whereby a
minimum of 75 percent of its long-term debt (term greater than one year) must
be at fixed versus floating interest rates. The Company is in compliance with
the policy.

    11.2 Other risks

    In addition to the Principal Risks noted in section 11.0 above, and the
business-specific risks identified in section 3.3.1.4 for CTR, section 3.3.2.4
for Mark's, section 3.3.3.4 for Petroleum and section 3.3.4.4 for Financial
Services, other risks may also have a significant impact on earnings, business
operations, and our reputation. These other risks include, but are not limited
to, the Company's ability to acquire and develop real estate properties,
disruptions in the capital markets to finance the expansion of the retail
network, the ability of our Dealers to secure financing through the
aforementioned third-party Trusts (see section 10.2) or through other means,
changes in commodity prices that could affect the Company's profitability,
fluctuating foreign currency exchange rates which could impact cross-border
shopping patterns and the purchase price of our goods, disruptions in the
global supply of gasoline and customers' inability to repay their Canadian
Tire credit card or loan balances.

    12.0 Critical accounting estimates

    The Company estimates certain amounts reflected in its financial
statements using detailed financial models that are based on historical
experience, current trends and other assumptions that are believed to be
reasonable under the circumstances. Actual results could differ from those
estimates. In our judgment, the accounting policies and estimates detailed in
note 1 of the Notes to the Consolidated Financial Statements for the quarter
ended April 4, 2009 do not require us to make assumptions about matters that
are highly uncertain and accordingly none of the estimates is considered a
"critical accounting estimate" as defined in Form 51-102F1 published by the
Ontario Securities Commission, except as noted below.
    In view of the recent turmoil in credit markets and economic recession
being experienced in Canada, the Company reviewed the allowance for credit
losses at Financial Services and considers it to be a "critical accounting
estimate". The allowance for credit losses adjusts the value of the Financial
Services loan portfolio to reflect its estimated realizable value. Financial
Services' allowance for impaired loans receivable for each of credit card,
personal, mortgage and line of credit loans is determined using historical
loss experience of account balances based on the aging and arrears status,
with certain adjustments for other relevant circumstances influencing the
recoverability of the loans receivables. A robust model is used and is based
on economic conditions and trends specific to Financial Services. The
allowance for impaired credit card loans (the largest portfolio) is comprised
of general, bankruptcy and fraud risk components. Changes in circumstances
including, but not limited to, changes in the aging of accounts and changes in
the bankruptcies experienced may cause future assessments of credit risk to be
materially different from current assessments, which could require an increase
or decrease in the allowance for credit losses. The impairment provisions for
personal loans and line of credit loans operate in similar fashion.
    Further details on consumer credit risk may be found in section 3.3.4.4
(Financial Services' business risk).

    13.0 Contractual obligations

    
    Contractual obligations due by period

                                        In the
                                     remaining
                                          nine  In years  In years
                                        months    2010 -    2012 -     After
    ($ in millions)            Total   of 2009      2011      2013      2013
    -------------------------------------------------------------------------
    Long-term debt(1)       $1,322.0  $    4.9  $  466.0  $    1.1  $  850.0
    Capital lease
     obligations                47.8       5.2      14.8      14.9      12.9
    Operating leases         2,122.3     176.3     420.2     357.8   1,168.0
    Purchase obligations       909.9     700.6     142.5      51.4      15.4
    Financial Services
     deposits                1,543.6     573.7     427.0     488.3      54.6
    Other obligations           34.3       8.5      10.1       6.4       9.3
    -------------------------------------------------------------------------
    Total contractual
     obligations            $5,979.9  $1,469.2  $1,480.6  $  919.9  $2,110.2
    -------------------------------------------------------------------------

    (1) Interest obligations are not included.
    

    14.0 Changes in accounting policies

    The numbers reflected in this MD&A have been calculated using the same
accounting policies and methods of their application as the most recently
issued annual financial statements for the 53 weeks ended January 3, 2009
(contained in our 2008 Annual Report), except as noted below.

    14.1 Financial Statement Concepts

    Effective, January 4, 2009 (the first day of the Company's 2009 fiscal
year), the Company applied the amendments issued by the CICA to HB 1000 -
Financial Statement Concepts, which clarify the criteria for recognition of an
asset and the timing of expense recognition, specifically, deleting the
guidance permitting the deferral of costs. The new requirements are effective
for interim and annual financial statements for fiscal years beginning on or
after October 1, 2008. The Company applied the amendments to CICA HB 1000 in
conjunction with CICA HB 3064 - Goodwill and Intangible Assets.

    14.2 Goodwill and Intangible Assets

    Effective, January 4, 2009, the Company implemented, on a retrospective
basis with restatement, the CICA HB 3064 - Goodwill and Intangible Assets,
which was effective for interim and annual financial statements for fiscal
years beginning on or after October 1, 2008.
    This new standard provides guidance on the recognition, measurement,
presentation and disclosure of goodwill and intangible assets, including
internally developed intangibles, and is consistent with the revised asset
definition and recognition criteria in CICA HB 1000 - Financial Statement
Concepts. Under the new standard, costs related to development projects can be
recorded as assets only if they meet the definition of an intangible asset.
    Additionally, the new standard requires that internally developed
computer software that is not an integral part of the related hardware
(previously included in property and equipment) be included in intangible
assets. As these costs have a limited useful life, they continue to be
amortized over a five year period.
    As a result of the retrospective implementation of these standards, the
cumulative impact on previously reported balances on the following dates is as
follows:

    
                                                  Increase/(Decrease)
    -------------------------------------------------------------------------
                                           January        March     December
    ($ in millions)                        3, 2009     29, 2008     29, 2007
    -------------------------------------------------------------------------
    Retained earnings                     $   (3.1)    $   (3.9)    $   (4.3)
    Long-term receivables and other
     assets                                   (3.3)        (4.0)        (4.6)
    Intangible assets                        189.5        173.8        174.0
    Property and equipment                  (190.9)      (175.6)      (175.8)
    Income taxes recoverable                   0.4          0.2          0.4
    Future income tax liabilities             (1.2)        (1.7)        (1.7)
    -------------------------------------------------------------------------
    

    In addition, the retrospective impact on depreciation and amortization
for the 13 weeks ended March 29, 2008 was a decrease of $0.6 million. The
retrospective impact on net earnings for the 13 weeks ended March 29, 2008 was
an increase of $0.4 million, or $nil per share. See note 2 in the Notes to the
Consolidated Financial Statements for additional information.

    14.3 Credit Risk and the Fair Value of Financial Assets and Financial
    Liabilities

    Effective, January 4, 2009, the Company implemented, on a retrospective
basis without restatement of prior periods, the CICA Emerging Issues Committee
(EIC) 173 - Credit Risk and the Fair Value of Financial Assets and Financial
Liabilities, which is effective for interim and annual financial statements
for periods ending on or after January 20, 2009.
    This EIC clarifies that an entity's own credit risk and the credit risk
of the counterparty should be taken into account in determining the fair value
of financial assets and financial liabilities, including derivative
instruments, rather than using a risk free rate.
    Entities are required to re-measure the financial assets and liabilities,
including derivative instruments, as at the beginning of period of adoption
(i.e. the beginning of fiscal 2009) to take into account its own credit risk
and counterparty credit risk. Any resulting difference would be recorded as an
adjustment to retained earnings, except a) derivatives in a fair value hedging
relationship accounted for by the "shortcut method", in which case the
resulting difference would adjust the basis of the hedged item; and b)
derivatives in cash flow hedging relationships, in which case the resulting
difference would be recorded in accumulated Other Comprehensive Income (OCI).
    As a result of the retrospective implementation of this new standard,
opening accumulated other comprehensive income decreased by $2.5 million and
opening retained earnings increased by $1.1 million.

    14.4 Business Combinations

    In January 2009, the CICA issued CICA HB 1582 - Business Combinations,
which will replace CICA HB 1581 - Business Combinations. The CICA also issued
CICA HB 1601 - Consolidated Financial Statements and CICA HB 1602 -
Non-Controlling Interests, which will replace CICA HB 1600 - Consolidated
Financial Statements. The new standards are effective for fiscal years
beginning on or after January 1, 2011, with early adoption permitted. The
objective of the new standards is to harmonize Canadian GAAP for business
combinations and consolidated financial statements with the International and
U.S. accounting standards. The new standards are to be applied prospectively
to business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after January
1, 2011, with earlier application permitted. Assets and liabilities that arose
from business combinations whose acquisition dates preceded the application of
the new standards will not be adjusted upon application of these new
standards.

    14.5 International Financial Reporting Standards

    In February 2008, the CICA announced that Canadian GAAP for publicly
accountable enterprises will be replaced by International Financial Reporting
Standards (IFRS) for fiscal years beginning on or after January 1, 2011.
Companies will be required to provide IFRS comparative information for the
previous fiscal year. Accordingly, the conversion from Canadian GAAP to IFRS
will be applicable to the Company's reporting for the first quarter of 2011,
for which the current and comparative information will be prepared under IFRS.
The Company expects the transition to IFRS to impact accounting, financial
reporting, internal control over financial reporting, taxes, IT systems and
processes as well as certain contractual arrangements.
    Given the magnitude of the effort involved in this conversion, the
project (which employs formal project management practices) has been developed
in three main phases.

    Phase One: Preliminary Scoping and Diagnostic Impact Assessment

    This phase consisted of a high-level assessment to identify key areas of
Canadian GAAP - IFRS differences that were most likely to impact the Company.
The assessment was completed over the period 2007-2008 and was integral in
prioritizing and resourcing the work streams identified below to enable the
subsequent steps in the process. Activities in this phase also included the
recruitment and training of core internal technical resources to be deployed
on the conversion project and retained afterwards to support ongoing training
of other finance personnel dealing with the more complex technical accounting
requirements of IFRS.

    Phase Two: Detailed Analysis and Design

    This phase, commenced in Q4 2008, involves the detailed assessment, from
an accounting, reporting and business perspective, of the changes that will be
caused by the conversion to IFRS. This phase initiates the launch of 13
accounting topic - specific "work streams" that are most relevant to the
Company and 4 general work streams. This phase also included the
standardization of criteria used to assess the appropriateness of accounting
policy choices in cases were choices are permissible under IFRS.
    Accounting specific work streams include revenue recognition, tangible
assets (including leases), impairments, provisions, contingent liabilities and
contingent assets, business combinations, consolidations, securitization
transactions, borrowing costs, compensation and benefits, financial
instruments, income taxes, software and intangibles and financial statement
presentation and disclosure. General work streams include contracts review,
employee education and training, IT systems and communication. The design
deliverables coming out of these work streams will include the documentation
of the rationale supporting accounting policy choices, new disclosure
requirements and their sources and implementation guidance for business units
and corporate groups as they undertake the execution phase noted below. The
deliverables for all accounting specific work streams are expected by the end
of Q2 2009. These will include the approval of new accounting policies,
including transitional elections. Some of the general work streams, such as
the education and training and communication work streams will continue
throughout the duration of the conversion project. The latter will involve not
only key finance employees but also other staff and management as well as the
Audit Committee, Board and external parties such as investors and analysts.

    Phase Three: Execution

    This phase involves executing the work completed in phase two by making
changes to business and accounting processes and supporting information
systems within each business unit and corporate group as well as the formal
documentation of the final approved accounting policies and procedures
compliant with IFRS. A quantification of anticipated business impacts will be
undertaken as well as a drafting of the pro-forma financial statement formats
and notes thereto that will be existent under IFRS. Details surrounding the
collection of comparative financial and other data in 2010 will also be
finalized during this stage. This stage will also involve the cascading of the
training plan to all staff having key accounting and reporting and investor
relations functions.
    This phase is expected to be completed by the end of Q2 2010.
    The following table summarizes our progress to date against the
milestones contained in the key elements of the transition plan:

    
    IFRS transition progress
    -------------------------------------------------------------------------
                                   Milestones/             Progress to
         Key Activity             Target Dates            April 30, 2009
    -------------------------------------------------------------------------
    Project governance       December 31, 2008       - governance practices
    - steering committee                               established
      formation                                      - program office,
    - project resourcing                               steering committee
    - progress reporting                               and working committee
      protocols                                        formed
    - project management                             - project status
      practices                                        reporting developed
                                                       and implemented
    -------------------------------------------------------------------------
    Financial statement      Ready for commencement  - fundamental Canadian/
     preparation             for 2011 financial year;  IFRS differences
    - identification of      quantification of         identified
      differences in         effects of change for   - criteria for
      Canadian GAAP/IFRS     IFRS 1 disclosures and    accounting policy
      accounting policies    comparative 2010          choice selection
      and choices            financial statements      established
    - selection of entity's  including note          - critical work stream
      continuing accounting  disclosure by             teams dealing with
      IFRS policies          September 2010            individual policy
    - selection of IFRS 1    (exclusive of Q4 2010     selection
      accounting policy      results)                  recommendations in
      choices                                          progress
    - financial statement
      format, including
      alternative performance
      measures
    - changes in note
      disclosure
    - quantification of IFRS
      1 disclosures for 2010
    -------------------------------------------------------------------------
    Infrastructure: IFRS     Internal education and  - resource requirements
    expertise                communication ready       identified
    - retraining of key      for issuance in Q2 2010 - internal and recruited
      finance and            External education and    resources deployed
      operational staff      communication ready     - additional consulting
    - education of           for issuance in Q4        support identified
      management, Audit      2010                    - initial training
      Committee and external                           completed for core
      constituents regarding                           project staff,
      IFRS implications                                senior management,
                                                       Board of Directors,
                                                       Audit Committee and
                                                       work stream members
    -------------------------------------------------------------------------
    Infrastructure:          Ready for capturing     - identified changes
    - information technology 2010 comparative data     required to systems -
      changes to support     in Q3 2010                ongoing
      IFRS reporting
      requirements
    -------------------------------------------------------------------------
    Business implications    GAAP-based clauses to   - process to review
    assessment: financial    be identified for         contracts has been
    covenants and practices  renegotiation with        established
    (including               counterparties by Q2
    securitization)          2010.
    - business contract      Renegotiation is a
      review/renegotiation   business matter that
    - financial debt         is outside the scope
      covenant assessments   of the conversion
    - off-balance sheet      project.
      Trust assessments
    -------------------------------------------------------------------------
    Control environment:     Approval and sign-off   - not yet commenced
    Internal control over    of all accounting
    financial reporting      changes and CEO/CFO
    (ICFR)                   certification process
                             complete by end of Q4
                             2010
    -------------------------------------------------------------------------
    

    15.0 Non-GAAP measures

    The following measures included in this MD&A do not have a standardized
meaning under Canadian generally accepted accounting principles (GAAP) and may
not be comparable to similar measures presented by other companies:

    
    -   EBITDA (earnings before interest, income taxes, depreciation and
        amortization);
    -   adjusted earnings; and
    -   same store sales
    

    EBITDA

    With the exception of Financial Services, we consider EBITDA to be an
effective measure of the contribution of each of our businesses to our
profitability on an operational basis, before allocating the cost of income
taxes and capital investments. EBITDA is also commonly regarded as an indirect
measure of operating cash flow, a significant indicator of success for many
businesses.
    A reconciliation of EBITDA to the most comparable GAAP measure (earnings
before income taxes) is provided as follows:

    
    Reconciliation of EBITDA to GAAP measures(1)

    ($ in millions)                                     Q1 2009    Q1 2008(2)
    -------------------------------------------------------------------------
    EBITDA(3)
      CTR                                              $   96.8     $  102.1
      Financial Services                                   46.7         60.4
      Petroleum                                            10.4          9.0
      Mark's                                                2.2          3.0
    -------------------------------------------------------------------------
      Total EBITDA                                     $  156.1     $  174.5
    -------------------------------------------------------------------------
    Less: Depreciation and amortization expense
        CTR                                            $   45.9     $   42.0
        Financial Services                                  2.5          2.6
        Petroleum                                           4.4          4.0
        Mark's                                              6.5          5.4
    -------------------------------------------------------------------------
        Total depreciation and amortization expense    $   59.3     $   54.0
    -------------------------------------------------------------------------
      Interest expense(3)
        CTR                                            $   18.1     $   16.5
        Financial Services                                 11.7          3.6
        Mark's                                              0.6          1.0
    -------------------------------------------------------------------------
        Total interest expense                         $   30.4     $   21.1
    -------------------------------------------------------------------------

    Earnings (loss) before income taxes
      CTR                                              $   32.8     $   43.6
      Financial Services                                   32.5         54.2
      Petroleum                                             6.0          5.0
      Mark's                                               (4.9)        (3.4)
    -------------------------------------------------------------------------
    Total earnings before income taxes                 $   66.4     $   99.4
    -------------------------------------------------------------------------

    (1) Differences may occur due to rounding.
    (2) 2008 figures have been restated for the implementation, on a
        retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets
        and the amendments to CICA HB 1000 - Financial Statement Concepts.
        See section 14.1 and 14.2 for additional information.
    (3) Eliminations of inter-company transactions (eg. a loan of funds from
        one business unit to another), previously disclosed as a separate
        line item, are now presented net of these transactions.
    

    References to adjusted earnings

    In several places in this MD&A, we refer to adjusted pre-tax and
after-tax earnings before the impact of non-operating items. Historically,
non-operating items have included the net effect of securitization activities
and dispositions of surplus property and equipment. The timing and amount of
gains and losses from these items are not consistent from quarter to quarter.
We believe the adjusted figures allow for a clearer assessment of earnings for
each of our businesses and provide a more meaningful measure of our
consolidated and segmented operating results.
    From time to time adjusted earnings may also contain additional unusual
and/or non-recurring items which are explained in detail at that time.

    Same store sales

    Same store sales is the metric used by management, and most commonly used
in the retail industry, to compare retail sales growth in a more consistent
manner across the industry. CTR's same store sales includes sales from all
stores that have been open for more than 53 weeks (in a 52-week fiscal year)
or 54 weeks (in a 53-week fiscal year, such as in the case of the fiscal year
ended January 3, 2009) and therefore allows for a more consistent comparison
to other stores open during the period and to results in the prior year.

    16.0 Controls and procedures

    Changes in internal control over financial reporting

    During the first quarter of 2009, there have been no changes in the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company's
financial reporting.

    17.0 Other Investor Communication

    Caution regarding forward-looking information

    This MD&A contains forward-looking information that reflects management's
expectations related to expected future events, financial performance and
operating results of the Company. All statements other than statements of
historical facts included in this MD&A, including statements regarding the
prospects of the industries in which the Company operates, future plans,
expected financial position and business strategy of the Company, may
constitute forward-looking information. Forward-looking information and
statements include, but are not limited to, statements concerning possible or
assumed future results set out herein, our strategic goals and our priorities,
and the economic and business outlook for us, for each of our business
segments and for the Canadian economy. 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. The forward-looking information contained
in this MD&A is presented for the purpose of assisting the Company's security
holders in understanding its financial position and results of operation as at
and for the periods ended on the dates presented and the Company's strategic
priorities and objectives and may not be appropriate for other purposes. By
its very nature, forward-looking information requires the Company 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 or 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 or
conclusions reflected in the forward-looking information are reasonable, it
can give no assurance that such matters will prove to have been correct. Such
forward-looking information is not fact but only reflections of management's
estimates and expectations. Although the Company believes that this
forward-looking information is 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 or conclusions
as set forth in such forward-looking information for a variety of reasons.
These factors include (a) credit, market, 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(TM) (Petroleum) agents and PartSource(R) and Mark's Work
Wearhouse(R) (Mark's) store operators and franchisees; (c) the willingness of
customers to shop at our stores or acquire our financial products and
services; (d) risks and uncertainties relating to information management,
technology, product safety, competition, seasonality, commodity price and
business disruption, consumer credit, securitization funding, and foreign
currency; and (e) the 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, which risks and uncertainties are discussed in
section 11.0 (Enterprise risk management) for the quarter-ended April 4, 2009.
Additional risks related to specific business segments can be found in section
3.3.1.4 (CTR's business risks), section 3.3.2.4 (Mark's business risks),
section 3.3.3.4 (Petroleum's business risks) and section 3.3.4.4 (Financial
Services' business risks).

    For more information on the risks, uncertainties and assumptions that
could cause the Company's actual results to differ from current expectations,
please also refer to the Company's public filings available at www.sedar.com
and at corp.canadiantire.ca/en/investors. We caution that the foregoing list
of important factors is not exhaustive and other factors could also adversely
affect our results. Investors and other readers are urged to consider the
foregoing risks, uncertainties 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
statements 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 dispositions, acquisitions, other business transactions,
asset write-downs or other charges announced or occurring after such
statements are made. The forward-looking information in this MD&A reflects the
Company's expectations as of May 14, 2009, and is subject to change after this
date. The Company does not undertake to update any forward-looking
information, whether written or oral, that may be made from time to time by or
on its behalf, to reflect new information, future events or otherwise, unless
required by applicable securities laws.
    Information contained in or otherwise accessible through the websites
referenced above does not form part of this MD&A. All references in this MD&A
to websites are inactive textual references and are for your information only.

    Commitment to disclosure and investor communication

    Canadian Tire strives to maintain a high standard of disclosure and
investor communication and has been recognized as a leader in financial
reporting practices. In many cases, the Company's disclosure practices exceed
the requirements of current legislation. Reflecting our commitment to full and
transparent disclosure, the Investor Relations section of the Company's web
site includes the following documents and information of interest to
investors:

    
    -   Annual Information Form;
    -   Management Information Circular;
    -   quarterly reports;
    -   quarterly fact sheets; and
    -   conference call webcasts (archived for one year)
    

    The Company's Annual Information Form, Management Information Circular
and quarterly reports are also available on the SEDAR (System for Electronic
Disclosure and Retrieval) web site at www.sedar.com.
    If you would like to contact the Investor Relations department directly,
call Karen Meagher (416) 480-8058 or email investor.relations@cantire.com.



    
                             2009 FIRST QUARTER

                          INTERIM REPORT FINANCIALS



    Consolidated Statements of Earnings (Unaudited)
    -------------------------------------------------------------------------
                                                           13 weeks ended,
                                                        April 4,    March 29,
    (Dollars in millions except per share amounts)         2009         2008
    -------------------------------------------------------------------------
                                                                 (Restated -
                                                                      Note 2)

    Gross operating revenue                         $   1,758.1  $   1,825.3
    -------------------------------------------------------------------------

    Operating expenses
      Cost of merchandise sold and all other
       operating expenses except for the undernoted
       items (Note 12)                                  1,597.8      1,644.5
      Net interest expense (Note 7)                        30.4         21.1
      Depreciation and amortization                        59.3         54.0
      Employee Profit Sharing Plan                          4.2          6.3
    -------------------------------------------------------------------------
    Total operating expenses                            1,691.7      1,725.9
    Earnings before income taxes                           66.4         99.4

    Income taxes
      Current                                               7.4         32.3
      Future                                                9.3            -
    -------------------------------------------------------------------------
    Income taxes                                           16.7         32.3
    -------------------------------------------------------------------------
    Net earnings                                    $      49.7  $      67.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted earnings per share            $      0.61  $      0.82
    -------------------------------------------------------------------------
    Weighted average number of Common and
     Class A Non-Voting Shares outstanding           81,630,771   81,518,607
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows (Unaudited)
    -------------------------------------------------------------------------
                                                          13 weeks ended,
                                                        April 4,    March 29,
    (Dollars in millions)                                  2009         2008
    -------------------------------------------------------------------------
                                                                 (Restated -
                                                              Notes 2 and 16)
    Cash generated from (used for):

    Operating activities
      Net earnings                                  $      49.7  $      67.1
      Items not affecting cash
        Depreciation                                       46.7         40.6
        Net provision for loans receivable (Note 3)        38.3         17.3
        Amortization of intangible assets                  12.6         13.4
        Changes in fair value of derivative instruments       -          6.7
        Future income taxes                                 9.3            -
        Other                                               8.6          0.2
        Employee future benefits expense (Note 4)           1.5          1.6
        Impairments on property and equipment               0.7            -
        Impairment of other long-term investments (Note 11) 0.5          1.0
        Gain on disposals of property and equipment        (0.1)        (3.8)
        Securitization loans receivable                   (10.8)       (12.2)
        Gain on sales of loans receivable (Note 3)        (13.3)       (23.1)
    -------------------------------------------------------------------------
                                                          143.7        108.8
    -------------------------------------------------------------------------
    Changes in other working capital components          (492.7)      (532.7)
    -------------------------------------------------------------------------
    Cash used for operating activities                   (349.0)      (423.9)
    -------------------------------------------------------------------------

    Investing activities
        Additions to property and equipment               (76.1)      (125.8)
        Other long-term investments                       (50.1)           -
        Additions to intangible assets                    (19.3)       (12.5)
        Long-term receivables and other assets             (8.3)        (6.1)
        Other                                              (0.9)        (0.9)
        Purchases of stores                                (0.6)       (15.4)
        Net securitization of loans receivable              0.3        621.9
        Proceeds on disposition of property and equipment   0.7         14.9
        Investment in loans receivable, net               137.8        167.1
    -------------------------------------------------------------------------
    Cash (used for) generated from investing activities   (16.5)       643.2
    -------------------------------------------------------------------------

    Financing activities
        Net change in deposits (Note 16)                  396.2         32.1
        Commercial paper                                   81.9        158.2
        Other                                               0.2          0.5
        Repayment of long-term debt                        (5.2)        (1.0)
        Dividends                                         (17.1)       (15.0)
    -------------------------------------------------------------------------
    Cash generated from financing activities              456.0        174.8
    -------------------------------------------------------------------------
    Cash generated in the period                           90.5        394.1
    Cash and cash equivalents, beginning of period        429.0       (105.5)
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period
     (Note 8)                                       $     519.5  $     288.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income (Unaudited)
    -------------------------------------------------------------------------
                                                          13 weeks ended,
                                                        April 4,    March 29,
    (Dollars in millions)                                  2009         2008
    -------------------------------------------------------------------------
                                                                 (Restated -
                                                                      Note 2)

    Net earnings                                    $      49.7  $      67.1
    Other comprehensive income (loss), net of taxes
      Gain on derivatives designated as cash flow
       hedges, net of tax of $7.4 (2008 - $9.7)            15.5         19.8
      Reclassification to non-financial asset of
       (gain)/loss on derivatives designated as cash
       flow hedges, net of tax of $25.4 (2008 - $7.5)     (53.4)        15.5
      Reclassification to earnings of (gain)/loss on
       derivatives designated as cash flow hedges,
       net of tax of $0.1 (2008 - $1.5)                       -          3.0
    -------------------------------------------------------------------------
    Other comprehensive (loss) income                     (37.9)        38.3
    -------------------------------------------------------------------------
    Comprehensive income                            $      11.8  $     105.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
    -------------------------------------------------------------------------
                                                           13 weeks ended,
                                                        April 4,    March 29,
    (Dollars in millions)                                  2009         2008
    -------------------------------------------------------------------------
                                                                 (Restated -
                                                                      Note 2)
    Share capital
    Balance, beginning of period                    $     715.4  $     700.7
    Transactions, net (Note 5)                              4.4          1.2
    -------------------------------------------------------------------------
    Balance, end of period                          $     719.8  $     701.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contributed surplus
    Balance, beginning of period                    $         -  $       2.3
    Transactions, net                                         -         (0.8)
    -------------------------------------------------------------------------
    Balance, end of period                          $         -  $       1.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings
    Balance, beginning of period as previously
     reported                                       $   2,755.5  $   2,455.1
    Transitional adjustment on adoption of
     new accounting policies - HB 1000/3064
     (Note 2)                                              (3.1)        (4.3)
    -------------------------------------------------------------------------
    Balance, beginning of period as restated            2,752.4      2,450.8
    Transitional adjustment on adoption of new
     accounting policies - EIC 173 (Note 2)                 1.1            -
    Net earnings for the period                            49.7         67.1
    Dividends                                             (17.1)       (17.0)
    Repurchase of Class A Non-Voting Shares                (4.3)           -
    -------------------------------------------------------------------------
    Balance, end of period                          $   2,781.8  $   2,500.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss)
    Balance, beginning of period                    $      97.2  $     (50.0)
    Transitional adjustment on adoption of new
     accounting policies - EIC 173 (Note 2)                (2.5)           -
    Other comprehensive (loss) income for the period      (37.9)        38.3
    -------------------------------------------------------------------------
    Balance, end of period                          $      56.8  $     (11.7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings and accumulated other
     comprehensive income                           $   2,838.6  $   2,489.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Balance Sheets (Unaudited)
    -------------------------------------------------------------------------
    (Dollars in millions)                  April 4,    March 29,   January 3,
    As at                                     2009         2008         2009
    -------------------------------------------------------------------------
                                                    (Restated -  (Restated -
                                                 Notes 2 and 16)      Note 2)
    ASSETS
    Current assets
      Cash and cash equivalents
       (Note 8)                        $     519.5  $     288.6  $     429.0
      Accounts receivable                    731.0        514.5        824.1
      Loans receivable (Note 3)            1,544.0        705.3      1,683.4
      Merchandise inventories              1,104.4      1,021.3        917.5
      Income taxes recoverable               109.8         76.5         64.6
      Prepaid expenses and deposits           73.5         69.3         40.2
      Future income taxes                     30.1         57.7         20.2
    -------------------------------------------------------------------------
      Total current assets                 4,112.3      2,733.2      3,979.0
    -------------------------------------------------------------------------
    Long-term receivables and other
     assets (Note 3)                         235.2        242.9        262.1
    Other long-term investments, net
     (Note 11)                                74.8          6.6         25.2
    Goodwill                                  70.8         62.4         70.7
    Intangible assets                        255.1        226.2        247.9
    Property and equipment, net            3,213.7      3,160.4      3,198.9
    -------------------------------------------------------------------------
      Total assets                     $   7,961.9  $   6,431.7  $   7,783.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Commercial paper                        81.9        158.2            -
      Deposits                               658.3        129.7        540.7
      Accounts payable and other           1,157.9      1,236.2      1,444.2
      Current portion of long-term debt       11.4        156.7         14.8
    -------------------------------------------------------------------------
      Total current liabilities            1,909.5      1,680.8      1,999.7
    -------------------------------------------------------------------------
    Long-term debt                         1,373.8      1,355.5      1,373.5
    Future income taxes                       45.2         70.1         44.7
    Long-term deposits                       878.2         17.6        598.7
    Other long-term liabilities              196.8        115.1        202.2
    -------------------------------------------------------------------------
      Total liabilities                    4,403.5      3,239.1      4,218.8
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Share capital (Note 5)                   719.8        701.9        715.4
    Contributed surplus                          -          1.5            -
    Accumulated other comprehensive
     income (loss)                            56.8        (11.7)        97.2
    Retained earnings                      2,781.8      2,500.9      2,752.4
    -------------------------------------------------------------------------
      Total shareholders' equity           3,558.4      3,192.6      3,565.0
    -------------------------------------------------------------------------
      Total liabilities and
       shareholders' equity            $   7,961.9  $   6,431.7  $   7,783.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Notes to the Consolidated Financial Statements (Unaudited)
    -------------------------------------------------------------------------

    1.  Basis of Presentation

        These unaudited interim consolidated financial statements (the
        "financial statements") have been prepared by management in
        accordance with Canadian generally accepted accounting principles
        ("GAAP") and include the accounts of Canadian Tire Corporation,
        Limited and its subsidiaries, collectively referred to as the
        "Company". These financial statements do not contain all disclosures
        required by Canadian GAAP for annual financial statements, and
        accordingly, these financial statements should be read in conjunction
        with the most recently issued annual financial statements for the 53
        weeks ended January 3, 2009 contained in our 2008 Annual Report.

        The preparation of the financial statements in conformity with
        Canadian GAAP requires management to make estimates and assumptions
        that affect the reported amounts of assets and liabilities and
        disclosures of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenue and expenses
        during the reporting period. Actual results could differ from these
        estimates. Estimates are used when accounting for a number of items
        including, but not limited to, income taxes, impairment of assets
        (including goodwill), employee benefits, product warranties,
        inventory provisions, amortization, uncollectible loans,
        environmental reserves, asset retirement obligations, financial
        instruments, and the liability for the Company's loyalty programs.

    2.  Change in Accounting Policies

        These financial statements follow the same accounting policies and
        methods of their application as the most recently issued annual
        financial statements for the 53 weeks ended January 3, 2009, except
        as noted below.

        Financial Statement Concepts

        Effective, January 4, 2009 (the first day of the Company's 2009
        fiscal year), the Company applied the amendments issued by the
        Canadian Institute of Chartered Accountants (CICA) to HB 1000 -
        Financial Statement Concepts, which clarify the criteria for
        recognition of an asset and the timing of expense recognition,
        specifically, deleting the guidance permitting the deferral of costs.
        The new requirements are effective for interim and annual financial
        statements for fiscal years beginning on or after October 1, 2008.
        The Company applied the amendments to CICA HB 1000 in conjunction
        with CICA HB 3064 - Goodwill and Intangible Assets.

        Goodwill and Intangible Assets

        Effective, January 4, 2009, the Company implemented, on a
        retrospective basis with restatement, the CICA HB 3064 - Goodwill and
        Intangible Assets, which was effective for interim and annual
        financial statements for fiscal years beginning on or after October
        1, 2008.

        This new standard provides guidance on the recognition, measurement,
        presentation and disclosure of goodwill and intangible assets,
        including internally developed intangibles, and is consistent with
        the revised asset definition and recognition criteria in CICA HB 1000
        - Financial Statement Concepts. Under the new standard, costs related
        to development projects can be recorded as assets only if they meet
        the definition of an intangible asset.

        Additionally, internally developed computer software that is not an
        integral part of the related hardware was previously included in
        property and equipment. The new standard requires these costs to be
        included in intangible assets. As these costs have a limited useful
        life, they continue to be amortized over a 5 year period.

        As a result of the retrospective implementation of these standards,
        the cumulative impact on previously reported balances on the
        following dates is as follows:

        ($ in millions)                          Increase/(Decrease)
                                       --------------------------------------
                                         January 3,    March 29, December 29,
                                              2009         2008         2007
                                       --------------------------------------
        Retained earnings                    ($3.1)       ($3.9)       ($4.3)
        Long-term receivables and
         other assets                         (3.3)        (4.0)        (4.6)
        Intangible assets                    189.5        173.8        174.0
        Property and equipment              (190.9)      (175.6)      (175.8)
        Income taxes recoverable               0.4          0.2          0.4
        Future income tax liabilities         (1.2)        (1.7)        (1.7)

        In addition, the retrospective impact on depreciation and
        amortization for the 13 weeks ended March 29, 2008 was a decrease of
        $0.6 million. The retrospective impact on net earnings for the 13
        weeks ended March 29, 2008 was an increase of $0.4 million, or $nil
        per share.

        Credit Risk and the Fair Value of Financial Assets and Financial
        Liabilities

        Effective, January 4, 2009, the Company implemented, on a
        retrospective basis without restatement of prior periods, the CICA
        Emerging Issues Committee (EIC) 173 - Credit Risk and the Fair Value
        of Financial Assets and Financial Liabilities, which is effective for
        interim and annual financial statements for periods ending on or
        after January 20, 2009.

        This EIC clarifies that an entity's own credit risk and the credit
        risk of the counterparty should be taken into account in determining
        the fair value of financial assets and financial liabilities,
        including derivative instruments, rather than using a risk free rate.

        Entities are required to re-measure the financial assets and
        liabilities, including derivative instruments, as at the beginning of
        period of adoption (i.e. the beginning of fiscal 2009) to take into
        account its own credit risk and counterparty credit risk. Any
        resulting difference would be recorded as an adjustment to retained
        earnings, except a) derivatives in a fair value hedging relationship
        accounted for by the "shortcut method", in which case the resulting
        difference would adjust the basis of the hedged item; and b)
        derivatives in cash flow hedging relationships, in which case the
        resulting difference would be recorded in accumulated OCI.

        As a result of the retrospective implementation of this new standard,
        opening accumulated other comprehensive income decreased by
        $2.5 million and opening retained earnings increased by $1.1 million.

        Future accounting changes

        International Financial Reporting Standards (IFRS)

        In February 2008, the CICA announced that Canadian GAAP for publicly
        accountable enterprises will be replaced by International Financial
        Reporting Standards (IFRS) for fiscal years beginning on or after
        January 1, 2011. Companies will be required to provide IFRS
        comparative information for the previous fiscal year. Accordingly,
        the conversion from Canadian GAAP to IFRS will be applicable to the
        Company's reporting for the first quarter of 2011, for which the
        current and comparative 2010 information will be prepared under IFRS.
        The Company expects the transition to IFRS to impact accounting,
        financial reporting, internal control over financial reporting,
        taxes, IT systems and processes as well as certain contractual
        arrangements. The Company is currently assessing the impact of the
        transition to IFRS in the above areas and has deployed additional
        trained resources and formal project management practices and
        governance to ensure the timely conversion to IFRS.

        Business Combinations

        In January 2009, the CICA issued CICA HB 1582 - Business
        Combinations, which will replace CICA HB 1581 - Business
        Combinations. The CICA also issued CICA HB 1601 - Consolidated
        Financial Statements and CICA HB 1602 - Non-Controlling Interests,
        which will replace CICA HB 1600 - Consolidated Financial Statements.
        The new standards are effective for fiscal years beginning on or
        after January 1, 2011, with early adoption permitted. The objective
        of the new standards is to harmonize Canadian GAAP for business
        combinations and consolidated financial statements with the
        International and U.S. accounting standards. The new standards are to
        be applied prospectively to business combinations for which the
        acquisition date is on or after the beginning of the first annual
        reporting period beginning on or after January 1, 2011, with earlier
        application permitted. Assets and liabilities that arose from
        business combinations whose acquisition dates preceded the
        application of the new standards will not be adjusted upon
        application of these new standards.

    3.  Loans Receivable

        The Company sells pools of loans receivable (the Loans) to third
        party trusts (the Trusts) in transactions known as securitizations.
        The transactions are accounted for as sales in accordance with CICA
        Accounting Guideline 12 (AcG-12), Transfers of Receivables, and the
        Loans are removed from the Consolidated Balance Sheets.

        The Company retains the interest-only strip, and, for the personal
        loan securitization, a subordinated interest in the loans sold (the
        "seller's interest") and cash deposited with one of the Trusts (the
        "securitization reserve"), which are components of retained
        interests. The interest-only strip represents the present value of
        the expected spread to be earned over the collection period on the
        loans receivable sold. The expected spread is equal to the yield
        earned, less the net write-offs and interest expense on the loans
        receivable sold. The seller's interest and securitization reserve
        provide the Trust with a source of funds in the event that the
        interest and principal collected on the Loans is not sufficient to
        pay the Trust's creditors. The Trusts' recourse to the Company is
        limited to the interest-only strip, the seller's interest and the
        securitization reserve and for the credit card loan securitization,
        the additional enhancement required to be maintained.

        The proceeds of the sale are deemed to be the cash received,
        interest-only strip and securitization reserve, less any servicing
        obligation assumed. The servicing liability represents the Company's
        estimated cost of servicing the securitized loans and is amortized
        over the life of the securitized loans. The proceeds are allocated
        between the Loans, interest-only strip, seller's interest and
        securitization reserve based on their relative fair value at the date
        of sale, with any excess or deficiency recorded as a gain or loss on
        sale, respectively.

        The Trusts have not been consolidated in these financial statements
        because either they meet the criteria for a qualified special purpose
        entity (which are exempt from consolidation) or the Company is not
        the primary beneficiary.

        Quantitative information about loans managed and securitized by the
        Company is as follows:

                                                 Total principal amount
        ($ in millions)                          of receivables as at(1)
                                       --------------------------------------
                                           April 4,    March 29,   January 3,
                                              2009         2008         2009
                                       ------------ ------------ ------------
        Total net managed credit
         card loans                    $   3,621.7  $   3,479.2  $   3,780.4
        Credit card loans sold            (2,214.8)    (2,850.3)    (2,216.0)
                                       ------------ ------------ ------------
        Credit card loans held             1,406.9        628.9      1,564.4

        Total net managed personal
         loans(2)                             67.9        129.4         83.8
        Personal loans sold                      -        (44.3)           -
                                       ------------ ------------ ------------
        Personal loans held                   67.9         85.1         83.8

        Total net managed mortgage
         loans(3)                            163.1         48.4        138.8
                                       ------------ ------------ ------------

        Total net managed line of
         credit loans                         19.3         28.2         20.6
                                       ------------ ------------ ------------

        Total loans receivable             1,657.2        790.6      1,807.6
        Less: long-term portion(4)          (113.2)       (85.3)      (124.2)
                                       ------------ ------------ ------------

        Current portion of loans
         receivable                    $   1,544.0  $     705.3  $   1,683.4
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------


                                           Average balances
        ($ in millions)                 for the 13 weeks ended
                                       -------------------------
                                           April 4,    March 29,
                                              2009         2008
                                       ------------ ------------
        Total net managed credit
         card loans                    $   3,659.4  $   3,533.9
        Credit card loans sold            (2,215.6)    (2,542.2)
                                       ------------ ------------
        Credit card loans held             1,443.8        991.7

        Total net managed personal
         loans(2)                             75.8        133.3
        Personal loans sold                      -        (50.0)
                                       ------------ ------------
        Personal loans held                   75.8         83.3

        Total net managed mortgage
         loans(3)                            150.4         42.9
                                       ------------ ------------

        Total net managed line of
         credit loans                         20.0         24.0
                                       ------------ ------------

        Total loans receivable         $   1,690.0  $   1,141.9
                                       ------------ ------------
                                       ------------ ------------
        Less: long-term portion(4)

        Current portion of loans
         receivable

        (1) Amounts shown are net of allowance for credit losses.
        (2) Personal loans are unsecured loans that are provided to
            qualified existing credit cardholders for terms of three to five
            years. Personal loans have fixed monthly payments of principal
            and interest; however, the personal loans can be repaid at any
            time without penalty.
        (3) Mortgage loans are issued for terms of up to ten years, have
            fixed or variable interest rates, are secured and include a mix
            of both high and low ratio loans. High ratio loans are fully
            insured and low ratio loans are partially insured.
        (4) The long-term portion of loans is included in long-term
            receivables and other assets.

        Net credit losses for the owned portfolio for the 13 weeks ended
        April 4, 2009 were $38.3 million (2008 - $17.3 million). Net credit
        losses for the total managed portfolio for the 13 weeks ended April
        4, 2009 were $79.2 million (2008 - $62.3 million). Net credit losses
        consist of total write-offs (including regular and bankruptcy write-
        offs and consumer proposals), net of recoveries and any changes in
        allowances.

    4.  Employee Future Benefits

        The net employee future benefit expense for the 13 weeks ended April
        4, 2009 was $1.5 million (2008 - $1.6 million).

    5.  Share Capital

        ($ in millions)                    April 4,    March 29,   January 3,
                                              2009         2008         2009
                                      ------------- ------------ ------------

        Authorized
          3,423,366 Common Shares
          100,000,000 Class A
           Non-Voting Shares
        Issued
          3,423,366 Common Shares
           (March 29, 2008 -
           3,423,366)                  $       0.2  $       0.2  $       0.2

          78,174,354 Class A Non-Voting
           Shares (March 29, 2008  -
           78,051,457)                       719.6        701.7        715.2
                                      ------------- ------------ ------------
                                       $     719.8  $     701.9  $     715.4
                                      ------------- ------------ ------------
                                      ------------- ------------ ------------

        The Company issues and repurchases Class A Non-Voting Shares. The net
        excess of the issue price over the repurchase price results in
        contributed surplus. The net excess of the repurchase price over the
        issue price is allocated first to contributed surplus, to the extent
        of any previous net excess from the issue of shares, with any
        remainder allocated to retained earnings.

        The following transactions occurred with respect to Class A
        Non-Voting Shares:


                               13 weeks ended           13 weeks ended
        ($ in millions)         April 4, 2009            March 29, 2008
                          ------------------------- -------------------------
                             Number         $          Number         $
                          ------------ ------------ ------------ ------------
        Shares outstanding
         at the beginning
         of the period     78,178,066        715.2   78,048,062        700.5
        Issued                218,388          9.0      103,395          6.7
        Repurchased          (222,100)        (8.9)    (100,000)        (6.3)
        Excess of repurchase
         price over issue
         price (issue price
         over repurchase price)     -          4.3            -          0.8
                          ------------ ------------ ------------ ------------
        Shares outstanding
         at the end of
         the period        78,174,354        719.6   78,051,457        701.7
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    6.  Stock-based Compensation Plan

        All stock-based compensation plans are as disclosed in the most
        recently issued annual financial statements for the 53 weeks ended
        January 3, 2009 except as follows:

        2009 Performance Share Unit Plan

        The Company has granted 2009 Performance Share Units (2009 PSUs) to
        certain employees. Each 2009 PSU entitles the participant to receive
        a cash payment in an amount equal to the weighted average closing
        price of Class A Non-Voting Shares traded on the Toronto Stock
        Exchange for the 20-day period prior to and including the last day of
        the performance period, multiplied by an applicable multiplier
        determined by specific performance-based criteria. Compensation
        expense related to 2009 PSUs is accrued over the performance period
        based on the expected total compensation to be paid out at the end of
        the performance period. For the 13 weeks ended April 4, 2009,
        $0.3 million of compensation expense was recorded for the 2009 PSUs.

    7.  Segmented Information - Statement of Earnings

        ---------------------------------------------------------------------
                                                       13 weeks     13 weeks
                                                          ended        ended
                                                        April 4,    March 29,
                                                           2009         2008
                                                                 (Restated -
        ($ in millions)                                               Note 2)
        ---------------------------------------------------------------------
        Gross operating revenue
          CTR                                       $   1,099.3  $   1,071.3
          Financial Services                              217.3        208.7
          Petroleum                                       321.9        422.8
          Mark's                                          147.1        147.5
          Eliminations                                    (27.5)       (25.0)
                                                    -------------------------
          Total gross operating revenue             $   1,758.1  $   1,825.3
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Earnings (loss) before income taxes
          CTR                                       $      32.8  $      43.6
          Financial Services                               32.5         54.2
          Petroleum                                         6.0          5.0
          Mark's                                           (4.9)        (3.4)
                                                    -------------------------
        Total earnings before income taxes                 66.4         99.4
        Income taxes                                       16.7         32.3
                                                    -------------------------
        Net earnings                                $      49.7  $      67.1
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Net Interest expense(1)
          CTR                                       $      18.1  $      16.5
          Financial Services                               11.7          3.6
          Mark's                                            0.6          1.0
                                                    -------------------------
          Total interest expense                    $      30.4  $      21.1
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Depreciation and amortization expense
          CTR                                       $      45.9  $      42.0
          Financial Services                                2.5          2.6
          Petroleum                                         4.4          4.0
          Mark's                                            6.5          5.4
                                                    -------------------------
          Total depreciation and amortization
           expense                                  $      59.3  $      54.0
        ---------------------------------------------------------------------

        (1) Net interest expense includes interest on short-term and
            long-term debt, offset by passive interest income. Interest on
            long-term debt for the 13 weeks ended April 4, 2009 was
            $27.4 million (2008 - $20.7 million).

        Segmented Information - Total Assets

        ---------------------------------------------------------------------
                                           April 4,    March 29,   January 3,
                                              2009         2008         2009
                                                    (Restated -  (Restated -
                                                    Notes 2 and       Note 2)
        ($ in millions)                                      16)
        ---------------------------------------------------------------------
        CTR                            $   5,900.4  $   5,630.7  $   5,801.8
        Financial Services                 2,942.4      1,342.6      2,550.6
        Petroleum                            261.9        256.7        352.9
        Mark's                               550.6        506.6        509.0
        Eliminations                      (1,693.4)    (1,304.9)    (1,430.5)
                                       --------------------------------------
        Total                          $   7,961.9  $   6,431.7  $   7,783.8
        ---------------------------------------------------------------------


    8.  Cash and Cash Equivalents (Bank Indebtedness)

        The components of cash and cash equivalents are:

                                           April 4,    March 29,   January 3,
        ($ in millions)                       2009         2008         2009
                                       ------------ ------------ ------------
        Cash (bank overdraft)          $     (48.9) $     (62.9) $      59.2
        Short-term investments               568.4        351.5        369.8
                                       ------------ ------------ ------------
        Cash and cash equivalents      $     519.5  $     288.6  $     429.0
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------

    9.  Capital Management Disclosures

        The Company's objectives when managing capital are:

        -  minimizing the after-tax cost of capital;

        -  maintaining healthy liquidity reserves and access to capital; and

        -  maintaining flexibility in capital structure to ensure the
           ongoing ability to execute the Strategic Plan.

        Management includes the following items in its definition of capital:


                    April 4,    % of   March 29,    % of  January 3,    % of
    ($ in millions)    2009    total       2008    total       2009    total
                  ------------------- ------------------- -------------------
    Current portion
     of long-term
     debt          $   11.4     0.2%   $  156.7     3.3%   $   14.8     0.3%
    Long-term debt  1,373.8    23.8%    1,355.5    28.7%    1,373.5    25.2%
    Long-term
     deposits         878.2    15.2%       17.6     0.4%      598.7    11.0%
    Other long-term
     liabilities(1)       -     0.0%          -     0.0%        3.2     0.1%
    Share capital     719.8    12.5%      701.9    14.9%      715.4    13.1%
    Contributed
     surplus              -       -%        1.5     0.0%          -       -%
    Components of
     accumulated other
     comprehensive
     loss(2)              -       -%      (11.3)   (0.2%)         -       -%
    Retained
     earnings       2,781.8    48.3%    2,500.9    52.9%    2,752.4    50.3%
                  ------------------- ------------------- -------------------
    Net capital
     under
     management    $5,765.0   100.0%   $4,722.8   100.0%   $5,458.0   100.0%
                  ------------------- ------------------- -------------------
                  ------------------- ------------------- -------------------

        (1) Long-term liabilities that are derivative or hedge instruments
            related to capital items only.
        (2) Components of other comprehensive loss relating to capital items
            only.

        The Company has in place various policies which it uses to manage
        capital, including a leverage and liquidity policy and a securities
        and derivatives policy. As part of the overall management of capital,
        Management's Financial Risk Management Committee and the Audit
        Committee of the Board review the Company's compliance with and
        performance against these policies.

        In addition, Management's Financial Risk Management Committee and the
        Audit Committee of the Board perform periodic reviews of the policies
        to ensure they remain consistent with the risk tolerance acceptable
        to the Company and with current market trends and conditions.

        To assess its effectiveness in managing capital, management monitors
        certain key ratios to ensure they are within targeted ranges.

                                           April 4,    March 29,   January 3,
                                              2009       2008(1)      2009(1)
                                       --------------------------------------
        Debt ratio
          Long-term debt to total
           capitalization(2)                 37.3%        30.2%        34.3%
        Coverage ratio
          Interest coverage(3)           4.9 times    9.5 times    5.4 times
                                       --------------------------------------

        (1) 2008 results have been restated for the implementation, on a
            retrospective basis, of CICA 3064 - goodwill and intangible
            assets.
        (2) Long-term debt includes the current portion of long-term debt,
            long-term debt and long-term deposits. Capitalization is based on
            current and long-term debt, long-term deposits, future income
            taxes, other long-term liabilities and shareholders' equity.
        (3) Interest coverage is calculated on a rolling 12-month basis for
            short-term and long-term interest on debt, net of short-term
            interest income.

        As part of existing debt agreements, two key financial covenants are
        monitored on an on-going basis by management to ensure compliance
        with the agreements. The key covenants are as follows:

        -  net tangible assets coverage - calculated as:

           -  total assets less intangible assets, current liabilities
              (excluding current portion of long-term debt), and liability
              for employee future benefits

           -  divided by long-term debt (including current portion of
              long-term debt)

        -  limitations on surplus available for distribution to shareholders
           - the Company is restricted from distributions (including
           dividends and redemptions or purchases of shares) exceeding its
           accumulated net income over a defined period.

        The Company was in compliance with these covenants during the period.

        The Company's wholly-owned subsidiary, Canadian Tire Bank (the Bank)
        manages its capital under guidelines established by the Office of the
        Superintendent of Financial Institutions Canada (OSFI). The
        regulatory capital guidelines measure capital in relation to credit,
        market and operational risks. The Bank has various capital policies,
        procedures and controls which it utilizes to achieve its goals and
        objectives.

        The Bank's objectives include:

        -  Providing sufficient capital to maintain the confidence of
           depositors.

        -  Being an appropriately capitalized institution, as measured
           internally, defined by regulatory authorities and compared with
           the Bank's peers.

        -  Achieving the lowest overall cost of capital consistent with
           preserving the appropriate mix of capital elements to meet target
           capitalization levels.

        The Bank's total capital consists of two tiers of capital approved
        under OSFI's current regulatory capital guidelines. As at March 31,
        2009 (the Bank's fiscal quarter end), Tier 1 capital includes common
        shares and retained earnings reduced by net securitization exposures.
        The Bank currently does not hold any instruments in Tier 2 capital.
        Risk-weighted assets (RWA), referenced in the regulatory guidelines,
        include all on-balance sheet assets weighted for the risk inherent in
        each type of asset as well as an operational risk component based on
        a percentage of average risk-weighted revenues.

        The Bank's ratios are above internal minimum targets of 12 per cent
        for Tier 1 and Total capital ratios. The Bank is within its internal
        maximum target of 11 times for the assets to capital multiple. OSFI's
        minimum Tier 1 and Total capital ratios for Canadian banks are 7 per
        cent and 10 per cent, respectively. During the 3 months ended March
        31, 2009 and the comparative period, the Bank complied with the
        capital guidelines issued by OSFI under the "International
        Convergence of Capital Measurement and Capital Standards - A Revised
        Framework" (Basel II).

    10. Financial Instruments Disclosures

        Allowance for credit losses

        The Company's allowances for receivables are maintained at levels
        which are considered adequate to absorb future credit losses. A
        continuity of the Company's allowances for credit losses is as
        follows:

                              Credit card loans           Other loans(1)
                          ---------------------------------------------------
                              April 4,    March 29,     April 4,    March 29,
        ($ in millions)          2009         2008         2009         2008
                          ---------------------------------------------------
        Balance, beginning
         of year          $      51.8  $      51.5  $       3.5  $       2.7
        Provision for
         credit losses           36.6         15.7          1.7          1.7
        Recoveries                4.6          3.6          0.2          0.1
        Write-offs              (32.6)       (25.2)        (2.2)        (1.8)
                          ---------------------------------------------------
        Balance, end of
         period           $      60.4  $      45.6  $       3.2  $       2.7
                          ---------------------------------------------------
                          ---------------------------------------------------

                             Accounts receivable              Total
                          ---------------------------------------------------
                              April 4,    March 29,     April 4,    March 29,
        ($ in millions)          2009         2008         2009         2008
                          ---------------------------------------------------
        Balance, beginning
         of year          $       3.3  $       5.0  $      58.6  $      59.2
        Provision for
         credit losses            0.7          0.3         39.0         17.7
        Recoveries                  -            -          4.8          3.7
        Write-offs               (0.2)        (2.3)       (35.0)       (29.3)
                          ---------------------------------------------------
        Balance, end of
         period           $       3.8  $       3.0  $      67.4  $      51.3
                          ---------------------------------------------------
                          ---------------------------------------------------

        (1) Other Loans include personal loans, mortgages loans and lines of
            credit loans.

        Foreign currency risk

        The Company has significant demand for foreign currencies, primarily
        United States dollars, due to global sourcing. However, it manages
        its exposure to foreign exchange rate risk through a comprehensive
        Foreign Exchange Risk Management Policy that sets forth specific
        guidelines and parameters, including monthly hedge percentage
        guidelines, for entering into foreign exchange hedge transactions for
        anticipated U.S. dollar-denominated purchases. The Company's
        exposure, however, to a sustained movement in the currency markets is
        impacted by competitive forces and future prevailing market
        conditions.

        Liquidity risk

        The following table summarizes the Company's contractual maturity for
        its financial liabilities. The table includes both interest and
        principal cash flows.

        ($ in millions)        1 year      2 years      3 years      4 years
                          ---------------------------------------------------
        Deposits          $     665.4  $     203.2  $     159.9  $      94.3
        Accounts payable
         and other(1)         1,220.5            -            -            -
        Long-term debt           11.4        459.3         21.4          9.1
        Interest
         payment(2)             102.0         84.2         69.2         64.6
        Other                       -            -            -            -
                          ---------------------------------------------------
        Total             $   1,999.3  $     746.7  $     250.5  $     168.0
                          ---------------------------------------------------
                          ---------------------------------------------------


        ($ in millions)       5 years   Thereafter        Total
                          --------------------------------------
        Deposits          $     420.8  $         -  $   1,543.6
        Accounts payable
         and other(1)               -            -      1,220.5
        Long-term debt            7.0        861.6      1,369.8
        Interest
         payment(2)             142.4        653.2      1,115.6
        Other                     4.2            -          4.2
                          --------------------------------------
        Total             $     574.4  $   1,514.8  $   5,253.7
                          --------------------------------------
                          --------------------------------------

        (1) Includes commercial paper.
        (2) Includes interest payments on deposits and long-term debt.

       Interest rate risk

        The Company is exposed to interest rate risk, which it manages
        through the use of interest rate swaps. The Company has a policy in
        place that requires a minimum of 75 per cent of its long-term debt
        (term greater than one year) to be at fixed versus floating interest
        rates. The Company is in compliance with the policy.

    11. Other Long-Term Investments

        Included in other long-term investments is the Company's investment
        of $5.1 million (2008 - $6.6 million) in Canadian third-party asset-
        backed commercial paper (ABCP) issued by a number of trusts with an
        original cost of $8.9 million.

        The market for Canadian third-party ABCP was addressed in a formal
        restructuring proposal, and on January 21, 2009, the Bank's custodian
        received restructured ABCP as designed in the Montreal Accord. The
        Company received Class A notes with a face value of $7.7 million
        which has floating interest rates estimated at BA less 50bps. The
        Class A notes received an "A" credit rating from DBRS. The Company
        also received $1.2 million in various lower grade notes as a part of
        the restructuring. On January 21, 2009, CTB received the first of two
        payments of accrued interest earned from the new notes of
        $0.3 million. A second payment is expected at a future date.

        The value of these notes is adjusted to fair market value on a
        quarterly basis, as the notes are financial instruments held for
        trading. There has been no trading of the notes in the open market
        and therefore a valuation model is used to determine fair value. The
        fair value of the notes was determined at $5.1 million net of an
        additional impairment adjustment of $0.5 million which was recorded
        in the 13 weeks ended April 4, 2009 (2008 - $1.0 million).

    12. Merchandise Inventory

        Included in "cost of merchandise sold and all other operating
        expenses except for the undernoted items" for the 13 weeks ended
        April 4, 2009 is $1,137.7 million (2008 - $1,236.8 million) of
        inventory recognized as an expense, which included $13.6 million
        (2008 - $16.8 million) of write-downs of inventory as a result of net
        realizable value being lower than cost. Inventory write-downs
        recognized in previous years and reversed in the current quarter and
        the comparative quarter were insignificant.

    13. Supplementary Cash Flow Information

        The Company paid income taxes during the 13 weeks ended April 4, 2009
        of $52.1 million (2008 - $55.8 million) and made interest payments of
        $56.2 million (2008 - $20.3 million), including $31.8 million related
        to the settlement of delayed start swaps.

        During the 13 weeks ended April 4, 2009, property and equipment were
        acquired at an aggregate cost of $59.5 million (2008 -
        $99.5 million). The amount of property and equipment acquired that is
        included in accounts payable and other at April 4, 2009 was
        $22.0 million (2008 - $38.0 million).

        During the 13 weeks ended April 4, 2009, intangible software were
        acquired at an aggregate cost of $19.9 million (2008 -
        $13.2 million). The amount of intangible software acquired that is
        included in accounts payable and other at April 4, 2009 was
        $0.7 million (2008 - $1.6 million).

    14. Legal Matters

        The Company and certain of its subsidiaries are party to a number of
        legal proceedings. The Company believes that each such proceeding
        constitutes a routine legal matter incidental to the business
        conducted by the Company and that the ultimate disposition of the
        proceedings will not have a material effect on the Company's
        consolidated earnings, cash flow or financial position.

    15. Tax Matters

        In the ordinary course of business, the Company is subject to ongoing
        audits by tax authorities. While the Company believes that its tax
        filing positions are appropriate and supportable, from time to time,
        certain matters are reviewed and challenged by the tax authorities.

        The main issues challenged by the Canada Revenue Agency (CRA) relate
        to the tax treatment of commissions paid to foreign subsidiaries of
        the Company (covering periods from 1995 to 2007), and dividends
        received on an investment made by a wholly-owned subsidiary of the
        Company related to reinsurance (covering periods from 1999 to 2003).
        The applicable provincial tax authorities have reassessed and are
        also expected to issue further reassessments on these matters for the
        corresponding periods.

        The Company has agreed with the CRA to settle the commissions issue
        for the period 1995-2003, although the determination of the final tax
        liability pursuant to the settlement is subject to the verification
        by the CRA of certain information provided by the Company. The
        Company believes the provincial tax authorities will also reassess on
        the same basis. The Company does not have a significant exposure on
        this issue subsequent to the 2003 taxation year.

        The reassessments with respect to the dividends received issue are
        based on multiple grounds, some of which are highly unusual. The
        Company has appealed the reassessments and the matter is currently
        pending before the Tax Court of Canada. If the CRA (and applicable
        provincial tax authorities) were entirely successful in their
        reassessments - an outcome that the Company and its tax advisors
        believe to be unlikely - it is estimated that the total liability of
        the Company for additional taxes, interest and penalties could be
        approximately $189.6 million. Although the Company has appealed these
        reassessments, current tax legislation requires the Company to remit
        to the CRA and its provincial counterparts approximately
        $117.1 million related to this matter, of which $112.7 million had
        been remitted by the end of the quarter.

        The Company regularly reviews the potential for adverse outcomes in
        respect of tax matters. The Company believes that the ultimate
        disposition of the settlements, finalization of the commissions
        issue, resolution of the dividends received issue and other tax
        matters, will not have a material adverse effect on its liquidity,
        consolidated financial position or results of operations because the
        Company believes that it has adequate provision for these tax
        matters. Should the ultimate tax liability materially differ from the
        provision, the Company's effective tax rate and its earnings could be
        affected positively or negatively in the period in which the matters
        are resolved.

        During the current quarter, the tax provision has been reduced by
        $4.6 million due to the retroactive change in the taxation of gains
        realized from the disposition of shares during 2006 and 2007.

    16. Comparative Figures

        The Company's wholly-owned subsidiary, Canadian Tire Bank, began
        taking deposits from customers commencing in 2007. Previously, these
        amounts were classified in accounts payable and other in the
        consolidated balance sheets and in changes in other working capital
        components in the consolidated statements of cash flows. Since the
        second quarter of 2008, these deposits are shown as current and
        long-term deposits in the consolidated balance sheets and a separate
        line in financing activities in the consolidated statements of cash
        flows. The comparative quarter ended March 29, 2008 has been restated
        to conform to the presentation adopted.

        As a result of this restatement, accounts payable and other decreased
        by $147.3 million, current deposits increased by $129.7 million and
        long-term deposits increased by $17.6 million in the Consolidated
        Balance Sheets. In addition, changes in other working capital
        components increased by $32.1 million and cash generated from
        financing activities increased by $32.1 in the Consolidated Statement
        of Cash Flows.


    Interest Coverage Exhibit to the Consolidated Financial Statements
    ------------------------------------------------------------------
    (unaudited)
    -----------
    

    The Company's long-term interest requirements for the 13 weeks ended
April 4, 2009, after annualizing interest on long-term debt issued and retired
during this period, amounted to $133.8 million. The Company's earnings before
interest on long-term debt and income taxes for the 13 weeks then ended were
$635.3 million, which is 4.7 times the Company's long-term interest
requirements for this period.

    %SEDAR: 00000534EF




For further information:

For further information: Media: Lisa Gibson, (416) 544-7655,
lisa.gibson@cantire.com; Investors: Karen Meagher, (416) 480-8058,
karen.meagher@cantire.com

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Canadian Tire Corporation, Limited

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Canadian Tire Corporation, Limited - Investor Relations

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