- Aggressive plan to compete in rapidly changing retail environment
- Innovating and investing in digital, technology and analytics
- Financial aspirations of annualized sales growth of 3%+ at Canadian Tire, 5%+ at Mark's and 9%+ at FGL Sports
- Intends to return capital to shareholders through buy-back of an additional $400 million of the Company's Class A Non-Voting Shares through end of 2015
- Ongoing evaluation of acquisitions to expand category authority in heritage businesses
Growth from Core Businesses
"We can unlock tremendous growth in our existing businesses," said Michael Medline, President and incoming CEO of Canadian Tire Corporation. "We have an innovative and aggressive management team that I would put up against the best in the industry. We have exceptional entrepreneurs in our Associate Dealers at Canadian Tire. Each of our businesses has a clear three-year vision for growth – and we're already seeing the early results of changes that were initiated in recent years."
Canadian Tire and Mark's are executing a 'generational shift' in the target customer – continuing to be relevant for today's core customers, while becoming more relevant to young families with kids. This will involve an evolution in product assortments, marketing, store layouts and investments in digital and online offerings.
Sport Chek is one of the fastest growing retailers in North America and will continue to drive growth through significant brand investments and over two million square feet of new, premium retail space between 2012 and 2017. Investments in digital innovations and technology at Sport Chek are expected to attract new customers and increase the frequency and size of purchases – and learnings from the digital journey will accrue to the rest of the Company.
Canadian Tire Financial Services will continue to provide a strong value proposition for Canadian Tire customers, including in-store instant credit and increased loyalty rewards through the new Canadian Tire loyalty program for Options MasterCard holders.
Canadian Tire's greatest asset is its strong, trusted brand with customers. The Company will continue to invest in communities, with a focus on sports through its 'We All Play for Canada' platform and national partnership with the Canadian Olympic Committee. This will include getting kids active for an hour a day in schools through the 'Active at School' program, and helping families in need get their kids into organized sports programs through the Company's charity, 'Jumpstart'.
The Company announced financial aspirations for its businesses, including annualized sales growth of 3%+ at Canadian Tire, 5%+ at Mark's and 9%+ at FGL Sports. In addition, the Company also announced targets for return on invested capital of 9% by the end of 2017, return on receivables growth in the financial services business of 6%+ and average diluted EPS growth of 8-10% over the three-year period.
Balanced Approach to Capital Allocation
"We will be judged on our results and how wisely we're investing shareholders' money," said Medline. "Our core businesses will have the capital they need to grow and compete – including increased investments in digital and technology. We are continually evaluating acquisition opportunities, but we have proven that we're slow to the trigger and are vigilant in our selection criteria. Any acquisition has to make sense strategically and financially. It has to be the right cultural and business fit and it has to generate a strong return."
"Meanwhile, we will continue to return capital to our shareholders – through dividend payments and buying back our shares when we believe that we are undervalued in the market and that it is the best use of our cash," added Medline.
The Company expects to make an average annual capital investment of $575 million from 2015-2017, including significant new investments in digital technology and an expansion and upgrade of the Company's store network. These investments do not include expenditures related to distribution centre capacity and any properties acquired by CT REIT from vendors other than the Company.
The Company announced that it intends to buy back an additional $400 million of the Company's Class A Non-Voting Shares through to the end of 2015, subject to regulatory approval. It also confirmed that it will maintain its dividend policy, paying out 25-30% of the prior year's normalized earnings. The Company has a history of increasing its dividend, with nine increases over the last ten years to reach the current payout of $2.00 per share.
As the Company continues to evaluate possible acquisitions to grow core categories, it will look for companies with a strong financial outlook, a brand with great potential, a profitable base and runway for growth. Also, any acquisition must have a distinctive long-term value proposition that can be strengthened through existing CTC expertise.
INVESTOR CONFERENCE WEBCAST: October 9, 2014, at 8:30 a.m.
- The live video webcast will be available at www.ctc2014investorday.com
- The webcast and presentation materials will be accessible on the Investor Relations website at http://corp.canadiantire.ca/EN/Investors and will be archived for twelve months.
- The audio portion is also accessible by dial-in: 1-866-305-1460 within Canada and U.S. or
- 1 416-620-1296 outside of Canada and U.S.
- Reservation Number: 8659316
ABOUT CANADIAN TIRE CORPORATION
Canadian Tire Corporation, Limited, (TSX:CTC.A) (TSX:CTC) or "CTC," is a family of businesses that includes a retail segment, a financial services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal categories. PartSource and Gas+ are key parts of the Canadian Tire network. The retail segment also includes Mark's, a leading source for casual and industrial wear, and FGL Sports (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere), which offers the best active wear brands. The nearly 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across the Company. For more information, visit Corp.CanadianTire.ca.
FOR MORE INFORMATION
This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements regarding the Company's financial aspirations for sales growth, return on invested capital, return on receivables growth and EPS growth over the next three years under the heading "Financial Aspirations", statements regarding the Company's expected capital investments from 2015-2017, its intention to acquire its Class A Non-Voting Shares through to the end of 2015, its dividend policy and its ongoing evaluation of possible acquisitions under the heading "Balanced Approach to Capital Allocation" and other statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "estimate", "plan", "can", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue", "ongoing" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analyses, beliefs 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 information is provided.
By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company's expectations and plans will not be achieved. Examples of management's beliefs, which may prove to be incorrect include, but are not limited to, beliefs about the effectiveness of certain performance measures, beliefs about current and future competitive conditions and the Company's position in the competitive environment, beliefs about the Company's core capabilities and beliefs regarding the availability of sufficient liquidity to meet the Company's contractual obligations. Although the Company believes that the forward-looking information in this document is based on information, assumptions and beliefs 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 expectations and plans as set forth in such forward-looking information for a variety of reasons. Some of the factors - many of which are beyond our control and the effects of which can be difficult to predict - include (a) credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of CTC to attract and retain high quality employees for all of its businesses, Dealers, Canadian Tire Petroleum agents and Mark's Work Wearhouse and FGL Sports franchisees, as well as our financial arrangements with such parties; (c) the growth of certain business categories and market segments and the willingness of customers to shop at our stores or acquire our financial products and services; (d) our margins and sales and those of our competitors; (e) the changing consumer preferences toward e-commerce, online retailing and the introduction of new technologies; (f) risks and uncertainties relating to information management, technology, property management and development, supply chain, product safety, changes in law, regulation, competition, seasonality, weather patterns, commodity price and business disruption, our relationships with suppliers, manufacturers, partners and other third parties, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by CTC and the cost of store network expansion and retrofits; (g) our capital structure, funding strategy, cost management programs and share price; and (h) the ability to obtain all necessary regulatory approvals. We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information.
For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the "Risk Factors" section of our Annual Information Form for fiscal 2013 and to sections 22.214.171.124 (Retail segment business risks), 126.96.36.199 (CT REIT segment business risks), 188.8.131.52 (Financial Services segment business risks) and 11.0 (Enterprise Risk Management) and all subsections thereunder of our 2013 Management's Discussion and Analysis, as well as the Company's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.
Statements that include forward-looking information do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.
SOURCE: CANADIAN TIRE CORPORATION, LIMITED