TORONTO, May 30, 2012 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC, CTC.A) ("Canadian Tire") today announced an accelerated growth strategy for FGL Sports' (formerly the Forzani Group Limited) corporate banners that focuses on aggressive expansion, primarily of Sport Chek as its most-strategic and best-positioned corporate banner.
As part of the strategy, FGL Sports will expand its footprint significantly. Outside of Quebec, Sport Chek will be the key "super brand." The company will also grow Atmosphere as its outdoor lifestyle banner across the country. In total, FGL Sports intends to add more than 100 new Sport Chek and Atmosphere stores or more than two million square feet of new retail space under those banners over the next five years - equivalent to more than 50 per cent more retail space. In particular, new concept, large, urban flagship Sport Chek stores will be opened, starting in 2013. As part of today's announcement, a number of under-performing, non-strategic corporate banners will be closed.
"Our vision is to create unparalleled access and customer connections to make our banners the conduit to the best sports brands in the world," said Michael Medline, President of FGL Sports. "To achieve this goal, we are concentrating on our core banners. To date, the acquisition and integration of FGL Sports have been seamless. Sales and profitability of FGL Sports have been strong and synergies are on target. Now, we're going on offence to strengthen our store network."
This retail expansion will also include an aggressive "super branding" strategy to build brand affinity and customer loyalty. This will be established through the development of an emotional connection between the customer and the brand, while continuously improving customer service and the in-store experience, all to drive sales. It includes significant growth across Canada, notably in Ontario and specifically in the Greater Toronto Area, where FGL Sports has been historically underrepresented.
"Our growth strategy will further position Canadian Tire and FGL Sports as the ultimate authority in sports in Canada," continued Medline. "In our work leading up to the acquisition of Forzani, it was clear that banner closures would be necessary and that was built into our financial modeling. These banners are expected to be generating unprofitable sales at the time they are closed and are not strategically well-differentiated in the market. This plan allows us to focus on our core banners in order to maximize results for FGL Sports."
In order to focus and invest in the fastest growing and most profitable banners, stand alone corporate locations for Sport Mart, Athletes World, Nevada Bob's Golf, Hockey Experts, Fitness Source and Econosports will either be converted to a Sport Chek or Atmosphere store or will be closed by the end of Q1 2013.
National Sports, a Southern Ontario based retail banner consisting of 18 team sports and hockey stores is well-differentiated and will continue to operate in the Ontario market. FGL Sports' current specialty stores - Nevada Bob's Golf and Hockey Experts - will continue to evolve into 'concept stores' within Sport Chek, an initiative that has been underway for several years.
While 115 corporate stores in total will be closed, approximately 20 of these locations will be converted to either Sport Chek or Atmosphere, resulting in a net closure of roughly 95 corporate stores. These closures will be offset by more than 100 new corporate stores that are planned to open over the next five years. In total, growth of over two million new square feet of retail space is expected, or approximately 1.4 million square feet net of the planned closures and conversions. For all store closures, the Company will undertake efforts to retain as many employees as possible through transfers to converted or new stores.
The closures announced today do not impact any of FGL Sports' franchise banners or franchise store locations, which will remain operating as usual. FGL Sports will look to grow and develop Sports Experts, its largest franchise banner in Quebec, as well as all other franchise banners.
The pre-tax costs associated with the store closures are estimated to be approximately $26 million. It is expected that the majority of these costs will be recognized in Q2 2012.
FORWARD-LOOKING STATEMENTS
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 financial position, results of operation and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.
All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, 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 "intend", "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made.
By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions may not be correct and that the Company's expectations and plans will not be achieved. Although the Company believes that the forward-looking information in this document 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 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 Canadian Tire to attract and retain quality employees, Dealers, Canadian Tire Petroleum agents and PartSource, Mark's Work Wearhouse and FGL Sports store operators and 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) risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, competition, seasonality, commodity price and business disruption, our relationships with suppliers and manufacturers, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by Canadian Tire and the cost of store network expansion and retrofits and (f) our capital structure, funding strategy, cost management programs and share price. 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 2011 and our 2011 Management's Discussion and Analysis, as well as Canadian Tire'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, unless required by applicable securities laws.
Investment Community Conference Call Details
A conference call will be held to discuss information included in this news release and related matters at 10 a.m. ET on May 30, 2012. The dial-in information is noted below. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://investors.canadiantire.ca, and will be available through replay at this website for 12 months.
Conference call details:
1-888-241-0326 for Canada and the U.S.
1-647-427-3411 for outside of Canada or the U.S.
Conference ID: 86413619
Replay (available until June 30, 2012):
1-855-859-2056 for Canada and the U.S.
1-404-537-3406 for outside of Canada and the U.S.
About Canadian Tire Corporation
Canadian Tire Corporation, Limited (TSX: CTC.a) (TSX: CTC) is one of Canada's most-shopped general retailers and the country's largest sporting goods retailer, with more than 1,700 retail and gasoline outlets from coast-to-coast. Our primary retail business categories - Automotive, Living, Fixing, Sports, Playing and Apparel - are supported and strengthened by our Financial Services division, which offers such products and services as Canadian Tire Home Services, credit cards, retail deposits, in-store financing, product warranties, and insurance. Nearly 68,000 people are employed across the Canadian Tire enterprise, which was founded in 1922 and remains one of Canada's most recognized and trusted brands.
Image with caption: "Michael Medline, President of FGL Sports, today announced an accelerated growth strategy and "super branding" for FGL Sports' corporate banners. The strategy will include the opening of more than 100 new Sport Chek and Atmosphere stores. (CNW Group/CANADIAN TIRE CORPORATION, LIMITED)". Image available at: http://photos.newswire.ca/images/download/20120530_C3870_PHOTO_EN_14334.jpg
Image with caption: "Michael Medline, President of FGL Sports, today announced an accelerated growth strategy and "super branding" for FGL Sports' corporate banners. The strategy will include the opening of more than 100 new Sport Chek and Atmosphere stores. (CNW Group/CANADIAN TIRE CORPORATION, LIMITED)". Image available at: http://photos.newswire.ca/images/download/20120530_C3870_PHOTO_EN_14347.jpg
Media: Rob Nicol, 416-480-8414, [email protected]
Investors: Angela McMonagle, 416-480-8225, [email protected]
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