New agreement between Canadian Tire and Canadian Tire Dealers solidifies financial relationship through 2014

    Financial adjustments result in an estimated $15 - $20 million of
    incremental annual pre-tax earnings for Canadian Tire Retail in 2008,
    growing to an estimated $80 million - $100 million by 2014.

    New automotive initiative results in an estimated $10 - $15 million of
    incremental annual pre-tax earnings in 2010, growing to an estimated
    $45 - $50 million by 2014.

    TORONTO, Sept. 17 /CNW/ - Canadian Tire Corporation, Limited (CTC.a, CTC)
and Canadian Tire Dealers ("the Dealers") have agreed to changes to the
financial and operating terms of the contract that governs the business
relationship between Canadian Tire and the Dealers. The changes which include
financial adjustments and the introduction of a new automotive initiative will
be implemented beginning in 2008 and will be in effect through mid 2014.
    "Canadian Tire and the Dealers have enjoyed a strong and mutually
beneficial relationship for more than 80 years. This revised contract builds
on that strong foundation and reconfirms the alignment of Canadian Tire and
the Dealers behind our common goals of growing sales and improving
productivity and service," said Tom Gauld, president and CEO, Canadian Tire.
"Under the terms of the revised contract, Canadian Tire and the Dealers are
motivated to continue to work together to improve operations, grow sales and
share enhanced profitability."

    Financial Adjustments

    Financial adjustments in the revised contract include cost-sharing
arrangements on marketing expenses, shared savings from store-based energy
initiatives, participation by Canadian Tire in the growth of Dealer profits,
as well as other important financial adjustments.
    Beginning in 2008, adjustments are estimated to provide $15 - $20 million
of incremental annual pre-tax earnings for Canadian Tire Retail ("CTR")
growing to an estimated $80 million -$100 million annually by 2014.
    The ongoing growth of CTR's sales and Dealer profitability and effective
execution of the various changes will be key to ensuring the success of the
revised contract.

    Automotive Initiative

    In addition to the aforementioned financial adjustments to the contract,
Canadian Tire and the Dealers have also agreed to support a major new
initiative to reinforce CTR's leadership position in its cornerstone
automotive business.
    This growth initiative will enable CTR and PartSource stores to grow
their automotive hard parts business by expanding category assortments,
improving local market access for same-day automotive hard parts supply and
enhancing in-store customer service.

    The key components of this program will include:

    -  more than doubling the assortment within CTR's three main auto parts
       distribution facilities from 35,000 stock keeping units to
       approximately 75,000 stock keeping units;

    -  installing a comprehensive technology infrastructure to improve retail
       operating systems, purchasing and inventory management, warehouse
       processes and front-line customer service; and

    -  creating a network of approximately 22 PartSource hub stores across
       Canada to supply automotive hard parts on a same day basis for
       75% - 80% of CTR's 468 stores.

    The major components of this program will be completed over the next 24
-36 months and will involve a total investment of approximately $120 million,
comprising $75 million of fixed assets, plus working capital. The Dealers will
also make an investment in the initiative.
    This program is estimated to generate $120 - $130 million in incremental
auto parts sales for Canadian Tire by 2010 increasing to over $200 million by
2014. The associated pre-tax earnings are estimated to be $15 million - $20
million by 2010 growing to an estimated $45 million - $50 million by 2014 as
the program is fully implemented for both CTR and PartSource stores.
    Additionally, Canadian Tire is planning to expand the number of
PartSource stores from 67 today to approximately 200 stores by 2014.
    "The revisions to the contract represent an important step in our ongoing
strategy to improve productivity and rates of return at CTR. These changes
enhance our confidence in our ability to sustain our earnings growth into the
future" said Tom Gauld. "Both Canadian Tire and our Dealers will benefit from
the significant investment in the Automotive business, our shared commitment
to reduce our store energy costs and the certainty of a new seven year term in
our financial arrangements".

    Canadian Tire Corporation, Limited (TSX: CTC.a, CTC), operates more than
1,100 general merchandise and apparel retail stores, gas stations and car
washes 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 468 stores operated by Associate 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. offers Canadians the
opportunity to shop online. PartSource is an automotive parts specialty chain
with 67 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 264 gas bars, 256 convenience stores and
kiosks, and 75 car washes. Mark's Work Wearhouse is one of the country's
leading apparel retailers operating 341 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. offers Canadians the opportunity
to shop online. Canadian Tire Financial Services manages over 4 million
Canadian Tire MasterCard accounts and markets related financial products and
services for retail and petroleum customers. Canadians can also access
Financial Services online at Over 50,000 Canadians work across
Canadian Tire's organization from coast-to-coast in the enterprise's retail,
financial services, and petroleum businesses.

For further information:

For further information: Media, Lisa Gibson, Canadian Tire, (416)
544-7655; Investors, Huw Thomas, Canadian Tire, (416) 480-3568

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Canadian Tire Corporation, Limited

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