Delivering sustainable, double-digit earnings growth and creating
customers for life remain key focus
TORONTO, Oct. 3 /CNW/ - Canadian Tire Corporation (CTC, CTC.a) today updated the investment community on its strategic direction for the 2008-2012 period.
During an investor conference, Canadian Tire's management team outlined its plans to build a bigger and better Canadian Tire through a continued focus on growth and productivity.
"We remain committed to our existing and successful growth strategies, which are based primarily on network expansion, continuous renewal of our store concepts and growth in Financial Services," said Tom Gauld, president and CEO. "At the same time, we will increase our emphasis on productivity enhancing initiatives to ensure long-term competitiveness and sustainable double-digit earnings growth. This balanced approach will create an even 'bigger and better' Canadian Tire for our customers and our shareholders."
A Bigger Canadian Tire
Canadian Tire plans to pursue a number of avenues for growth over the next five years, including:
- growth of each of its retail businesses through ongoing expansions
and store upgrades. On average, the Corporation expects to introduce
a total of between 60 and 70 new retailing outlets annually across
Canadian Tire Retail (CTR), Mark's Work Wearhouse (Mark's),
PartSource and Canadian Tire Petroleum (Petroleum);
- CTR is piloting a full-sized Mark's store inside a Canadian Tire
store as a specialty department in Waterdown, Ontario and Dartmouth,
Nova Scotia in stores that are expected to open this Fall. In 2008
CTR, as part of its network expansion strategy, plans to test a new
infill retailing concept in underserved markets featuring a product
assortment tailored to the local market, a Mark's in every store and
retail square footage of 18,000-20,000;
- growth of the CTR/PartSource cornerstone automotive business through
the expansion of category assortments, investment in new technology
infrastructure and the creation of a network of approximately 22
PartSource hub stores across Canada to supply automotive hard parts
on a same-day basis for up to 80 percent of CTR stores;
- continued expansion of Canadian Tire Financial Services' portfolio of
high-margin, Canadian Tire-branded retail financial services,
including new credit cards, balance transfers and credit line
expansion. Financial Services will also continue to test its new high
interest savings account, GICs, mortgages and One-and-Only Account
banking products. During the conference, management indicated that
results to date from the retail banking test markets have been
encouraging and testing will continue through 2008; and,
- a broadened assortment of merchandise within the retail network with
a specific focus on expanding the popular assortment of Mark's
women's apparel.
These initiatives are expected to result in store network growth of at
least 5 percent, averaged over five years, and retail revenue growth of 6 to 8
percent over the same time period.
A Better Canadian Tire
Canadian Tire plans to improve its overall productivity and customer
service levels by streamlining its operations and improving its organizational
structure. Plans include:
- leveraging the financial and operating benefits gained from the
improved Dealer agreement including cost-sharing arrangements on
marketing expenses, shared savings from store-based energy
initiatives, and participation in the growth of Dealer profits.
- streamlining organizational structures and processes at CTR,
Petroleum and PartSource through simplified business practices and a
continuous focus on enhancing productivity;
- strengthening overall operational capabilities by investing in
critical areas of the supply chain, automotive and technology
infrastructure in order to deliver future productivity improvements
across the retail businesses;
- continued expansion of the global sourcing program to support
margins, competitive pricing and to access innovative products. AT
CTR, these efforts will be supported by the development of automated
marketing processes for pricing and inventory management controls;
and,
- continued enhancements to Canadian Tire's customer service programs
across each of the business units.
These initiatives are expected to generate double digit earnings growth over the next five years. In addition, the after-tax return on invested capital (ROIC) is expected to exceed 10 percent over the outlook period.
The estimated capital expenditures required to support the 2008-2012 initiatives is forecast to be in the range of $2.6 billion to $2.7 billion. These expenditures will support continued expansion of Canadian Tire's various retail store networks and financial services business, revitalization of the core retail infrastructure, and improvements to overall productivity. Capital expenditures will be funded through growing operating cash flows, multiple sources of capital and committed lines of credit.
During the conference, management indicated it has moved to a five-year rolling strategic planning format so that it may provide the investing public with ongoing visibility to its long-term outlook and growth plans.
WEBCAST AND INVESTOR MATERIALS
A live webcast of the Investor Conference will begin at approximately 8:30 a.m., Eastern Standard Time (EST), and can be accessed through Canadian Tire's website at http://investor.relations.canadiantire.ca under the "Webcasts" tab. Presentation material related to this conference will also be available at this URL.
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. www.canadiantire.ca 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. www.marks.com 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 www.ctfs.com. Over 50,000 Canadians work across Canadian Tire's organization from coast-to-coast in the enterprise's retail, financial services, and petroleum businesses.
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