Company will retain 100% ownership, cementing
strategic flexibility to scale Triangle Rewards
TORONTO, Dec. 6, 2024
/CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX:
CTC.A) (CTC or the Company) has completed the assessment of
strategic alternatives for Canadian Tire Financial Services (CTFS
or the Bank). CTC will retain 100% ownership of the Bank.
The Company explored options with a range of interested parties,
including several of Canada's
leading financial services companies, and has chosen a path which
builds upon the Bank's strong return profile and meaningful
earnings stream, and maximizes its contribution to CTC's retail
portfolio. As CTC scales the Triangle Rewards loyalty program, CTFS
will continue to add value through its relationship with Triangle
credit card holders and its lens on the Canadian consumer.
"The review underscored that Canadian Tire is uniquely
positioned to maximize the Bank's long-term financial and strategic
potential," said Greg Hicks,
President and CEO, Canadian Tire Corporation. "Having reviewed the
alternatives, we have gained insights that will make us an even
better bank owner, with confidence that this is the optimal path
for shareholder value creation, including through a scaled loyalty
program.
"Retaining the Bank cements our flexibility to drive value to
our retail businesses and pursue partnerships that will make
Triangle Rewards membership more rewarding every day, in our stores
and beyond. We are actively engaged in conversations with several
of Canada's largest brands about
loyalty partnerships that are expected to broaden the value of
Triangle Rewards – giving more Canadians more reasons to shop with
us."
The Company is expanding its retail ecosystem around Triangle
Rewards, powered by its store banners and bank, as well as
strategic loyalty partners like Petro-Canada – which allows
Triangle members to earn eCTM outside CTC channels, every
day.
Triangle Rewards is the cornerstone of the Company's
customer-focused retail strategy. The program uses insights,
strategic offers and Canadian Tire Money (eCTM) to reward and
engage more than 11 million loyalty members. CTFS distributes
approximately 75% of all eCTM through its relationship with 2.3
million members who carry Triangle credit cards. Engaged Triangle
Rewards members spend more than twice as much as non-members on
average. Triangle credit card holders represent some of CTC's most
engaged customers.
Canadian Tire Financial Services has been integrated with CTC's
retail business and customers for nearly three decades. It provides
a competitive advantage – acquiring new accounts and issuing eCTM
to loyal customers. The Company's strategic review highlighted
CTFS' differentiated capabilities for assessing and managing credit
card risk.
Over the last 10 years, the number of Triangle credit card
holders has increased from 1.8 million to 2.3 million, and average
receivables have grown by more than 65% to approximately
$7.3 billion at the end of Q3 2024.
In 2023, the CTFS business ranked as Canada's seventh largest issuer of credit
cards by receivables outstanding, generating $385 million of income before income taxes.
FINANCIAL CONSIDERATIONS
In conjunction with the announcement, CTC confirmed its
intention to substantially reduce the borrowings associated with
its October 2023 repurchase of 20% of
the Canadian Tire Financial Services business through the
significant improvement in cash from operations to the end of Q3
2024 and the $258 million proceeds
from the sale of a Brampton
industrial property announced on November
15, 2024.
CTFS' existing committed credit facility of $1.1 billion remains in place until April 2025 and the Company is exploring
alternatives to replace the facility at maturity.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information within
the meaning of applicable securities laws. All statements other
than statements of historical facts contained in this press release
may constitute forward-looking information, including, but not
limited to, statements concerning: ownership and operation of CTFS;
potential loyalty partnerships; reducing borrowings associated with
the repurchase of the CTFS business; and CTFS' committed credit
facility. CTC has provided these forward-looking statements for the
purpose of presenting information about management's current
expectations and plans, which allows investors and others to better
understand the Company's anticipated financial position, results of
operations and operating environment. Readers are cautioned that
these statements may not be appropriate for other purposes.
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 disclosed. Forward-looking information is
necessarily subject to a number of business, economic, competitive
and other risk factors that could cause actual results to differ
materially from management's expectations and plans as set forth in
such forward-looking information. For information on the material
risk factors and uncertainties and the material factors and
assumptions applied in preparing the forward-looking information
that could cause CTC's actual results to differ materially from
predictions, forecasts, projections, expectations or conclusions,
refer to section 13.0 (Forward-Looking Information and Other
Investor Communications) of the Third Quarter 2024 Management's
Discussion and Analysis as well as CTC's other public filings,
available at https://www.sedarplus.com and
at https://investors.canadiantire.ca. CTC 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.
ABOUT CANADIAN TIRE CORPORATION
Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) (or
"CTC"), is a group of companies 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 &
Gardening divisions. Party City, 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; Pro Hockey
Life, a hockey specialty store catering to elite players; and
SportChek, Hockey Experts, Sports Experts and Atmosphere, which
offer the best active wear brands. The Company's close to 1,700
retail and gasoline outlets are supported and strengthened by CTC's
Financial Services division and the tens of thousands of people
employed across Canada and around
the world by CTC and its local dealers, franchisees and petroleum
retailers. In addition, CTC owns and operates Helly Hansen, a
leading technical outdoor brand based in Oslo, Norway. For more information, visit
Corp.CanadianTire.ca.
SOURCE Canadian Tire Corporation, Limited
