TORONTO, Oct. 31,
2023 /CNW/ - Canadian Tire Corporation, Limited (TSX:
CTC) (TSX: CTC.A) ("CTC" or "the Company") today announced that it
has completed the repurchase of Scotiabank's 20% stake in Canadian
Tire Financial Services ("CTFS"). This all-cash transaction, valued
at $895 million, restores CTC's full
ownership of its financial services arm. The transaction will
enhance CTC's flexibility in delivering added value to its more
than 11 million active loyalty members, including its 2.3 million
credit card holders. CTFS plays a pivotal role in the Company's
Triangle Rewards loyalty program, representing approximately 75% of
all Canadian Tire Money ("eCTM") issued to members annually.
Triangle Rewards is a cornerstone of CTC's Better Connected
strategy, driving significantly higher sales per member and
sustained growth over time. Engaged Triangle Rewards members spend,
on average, more than twice as much as non-members, and those with
a Triangle credit card represent some of CTC's most valued and
engaged customers.
"This move enables us to expedite key elements of our Triangle
Rewards strategy to stay relevant to customers' changing needs and
expand our credit card program to unlock even greater value for
shareholders," said Greg Hicks,
President and CEO.
Mr. Hicks added, "Loyalty rewards programs, and their
integration with financial institutions have evolved significantly
since our original deal with Scotiabank. We have invested
heavily in Triangle Rewards, and Scotiabank has done the same with
its coalition loyalty program. While we have appreciated partnering
with Scotiabank over the past decade, with both Scotiabank and CTC
having received significant strategic and financial benefits,
concluding this partnership will give us much greater control and
flexibility in building out our loyalty program. Accelerating
issuance of eCTM, including through opportunities with new partners
such as Petro-Canada, is key to driving value for members in a
rapidly evolving loyalty marketplace."
CTC will evaluate strategic alternatives for its financial
services business to be undertaken with Goldman Sachs as the
company's financial advisor during 2024. Consideration will
be given to the optimal ownership structure of the CTFS business
and to driving sustainable value in the Triangle Rewards program
and credit card portfolio, building on CTFS' strong track record of
long-term growth.
Since 2014, the number of Triangle credit cardholders has
increased from 1.8 million to 2.3 million and receivables have
grown by more than 60% to approximately $7.1
billion at the end of Q2 2023. In 2022, the financial
services business ranked as Canada's seventh largest issuer of credit
cards by receivables outstanding, generating $442 million of income before income taxes.
Scotiabank will continue to provide a committed credit facility
of $1.1 billion to CTFS for the next
18 months.
CTC will record a charge of $328
million related to the transaction, equating to $5.88 per share, which will be reflected in the
Company's Q3 2023 results. The transaction will be accretive to
normalized earnings in 2024.
The $895 million consideration
will be funded by CTC's existing short-term funding channels,
supplemented by a $400 million,
18-month term loan from Desjardins Capital Markets.
FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking information within
the meaning of applicable securities laws, which reflects
management's current expectations regarding the repurchase of
Scotiabank's 20% interest in CTFS (the "Repurchase") and future
events. 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:
the expected benefits of the Repurchase, including with respect to
CTC's ability to expedite its Triangle Rewards strategy, expand its
credit card program, deliver added value to its loyalty members
(including through an acceleration of the issuance of eCTM); CTC's
intention to evaluate strategic alternatives for its financial
services business; Scotiabank's continued provision of banking
services to CTFS; the accounting treatment of the Repurchase; and
the impact of the transaction on 2024 normalized earnings. CTC
has provided these forward-looking statements for the purpose of
presenting information about management's current expectations and
plans relating to the Repurchase and readers are cautioned that
these statements may not be appropriate for other purposes.
Forward-looking statements are 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 statements are made. 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 the Company's actual results to differ materially
from predictions, forecasts, projections, expectations or
conclusions, refer to section 10.0 (Key Risks and Risk Management)
of the Company's Q2 2023 MD&A as well as CTC's other public
filings, available at https://www.sedarplus.ca and at
https://investors.canadiantire.ca. 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.
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 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.
FOR MORE
INFORMATION
Media: Stephanie Nadalin,
(647) 271-7343, stephanie.nadalin@cantire.com
Investors: Karen Keyes, (647)
518-4461, karen.keyes@cantire.com
SOURCE CANADIAN TIRE CORPORATION, LIMITED - INVESTOR
RELATIONS