Canadian Tire Corporation (CTC-A-T) has announced a four-year “transformative strategy” which involves $2 billion in investments in virtually all aspects of its business, and will result in store closures and realignments within several of its banners.

Called True North, the strategy follows the conclusion of its former Better Connected strategy which was significantly truncated during the past few years by the pandemic and other economic considerations.

"We are an iconic Canadian retailer primed for stronger customer connections and leading shareholder returns," Greg Hicks, president and CEO of Canadian Tire Corp., said in the Thursday morning announcement. "In a new era of retail and hyper-scale global competition, we will operate more efficiently and go to market more strategically, harnessing our banners and loyalty system to elevate our scale. 

“Our transformation starts from the strengths that set us apart: we have the highest customer trust, market-leading data, and the vision to know, reward and serve Canadians best."

Canadian Tire Corp. (CTC) has also retooled its senior leadership to deliver the new strategy.

Atmosphere store closures, SportChek optimization

Perhaps of greatest import to the commercial real estate industry, CTC says it plans to “optimize” its SportChek portfolio of sports and outdoors retail stores and revise the strategy for its related Atmosphere business. 

This will include closing 17 “uncompetitive standalone” stores under its Atmosphere banner, as well as co-locating 14 sites within SportChek stores.

The locations involved were not immediately identified. It’s also not immediately known if there are stores included within CTC’s CT REIT portfolio, owned by other real estate companies or if there is a mix. CT REIT was spun off from Canadian Tire in 2013 as a distinct owner and operator of many of CTC’s real estate assets.

Its holdings include a significant number of CTC’s leased retail and logistics assets.

Other key aspects of the True North initiative include: an expanded Triangle Rewards loyalty program; refocused capital allocations; reorganizing from a “complex holding company model into a more agile operating company”; and the reorganization of its senior management team. 

Senior management revamp

The senior leadership group will focus on three priorities: management of the multi-year transformation initiatives and related value-creating capital allocation led by a new chief transformation officer; execution and growth of CTC’s core retail business under a new chief operating officer within a unified operating model for all banners including Canadian Tire, SportChek, and Mark's; and centralizing customer-focused retail, product, marketing and loyalty strategies under a new chief commercial officer:

• Susan O'Brien is appointed EVP and chief transformation officer. A 17-year company veteran, she was most recently EVP and chief brand and customer officer. Her past experience includes leading Triangle Rewards and building new customer capabilities.
• TJ Flood becomes EVP and chief operating officer, leading CTC's newly centralized banners including Canadian Tire, Mark's and SportChek. A 20-year company veteran, he was most recently EVP and president, Canadian Tire retail.
• CTC will soon appoint an EVP and chief commercial officer responsible for growing Triangle Rewards, customer insights and core retail processes.
• Darren Myers has been hired as CTC's new EVP and chief financial officer, effective April 1. He is a three-time CFO at Canadian companies, previously responsible for large-scale transformations in retail and other sectors.

"This team has the experience and mandate to deliver transformational initiatives and results," Hicks said in the announcement. "As we knock down unnecessary legacy siloes and systems, we are combining the best of our business and all of our customer knowledge to rally around a unified strategy to help make life in Canada better."

Canadian Tire's capital allocations priorities

Pending completion of the recently announced sale of outdoor clothing brand Helly Hansen, CTC will focus on several capital allocation initiatives, including:

• Prioritizing investments to transform its core Canadian retail business, while maintaining flexibility to address market uncertainty. CTC said it expects total operating capital expenditures in 2025 to be toward the upper end of its previously disclosed range of $525 million to $575 million. This will include omnichannel investments, including ongoing modernization of Canadian Tire stores and increased investments in Mark's.
• It will return up to $400 million to shareholders through share repurchases in 2025.
• It will use $200 million of proceeds to reduce debt.

CTC forecasts the initiatives will cost $2 billion over four years starting in 2025; with expense savings beginning in 2025 with a $100-million run rate expected to start in 2026.

"Our strategy, structure and initiatives begin in 2025, and improved value creation is expected in the years ahead," Hicks said in the announcement. "We look forward to detailing our early progress and longer-term returns with greater precision as they begin to take shape."

CTC expects one-time charges of approximately $85 million in transformation and restructuring costs, including severance, as well as closure costs for Atmosphere stores, to be recorded in the first half of 2025. They are expected to deliver annualized operating expense savings of $100 million starting in 2026.

About Canadian Tire Corporation

Canadian Tire Corporation, Ltd., was founded in 2022 and now includes additional banners spanning Party City and PartSource; Mark's, a leading source for casual and industrial wear; SportChek, Hockey Experts, Sports Experts and Atmosphere, offering the best brands of active wear and gear; and Pro Hockey Life, a hockey specialty store catering to elite players. 

CTC's banners, brand partners and credit card offerings are unified through its Triangle Rewards loyalty program. With nearly 12 million members, Triangle integrates first-party data across nearly 1,700 retail and gasoline outlets. 

CTC also operates a retail petroleum business and a financial services business and holds a majority interest in CT REIT.