The Canadian Tire store in Signal Hill, Calgary, on Feb. 18.Amir Salehi/The Globe and Mail
Canadian Tire Corp. Ltd. CTC-A-T has announced a transformation strategy that will see the retailer invest more than $2-billion over four years and reorganize its operations, after “a tremendous amount of introspection” that identified inefficiencies in the business.
The “True North” strategy, announced Thursday, will restructure the company’s leadership and sets a new course after Canadian Tire was forced to scale back its last four-year plan amid a drastic downturn in consumer spending. That plan was supposed to involve $3.4-billion in investment over four years; instead, Canadian Tire spent $1.8-billion over three years.
The company is now planning to relocate and remodel more Canadian Tire, Sport Chek and Mark’s stores; to improve data analytics and its use of artificial intelligence; to continue expanding its loyalty program; and to reduce separation in the operations of its various retail banners and Canadian Tire Bank.
The retailer will also be cutting jobs as part of the restructuring, but did not disclose the number of employees that would be affected.
“We need to build a more resilient Canadian Tire. That’s what the strategy is about,” president and chief executive officer Greg Hicks said during an interview at the company’s headquarters in Toronto.
Canadian Tire is unveiling its plan at a time of deep uncertainty, as the retail industry, and corporate Canada as a whole, faces significant upheaval from a trade dispute with the United States.
But the new strategy was developed prior to Donald Trump’s return to the White House, as Canadians were hit hard by surging inflation and rising interest rates in recent years. The resulting pullback on spending affected retailers, and during a “rough year” in 2023, the company decided to assess how many of Canadian Tire’s challenges were external, versus “self-inflicted wounds,” Mr. Hicks said.
“This belief that we’re in this constant period of disruption, that that is what the retail industry is about now – to have that degree of volatility in our earnings wasn’t something that we felt good about,” he said.
Among the internal issues needing a fix was a number of inefficiencies. For example, each of the retail banners had its own unique system for forecasting product demand, run by separate teams. Those kinds of operations will now be brought together – a process that will involve eliminating overlapping roles. The company will incur $85-million in one-time restructuring costs in the first half of the year, including severance payments.
“If we continue to operate that way, not only are we inefficient, we’re not aggregating the scale that we have created for ourselves that gives us a better chance to compete against global scale players,” he said.
With this in mind, Canadian Tire announced a reorganization of its executive team on Thursday. Susan O’Brien, recently in charge of marketing for the company, is now chief transformation officer. The president of Canadian Tire Retail, TJ Flood, is now chief operating officer overseeing all of the retail banners. Canadian Tire will soon announce an addition to the management ranks as well, with a newly created role of chief commercial officer responsible for the Triangle Rewards program and for improving “customer insights” across the businesses.
The team will be focused on improving “retail fundamentals,” Mr. Hicks said. Through 2023 and 2024, Canadian Tire and other retailers had to work to clear out inventory – an imbalance created by overbuying in certain categories during the pandemic, followed by shifts in the market when consumers cut back on non-essential purchases.
With inventory at more reasonable levels now, the company is refocusing on ensuring key categories are in stock. And there are plans to refresh the shelves with thousands of new product launches – particularly with the company’s owned brands.
The renovation and relocation of stores – which began during the last strategic plan with the opening of new and renovated Canadian Tire locations – will continue, and expand to include Sport Chek and Mark’s stores. Canadian Tire also announced on Thursday that it is closing all 17 of its underperforming Atmosphere stores, and Atmosphere’s selection of outdoor products will be sold in 14 Sport Chek stores.
For Mark’s, larger-format stores that opened in former Bed Bath & Beyond locations are performing well, and have allowed the chain to expand into categories such as women’s denim and children’s clothing. Canadian Tire acquired those leases when Bed Bath & Beyond’s Canadian operations were granted protection from creditors in 2023, and the company plans to continue to look for similar opportunities, Mr. Hicks said, as a challenging retail environment pushes some retailers to scale back or close stores.
“We’ve got all three major banners with a refresh and a retail format that we think we can invest in, which just presents a new era of retail for us,” Mr. Hicks said.
The company will also work on increasing its use of artificial intelligence. Last year, it launched an AI-powered chatbot called CeeTee to provide customers who were looking for tires with more detailed answers, and Mr. Hicks said the company plans to expand that work. A search for a tent, for example, could lead to a question about whether it is the customer’s first time camping, and advice on how to prepare for the trip. Better customer analytics should allow the company to send more targeted offers as well, he said.
Bringing more people into the Triangle loyalty program continues to be a major priority, because of that customer data and the increased spending the program generates. Shoppers who want to redeem points are motivated to visit stores, and spend more when they are there.
Canadian Tire spent $895-million in 2023 to buy back full ownership of the financial services division – which is deeply tied to the Triangle program with its credit-card business. But while the bank works to hold on to customers with financial offers like credit-limit increases, it could do a better job of generating retail sales through offers for discounts on products in its stores, Mr. Hicks said.
The company is actively looking for partners to expand Triangle’s reach – both with businesses that do not have their own loyalty programs, and those that do. The 2023 partnership with Petro-Canada – which has the Petro Points program – is one example.
Canadian Tire has also been working on building financial flexibility to deal with an unpredictable environment.
For example, in the absence of the current trade tensions, the company would likely have had “a little bit more conviction” about using the proceeds from the recently-announced sale of the Helly Hansen apparel business, Mr. Hicks said. Instead, “we’re just going to keep some dry powder until we get a little bit more certainty.” The company announced Thursday it will use $200-million of the proceeds to pay down debt.
“I think it behooves us to be a little conservative with how we think about things,” Mr. Hicks said.
If the situation improves, and consumer confidence rebounds, Mr. Hicks said the plan could be adjusted.
“If the customer comes back and we’re creating value, the great news is we had a strong year in 2024,” he said, “so we’re entering this transformation from a period of strength, and we have created great financial flexibility for ourselves that allows us to invest at a much higher level.”