Forward-looking Statements. Canadian Tire Corporation, Limited. Huw Thomas Executive Vice-President and Chief Financial Officer

Transcription

1 Huw Thomas Executive Vice-President and Chief Financial Officer Canadian Tire Corporation, Limited Forward-looking Statements This disclosure contains statements that are forward-looking. Actual results or events may differ materially from those forecasted in this disclosure because of the risks and uncertainties associated with Canadian Tire s business and the general economic environment. Risks and uncertainties outlined here are disclosed in other public filings by the Company, such as Management s Discussion and Analysis in the 2007 Annual Report and include, but are not limited to: changes in interest, currency exchange and tax rates, the ability of Canadian Tire to attract and retain quality employees, Associate Dealers, Petroleum agents and PartSource and Mark s Work Wearhouse store operators and franchisees; and the willingness of customers to shop at the Company s stores or access financial products and services. 2 1

2 Unique Business Model, Delivering Long-term Shareholder Value Canadian Tire offers a range of goods and services that meet life s everyday needs, including general merchandise, clothing, petroleum and financial services Synergies between our five businesses enhance our customer value proposition while increasing overall operating effectiveness Delivering value for our shareholders through sustainable double-digit earnings growth 3 Five Distinct, Yet Interrelated, Businesses CTR 473 stores Financial Services >5 million MasterCard accounts Mark s 360 stores Petroleum 266 gas bars PartSource 74 stores Canadian Tire Retail is Canada s most shopped general merchandise retailer and a leader in each of its three core product categories Automotive, Leisure, and Home. Canadian Tire Financial Services offers Canadian Tire-branded credit cards, personal loans, insurance and warranty products, as well as residential mortgages and high-rate savings accounts, and is the 2 nd largest MasterCard franchise in Canada. Mark s Work Wearhouse is a leading clothing and footwear retailer the largest Canadian industrial apparel and footwear retailer and the 2 nd largest casual pants and jeans retailer in Canada. Canadian Tire Petroleum is one of Canada s largest independent gasoline retailers, creating customer loyalty to drive growth for Canadian Tire Retail and Canadian Tire Financial Services. PartSource is a chain of specialty automotive stores catering to serious do-it-yourselfers and professional installers. Canadian Tire s products and services provide the essentials of everyday living for people of all ages 4 2

3 Canadian Tire Enjoys Distinct Competitive Advantages Platform of interrelated businesses Brand recognition and trust Canadian Tire Money Marketing/advertising reach and scale Innovative formats, products and services Real estate Competitive advantage is created through trust in the Canadian Tire brand, market leadership, deep-rooted customer relationships and our integrated business model 5 Strong Track Record: Consolidated Financial Performance Gross Operating Revenue ($ Billions) Canadian Tire s performance has been consistent through many economic cycles due in part to its everyday needs offering '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Basic EPS from Continuing Operations ($) Earnings before Income Taxes and Minority Interest ($ Millions) '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 6 3

4 Financial Aspirations & Grow revenue by 6% - 8% Double-digit earnings growth 10%+ return on invested capital 5-year averages We are building a bigger and better Canadian Tire through growth and productivity. Our objective is to increase shareholder value through sustainable, double-digit earnings growth 7 Building a Bigger Canadian Tire 2008 Strategic Objectives 1. Retail expansion 2. Outlet enhancements 3. New store concepts 4. CTR-Mark s combination store expansion 5. Automotive parts supply chain improvement 6. Financial Services growth 8 4

5 Bigger - Network Expansion 1. Expand our retail network by adding incremental outlets 2008 Plan: Plan: 3 CTR stores CTR projects 14 PartSource stores 100 PartSource stores 17 Mark s stores Mark s projects 8 Petroleum sites 60 Petroleum sites By 2012, introduce a total of 330 incremental retail outlets across CTR, PartSource, Mark s and Petroleum 9 Significant Opportunity for Future Growth CTR Store Network Growth Traditional Stores New Format Stores Concept 20/ Smart Store Small Market Store '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F 10 5

6 Bigger Outlet Renovation 2. Renovate, retrofit or expand retail outlets to enhance the customer experience and bring older outlets up to current design standards 2008 Plan: 35 CTR stores 24 Mark s stores 25 + Petroleum sites By 2012, we will refurbish 100+ Petroleum sites and approximately two thirds of planned CTR store projects will be expansions and/or retrofits 11 Rebuild, Renew, Grow Petroleum Outlets Before Modernization Strathroy, Ont Portage, Man Kirkland, Que After Modernization Strathroy, Ont Portage, Man Kirkland, Que 12 6

7 Bigger New Store Concepts 3. Market test 2 CTR store concepts for pilot in 2008 and rollout in Small Market stores: 14,000-18,000 square feet Full Mark s store inside a CTR store and, in most markets, a gas bar and convenience store onsite Large outdoor compound for seasonal goods 2 Smart stores: Next wave of renewal for existing and new CTR stores Requires less capital and creates a more exciting shopping experience Dramatically different inside, with look and feel of several small boutiques 13 Bigger - CTR-Mark s Combination Store Expansion 4. Expand the number of CTR stores incorporating a Mark s store 2008 Plan: 14 new stores Our largest 95,000 retail sq. ft. store in Dartmouth, Nova Scotia, features a full-sized, 13,000 sq.ft. Mark s inside the CTR store 14 7

8 Bigger Automotive Infrastructure Improvement 5. Improve the automotive parts supply chain to enhance customer service, breadth of product and supply of emergency parts to both CTR and PartSource stores 2008 Plan: Double hard parts number in 3 main warehouses Build 6 new PartSource hub stores Technology infrastructure renewal New Automotive Management System New industry standard data catalogue New warehouse management technology Plan: Increase CTR in-store assortments by 10-15% and double assortment in distribution centres Build 22 PartSource hub stores Build the PartSource chain up to 200 stores Better technology 15 Bigger Financial Services Growth 6. Grow the Financial Services business Grow credit card receivables by 8% (yearover-year), with testing of additional cards Relaunch the Options MasterCard Continue retail banking pilot Continue enhancements to insurance and warranty products Financial Services growth strategy includes plans to drive receivables growth through increasing the number of accounts with a balance and increasing average balances 16 8

9 Attractive Return on Receivables of 4.5% to 5.0% Net Write-Off Rates (%) Target: 5.0% - 6.0% Return on Receivables 1 (%) Target: 4.5% - 5.0% '03 '04 '05 '06 '07 '03 '04 '05 '06 '07 1) Earnings before income taxes, gains (losses) on sales of loans receivable, the impact of a stock option modification (2006) and redemption of an investment (2006), as a percentage of gross average loans receivable 17 Retail Banking Potential Channel for Growth Pilot retail banking in three markets for up to two years: High interest savings accounts no minimum deposit, no monthly fees GICs varying interest rates and terms, competitive offering Residential mortgages variety of traditional terms and competitive rates prime and super-prime customers One-and-Only account combines mortgage, chequing/savings account, loans or credit card balances into one account

10 Building a Better Canadian Tire 2008 Strategic Objectives 1. Customer service improvement 2. IT renewal initiative 3. Productivity improvement 4. Financial flexibility enhancement 19 Better Improve Customer Service 1. Strengthen enterprise-wide focus growth on customer service 2008 Plan: Plan: Common measurements, tracking and reporting Prioritized store-level customer service training Improve accountability and rewards In-store customer assistance Consistent store execution In-stock assurance Price assurance New self-serve checkouts at CTR Pay-at-the-pump technology Canadian Tire is committed to building customer loyalty through fostering a positive, consistent & memorable customer experience 20 10

11 Better IT Renewal 2. Advance the multi-year IT renewal initiative New CTR and Mark s merchandizing software and related process improvements for better data, decisions and productivity New system to enhance information quality and management of our human resources and related costs across the enterprise New automotive inventory and warehouse management systems to improve productivity and customer service at CTR and PartSource stores Rationalize older CTR technology to reduce risks and operating costs 21 Better Productivity 3. Improve the productivity and engagement of our people Enhance and align organizational structure and internal processes CT Works Enhance and align compensation systems and leadership programs Improve marketing and merchandising processes Energy savings across retail store networks and other areas 22 11

12 Better - Financial Flexibility Enhancements 4. Enhance our financial flexibility to position the company for future growth and ensure financial strength through changing economic conditions Maintain adequate lines of credit Explore new sources of funding to increase flexibility and access to capital Over time, opportunities may exist to enhance the share buy back and/or dividend policy as free cash flow grows 23 Financial Services Funding Financial Services financed through a combination of: Corporate financing % Securitized debt % Securitized debt through Glacier Credit Card Trust A single purpose trust only containing Financial Services credit card receivables Glacier Credit Card Trust Update: In February 2008, we completed a Glacier Credit Card Trust transaction of $630 million (net of transaction costs) in 5-year notes at a weighted average cost of 5.08% Commercial paper currently represents less than 7% of total Glacier funding Glacier commercial paper continues to roll over at bank conduit spreads Considering obtaining a second credit rating for Glacier commercial paper 24 12

13 2008 Plan for EPS of $5.15 $5.40 Our Goal To increase shareholder value through sustainable, double-digit earnings growth 25 Questions 26 13