Canadian Tire Corporation to Accelerate the Growth of Triangle Rewards with Strategic Repurchase of Financial Services Business Stake from Scotiabank

Canadian Tire Corporation, Limited (“CTC” or “the Company”) 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.

About Canadian Tire Corporation

Canadian Tire Corporation, Limited, 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.

Contact:

Media – Stephanie Nadalin – stephanie.nadalin@cantire.com – (647) 271-7343

Investors – Karen Keyes – karen.keyes@cantire.com – (647) 518-4461

Source: Canadian Tire Corporation Limited