Canadian Tire Corporation
2021 REPORT TO SHAREHOLDE RS
canadian tire corporation
2021 REPORT TO SHAREHOLDERS
01
MESSAGE FROM MAUREEN J. SABIA, CH AIRMAN OF THE BOAR D
DE AR SHA REHOLDERS,
Happy Birthday, Canadian Tire! This year, 2022, the Company reached its 100th birthday, an age few
public companies in Canada attain. During the year, our shareholders and our customers will see many
different and innovative ways in which the Company will celebrate its birthday – ways that celebrate our
distinguished past and provide a glimpse of how we will chart our future.
Striving always to make things better, Canadian Tire has worked hard and innovatively to be there for
Canadians – to meet their needs – as they navigate their way through their lives. Congratulations to the many
committed managements over the years that have ensured our place in the hearts and minds of Canadians.
I am sure that the Billes brothers would be very proud that their innovative and entrepreneurial vision for
the Tire, and their focus on helping communities, are still guiding us. I know that Martha and Owen Billes
are very proud that the values of our founders are still to be found deeply embedded in the culture of
Canadian Tire.
Today, Canadian Tire is a company transformed. It is meeting the omnichannel demands of our customers
and is putting in place the initiatives that will secure our future. Enhancement of our brand, support for
our many communities, investment in more sophisticated technologies, growing market share, a focus on
risk in its many forms, a renewed focus on acquiring and developing world-class talent, a commitment
to an even better customer experience and continuing to reward our shareholders for their commitment
and loyalty, are priorities. I believe that the leadership being given by Greg Hicks will influence greatly
the Canadian Tire of tomorrow. We are already seeing the effect of his leadership in the resilience and
innovation of the Tire during COVID-19 and how quickly we ramped up our eCommerce business, though
retaining our belief in bricks and mortar.
02
This Report to Shareholders is the vehicle for reporting on our very successful and resilient 2021 and therein
lies the difficulty for the contents of this Letter. While I want to celebrate our many accomplishments of
the past year, I also want to look forward into the future. This will be my last Letter and I want to leave
you with some of the thoughts I have developed over the years I have had the privilege of serving as your
Chairman and some thoughts I have for the future.
I will miss my role at the Tire, but I firmly believe that the time is now for new leadership of the Board. I
know that Mike Owens will serve the Company as Chairman with distinction, energy and commitment.
I have known Mike for many years and the time I have spent with him during the past few months, ensuring
a smooth transition, has confirmed my opinion. Mike will continue my focus on board renewal and has
worked with me over the last few months to ensure that. As a result, with the approval of the shareholders,
we will welcome Sowmyanarayan Sampath to our Board at our Annual Meeting of Shareholders. Sampath’s
track record of accomplishments in technology, strategy, transformation, digital transformation, managing
huge complexity and improving the customer experience will add huge value to the Tire.
Over the years that I have had the good fortune to be Chairman of the Board, we have had many directors
who have contributed much to the Tire during their time on the Board. I think most especially of Claude
L’Heureux, Pierre Boivin, Tim Price, Jim Goodfellow, George Vallance, John Furlong, Pat Connolly, Austin
Curtin, Daniel Fournier, and Iain Aitchison, all of whom we continue to miss.
Growth is our mantra for the future. To that end we have embarked on a series of significant investments.
We are investing over $3 billion in our Owned Brands, Loyalty program, Helly Hansen’s Canadian sales,
our Operational Efficiency program, IT infrastructure modernization, Canadian Tire store expansion and
supply chain. These investments, plus investments in innovation, together with our powerful assets, will
shape our future and result in a Canadian Tire equipped even better to meet the challenges presented to
it in the next three to five years. Remarkable retail will be synonymous with Canadian Tire.
I have been reflecting on my time at the Tire and over the many years I have been on the Board, I was
privileged to witness many significant moments in our history. To mention just a very few: Martha Billes
bought out her brothers and became the majority controlling shareholder, Canadian Tire became the first
non-bank to issue a Mastercard, we bought the Forzani Group (SportChek) and Mark’s, we acquired Party
City and Helly Hansen, we created CT REIT and Canadian Tire Bank, we celebrated our 90th birthday by
producing a history of Canadian Tire, entitled “Living the Canadian Dream” which told the story of how a
set of tires moved a nation.
Since becoming Chairman in 2007, I have seen the Company’s revenues grow from $8 billion to over
$16 billion, the result of some bold and innovative initiatives.
The future for the Tire is secure, but the task of ensuring that future will depend on our ability to be
extremely agile. How business will be conducted in the short and longer term is changing very quickly and
we will have to evolve in order to be responsive to those changes. This will require an even greater focus
on acquiring world-class talent. Moreover, we will have to be ever more mindful of our competition and we
will need to make decisions, and implement them, quickly. Progress over perfection.
As I think about the future, I have some worries about what it will mean for corporate Canada. I worry
about some of the implications of stakeholder capitalism replacing shareholder capitalism. I worry about
quotas in the boardroom with their potential to be discriminatory. I worry that entitlement is replacing
personal responsibility and accountability.
03
To the business leaders, managements and corporate directors of today and for those who will follow them, my
advice to you is:
• Strive always to do what is right for the company
• Take responsibility to support the communities in
which you operate. Emulate Canadian Tire, which,
from its inception, has supported its communities
and through its Jumpstart Charities is widely
recognized as giving nearly 3 million children the
opportunity to engage in sports.
• Hire the best talent you can and strive for world-
class talent
• Have the courage to be a minority of one
• Reject the idea that Boards of Directors merely
provide oversight. Management and the directors
need to become partners in the leadership of the
company so that transparency and joint purpose can
flourish, information can be shared more freely and
a critical dynamic between management and the
Board can be nurtured.
• Demand accountability in your corporate culture
• Partner with political leaders in shaping
public policy
• Pivot ESG to include energy, security and an
expanded concept of governance
I have had the opportunity to develop these perspectives through my work at a great corporation, working
with incredible peers on the Board and with many skilled managements.
I especially want to thank Martha and Owen Billes for the support they have given me over the years. In
placing their confidence in me, they gave me a great gift.
I also want to thank today’s management for the support and guidance they have given me. They taught
me so much.
To Canadian Tire I say, don’t just think big, think huge.
Canadian Tire is iconic, a part of the fabric of Canada, part of the Canadian dream. It has been a privilege
for me to have been part of its story.
Maureen Sabia, Chairman of the Board
04
05
MESSAGE FROM GREG HICKS, PRESIDE NT AND CH IEF EXECUTIVE OFFICER
We Are Here to Make
Life in Canada Better
DE AR SHA REHOLDERS,
There’s no question that we all continue to live and work in challenging times. After more than two years spent
navigating COVID-19 turbulence, we’ve found ourselves facing yet another global crisis: Russia’s invasion of
Ukraine. The conflict is tragic and deeply concerning, and we are committed to helping those impacted by the
violence. As a start, in March we made a $200,000 donation to the Red Cross’ Ukraine Humanitarian Crisis
Appeal. We’ve also committed up to $500,000 to support the thousands of refugees who will soon be arriving
in Canada.
For a century, Canadian Tire has been here not only with the products and services, but also the support
needed for life in Canada. As I mentioned last year, the challenges of COVID-19 gave us the opportunity to
reshape the culture of our Company and change the way we work. And now, we are a different Company
than we were two years ago. Today, we are here with a clear Brand Purpose: to make life in Canada better.
This serves as our North Star, guiding every single decision we make, from how we respond in a crisis
to our plans for growth. Having a collective purpose enables us to work horizontally towards common
outcomes focused on the customer, embrace agility, and be more dynamic in our decision making.
06
Our record-setting performance in 2021 was a direct result of our evolution. In addition to changing how we
work, we’d spent the previous two years focused on building a better omnichannel business, including our
platform upgrade, our site experience, our digital marketing, our mobile apps, our in-store technology, and our
improvements in both the economics and the speed of experience across every customer fulfillment method.
We’d also been reinforcing our powerful capabilities, including our world-class supply chain, which proved it
can stand up to any challenge – from ocean freight capacity issues to mudslides and everything in between. It’s
evident we have the culture, assets and capabilities required to win in the world of retail – today and tomorrow.
07
Last year, I made a commitment to you, our valued shareholders, that we would allocate greater resources
to the businesses that maximize our potential and position us to deliver stronger returns. I also assured
you that we’d continue to communicate frequently and transparently with you. I trust that you’ll agree
we’ve stayed true to our promise to better tell our story. When we approached our Investor Day in March,
we did so with three objectives in mind: first, we wanted to position and reinforce our management
team as the progressive retail leaders they are; second, we wanted to outline a unified and strategically
integrated vision of our Company; and third, we wanted to improve your perception around our ability to
compete and grow going forward. I’m confident we achieved these objectives when we announced our
Better Connected strategy at our Investor Day.
As we outlined in detail, we plan to invest $3.4 billion over the next four years to deliver an improved
omnichannel customer experience. We will continue to modernize, creating a more contemporary
experience for our customers while unifying the customer connection points across all our banners,
making CTC a trusted source for a variety of products and services. As such, we are making strategic
investments that will enable our evolution from a collection of banners, brands and channels to one
08
integrated Company, ultimately creating better customer experiences, deeper customer connections, and
driving long-term growth and value for you: our shareholders.
Through our Better Connected strategy, we will create valuable relationships through the power of the
Triangle. We know that by strengthening our Triangle Brand and the value of our Triangle Rewards Program,
we can build lifetime relationships by acquiring new loyalty and credit card members, and continue to foster
personalized engagement and meaningful customer connections. We will also provide a seamless end-
to-end connection along the supply chain and to our customers across whichever channel they choose.
This includes investing heavily in the Canadian Tire Retail store network to drive convenience, discovery,
localized assortment and enhanced experience while delivering our better website and digital platforms.
Additionally, we will ensure we continue to have everything Canadians want and need by designing and
delivering world-class products through our sourcing and design capabilities. Canadians have come to
know and love our Owned Brands, and now we’re taking this highly successful, $5.7 billion portfolio to new
heights through the acceleration of new product launches.
09
Our Better Connected strategy also includes our plans to further our positive impact on Canada through
our strong community relationships. There should be no question that we step up for our communities;
through our Jumpstart Charities, we are on track to surpass three million kids helped in 2022. We’re also
continuing to make progress on our sustainability efforts, including once again being named among the
most sustainable retailers in Canada and listed as one of the Global 100 Most Sustainable Corporations by
Corporate Knights. As we move forward, we are focused on bringing all of our environmental and social
initiatives together into an integrated ESG strategy, which we look forward to sharing in 2022.
Through our Better Connected strategy, we’re well-positioned and have a clear path for growth. We have
confidence in our convictions and a profound understanding of how, together, our teams will make both
CTC and life in Canada better. And we have been transparent in an effort to further your understanding of
our performance and where we intend to go in the future.
I’m so grateful to our tens of thousands of team members who embraced and now embody our Brand
Purpose of Being Here to Make Life in Canada Better. The CTC team has been tenacious, resilient and
committed to driving our performance and delivering better customer experiences. We have entered our
centennial year in a strong and enviable position.
I want to thank the CTC Board for their ongoing support of me and my conviction around how we will
continue to grow this Company for the next 100 years. I also want to thank our Chairman of the Board,
Maureen Sabia, for her tireless and inspiring 37-year commitment to our great Company. Maureen has led
the Board and partnered with management with the sole objective of making our Company better. I will
always remember both her support for and faith in me, and am forever grateful for her sage advice. I wish
her well in her retirement.
Finally, I want to thank you, our valued shareholders, for recognizing our ability to not simply survive, but
thrive, in such challenging times. I’m grateful you have joined us on this journey – and trust me, it’s only
going to get better.
Best,
Greg Hicks,
President and CEO, Canadian Tire Corporation
10
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11
management’s discussion
and analysis
AND
consolidated financial
statements
Management’s Discussion and Analysis
Canadian Tire Corporation, Limited
Fourth Quarter and Full-Year 2021
Table of Contents
1.0
PREFACE
2.0
COMPANY AND INDUSTRY OVERVIEW
3.0
HISTORICAL PERFORMANCE HIGHLIGHTS
4.0
FINANCIAL PERFORMANCE
4.1 Consolidated Financial Performance
4.2 Retail Segment Performance
4.3 Financial Services Segment Performance
4.4 CT REIT Segment Performance
5.0
BALANCE SHEET ANALYSIS, LIQUIDITY, AND CAPITAL RESOURCES
6.0
EQUITY
7.0
TAX MATTERS
8.0
ACCOUNTING POLICIES AND ESTIMATES
9.0
KEY PERFORMANCE MEASURES
10.0
KEY RISKS AND RISK MANAGEMENT
11.0
INTERNAL CONTROLS AND PROCEDURES
12.0
ENVIRONMENTAL SUSTAINABILITY
13.0
FORWARD-LOOKING INFORMATION AND OTHER INVESTOR COMMUNICATION
14.0
RELATED PARTIES
15.0
SUBSEQUENT EVENT
1
3
4
6
6
13
20
23
26
35
36
37
39
53
64
65
66
68
68
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.0 Preface
1.1 Definitions
In this document, the terms “we”, “us”, “our”, “Company”, “Canadian Tire Corporation”, “CTC”, and “Corporation”
refer to Canadian Tire Corporation, Limited, on a consolidated basis. This document also refers to the
Corporation’s three reportable operating segments: the “Retail segment”, the “Financial Services segment”, and
the “CT REIT segment”.
The financial results for the Retail segment are delivered by the businesses operated by the Company under the
Company’s retail banners, which include Canadian Tire, PartSource, Petroleum, Gas+, Party City, Mark’s, Helly
Hansen, SportChek, Sports Experts, Atmosphere, Pro Hockey Life (“PHL”), Sports Rousseau, and Hockey
Experts.
In this document:
“Canadian Tire” refers to the general merchandise retail and services businesses carried on under the
Canadian Tire, PartSource, PHL, and Party City names and trademarks.
“Canadian Tire stores” and “Canadian Tire gas bars” refer to stores and gas bars (which may include
convenience stores, car washes, and propane stations) that operate under the Canadian Tire and Gas+ names
and trademarks.
“CT REIT” refers to the business carried on by CT Real Estate Investment Trust and its subsidiaries, including
CT REIT Limited Partnership (“CT REIT LP”).
“Financial Services” refers to the business carried on by the Company’s Financial Services subsidiaries, namely
Canadian Tire Bank (“CTB” or the Bank”) and CTFS Bermuda Ltd. (“CTFS Bermuda”), a Bermuda reinsurance
company.
“Franchise Trust” refers to a legal entity sponsored by a third-party bank that originates and services loans to
certain Dealers for their purchases of inventory and fixed assets (“Dealer loans”).
“Helly Hansen” refers to the international wholesale and retail businesses that operate under the Helly Hansen
and Musto brands.
“Jumpstart” refers to Canadian Tire Jumpstart Charities.
“Mark’s” refers to the retail and commercial wholesale businesses carried on by Mark’s Work Wearhouse Ltd.,
and “Mark’s stores” including stores that operate under the Mark’s and L’Équipeur names and trademarks.
“Owned Brands” refers to brands owned by the Company and are managed by the consumer brands division of
the Retail segment.
“PartSource stores” refers to stores that operate under the PartSource name and trademarks.
“Party City” refers to the party supply business that operates under the Party City name and trademarks in
Canada.
“Petroleum” refers to the retail petroleum business carried on under the Canadian Tire and Gas+ names and
trademarks.
“SportChek” refers to the retail business carried on by FGL Sports Ltd., including stores that operate under the
SportChek, Sports Experts, Atmosphere, Sports Rousseau, and Hockey Experts names and trademarks.
Other terms that are capitalized in this document are defined the first time they are used.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
This document contains trade names, trademarks, and service marks of CTC and other organizations, all of which
are the property of their respective owners. Solely for convenience, the trade names, trademarks, and service
marks referred to herein appear without the ® or TM symbol.
1.2 Forward-Looking Information
This Management’s Discussion and Analysis (“MD&A”) contains statements that are forward-looking and may
constitute “forward-looking information” within the meaning of applicable securities legislation. Actual results or
events may differ materially from those forecast and from statements of the Company’s plans or aspirations that
are made in this MD&A because of the risks and uncertainties associated with the Corporation’s businesses and
the general economic environment. The Company cannot provide any assurance that any forecast financial or
operational performance, plans, or aspirations will actually be achieved or, if achieved, will result in an increase in
the Company’s share price. Refer to section 13.0 in this MD&A for a more detailed discussion of the Company’s
use of forward-looking information.
1.3 Review and Approval by the Board of Directors
The Board of Directors, on the recommendation of its Audit Committee, approved the contents of this MD&A on
February 16, 2022.
1.4 Quarterly and Annual Comparisons in the MD&A
Unless otherwise indicated, all comparisons of results for Q4 2021 (13 weeks ended January 1, 2022) are
compared against results for Q4 2020 (14 weeks ended January 2, 2021) and all comparisons of results for the
full-year 2021 (52 weeks ended January 1, 2022) are compared against results for the full-year 2020 (53 weeks
ended January 2, 2021).
Comparison of results for Q4 and full-year 2021 is also made against Q4 and full-year 2019 in certain sections of
the MD&A so as to provide a more meaningful comparison of results against the last comparable quarter prior to
the onset of the COVID-19 pandemic.
1.5 Accounting Framework
The annual consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), also referred to as Generally Accepted Accounting Principles (“GAAP”), using the
accounting policies described in Note 3 of the annual consolidated financial statements.
1.6 Accounting Estimates and Assumptions
The preparation of the Company’s consolidated financial statements that conforms to IFRS requires Management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Refer to section 8.1 in this MD&A for further information.
1.7 Key Performance Measures
The Company uses certain key performance measures which provide useful information to both Management and
investors in measuring the financial performance and financial condition of the Company. These measures are
classified as GAAP measures, non-GAAP financial measures, non-GAAP ratios, capital management measures
and supplementary financial measures, as well as non-financial measures. Readers are cautioned that the non-
GAAP financial measures have no standardized meanings under IFRS and, therefore, may not be comparable to
similar terms used by other companies. Refer to section 9.2 for additional information on these metrics. Many of
the non-GAAP financial measures in this document are adjusted to normalize the results for certain activities
Management does not believe reflect the ongoing business. Unless otherwise noted, analysis of changes in
normalized results applies equally to changes in the reported results.
1.8 Rounding and Percentages
Rounded numbers are used throughout the MD&A. All year-over-year percentage changes are calculated on
whole dollar amounts except in the presentation of basic and diluted earnings per share (“EPS”), in which year-
over-year percentage changes are based on fractional amounts.
2 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
2.0 Company and Industry Overview
Canadian Tire Corporation, Limited (TSX: CTC.A) (TSX: CTC) and its subsidiaries, are a group of companies that
include a Retail segment, a Financial Services segment 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 Automotive,
Fixing, Living, Playing and Seasonal & Gardening divisions. PartSource, Gas+, Party City and Pro Hockey Life
are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual
and industrial wear; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best
activewear brands. The approximately 1,711 retail and gasoline outlets are supported and strengthened by our
Financial Services segment and the tens of thousands of people employed across Canada and around the world
by the Company and its Canadian Tire Associate Dealers (“Dealers”), franchisees and petroleum retailers. In
addition, Canadian Tire Corporation owns Helly Hansen, a leading global brand in sportswear and workwear
based in Oslo, Norway, whose results are included in the Retail segment. A description of the Company’s
business and select core capabilities can be found in the Company’s 2021 Annual Information Form (“2021 AIF”),
including section 2 “Description of the Business” and on the Company’s Corporate (https://corp.canadiantire.ca/
English/home/default.aspx) and Investor Relations (https://corp.canadiantire.ca/English/investors/default.aspx)
websites.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
3.0 Historical Performance Highlights
3.1 Select Annual Consolidated Financial Trends
The following table provides selected annual consolidated financial and non-financial information for the last three
fiscal periods. The financial information has been prepared in accordance with IFRS. As a result of COVID-19,
consolidated earnings and EPS were impacted by a number of items in 2020. Refer to section 4.1.1 in this MD&A
for further information regarding the events that impacted the Company in 2020. The fourth quarter and full-year
2020 results include one additional week of retail operations compared to the fourth quarter and full-year 2021
results.
(C$ in millions,
except per share amounts and number of retail locations)
Consolidated Comparable sales growth2, 3
Retail sales, excluding Petroleum3
Revenue
Net income
Normalized4 net income5
Basic EPS
Diluted EPS
Normalized4 diluted EPS5
Total assets
Total non-current financial liabilities
Financial Services gross average accounts receivable3 (total
portfolio)
Number of retail locations
‘2021
8.2 %
20201
9.5%
2019
3.6%
$
16,194.0
$
15,172.7
$
13,669.0
16,292.1
1,260.7
1,290.8
18.56
18.38
18.91
21,802.2
8,749.7
5,876.4
1,711
14,871.0
14,534.4
862.6
904.9
12.35
12.31
13.00
20,377.1
8,353.3
6,008.6
1,741
4.5875
$
167.33
894.8
923.3
12.60
12.58
13.04
19,518.3
7,535.3
6,253.5
1,746
4.2500
140.63
Cash dividends declared per share
Stock price (CTC.A)6
1 The full-year 2020 results include one additional week of retail operations compared to the full-year 2021.
2 Does not include Helly Hansen.
3 For further information about this measure see section 9.3 of this MD&A.
4 Refer to section 4.1.1 in this MD&A for a description of normalizing items.
5 This is a non-GAAP financial measure. For further information and a detailed reconciliation see section 9.2 of this MD&A.
6 Closing share price as of the date closest to the Company’s fiscal year end.
4.8250
181.44
$
$
4 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
REVENUE BY BANNER/UNIT*
($ millions)
STORES AND RETAIL REVENUE
Retail revenue
($ billions)
Number of stores
Canadian Tire
Financial Services
SportChek
Mark’s
Petroleum
*Excludes CT REIT
Helly Hansen
**2020 results are based
on a 53-week period.
Store count
Retail revenue
* 2020 results are based on a 53-week
period.
FINANCIAL SERVICES GROSS AVERAGE
ACCOUNTS RECEIVABLE
($ millions)
NORMALIZED DILUTED EPS AND
DIVIDENDS PER SHARE
($ per share)
(Dividends $ per share)
Normalized diluted EPS
Dividends per share
* 2020 results are based on a 53-week period.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 5
20192020**202105,00010,00015,00020,0002019202020214,5004,7505,0005,2505,5005,7506,0006,2506,500$13.2$13.6$15.120192020*202156789101112131415161650167517001725175017754.25004.58754.825020192020*2021$6$8$10$12$14$16$18$20$0$1$2$3$4$5
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.0 Financial Performance
4.1 Consolidated Financial Performance
4.1.1 Consolidated Financial Results
(C$ in millions, except where noted)
Retail sales1
Q4 2021
Q4 2020
Change
2021
2020
Change
$ 5,661.0 $ 5,317.2
6.5 % $ 18,264.6 $ 16,864.4
8.3 %
Revenue
Gross margin dollars
Gross margin rate1
Other expense (income)
$ 5,137.6 $ 4,874.5
5.4 % $ 16,292.1 $ 14,871.0
$ 1,946.7 $ 1,849.9
5.2 % $ 5,835.2 $ 5,076.6
9.6 %
14.9 %
37.9 %
37.9 %
(6) bps
35.8 %
$
5.2 $
18.9
NM2 $
(23.5) $
Selling, general and administrative expenses
1,167.4
1,053.6
10.8 % 3,934.3
3,599.3
Net finance costs
54.1
58.8
(8.1) %
222.5
256.5
(13.3) %
Income before income taxes
$
720.0 $
718.6
0.2 % $ 1,701.9 $ 1,172.1
34.1 % 168 bps
NM2
9.3 %
48.7
45.2 %
42.6 %
184.3
196.8
(6.4) %
441.2
309.5
25.6 %
27.4 %
25.9 %
26.4 %
$
535.7 $
521.8
2.7 % $ 1,260.7 $
862.6
46.1 %
Income tax expense
Effective tax rate1
Net income
Net income attributable to:
Shareholders of Canadian Tire Corporation
$
508.5 $
488.8
4.0 % $ 1,127.6 $
751.8
Non-controlling interests
27.2
33.0
(17.4) %
133.1
110.8
Basic EPS
Diluted EPS
Weighted average number of Common and
Class A Non-Voting Shares outstanding:
$
$
$
535.7 $
521.8
2.7 % $ 1,260.7 $
862.6
8.40 $
8.34 $
8.04
7.97
4.5 % $
18.56 $
12.35
4.6 % $
18.38 $
12.31
50.0 %
20.1 %
46.1 %
50.3 %
49.3 %
Basic
Diluted
60,553,762 60,807,577
61,008,556 61,358,623
NM2 60,744,440 60,896,809
NM2 61,345,072 61,090,111
NM2
NM2
1 For further information about this measure see section 9.3 of this MD&A.
2 Not meaningful.
Non-Controlling Interests
The following table outlines the net income attributable to the Company’s non-controlling interests. For additional
details, refer to Note 15 to the Company’s 2021 Consolidated Financial Statements.
(C$ in millions)
Financial Services
Q4 2021
Q4 2020
2021
2020
Non-controlling interest 20.0% (2020 – 20.0%)
$
9.0 $
16.7 $
62.7 $
47.2
CT REIT
Non-controlling interest 31.0% (2020 – 30.8%)
Retail segment subsidiary
Non-controlling interest 50.0% (2020 – 50.0%)
16.7
15.7
66.6
62.4
1.5
0.6
3.8
1.2
Net income attributable to non-controlling interests
$
27.2 $
33.0 $
133.1 $
110.8
6 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operational Efficiency program
Since launching the Company’s Operational Efficiency program in the fall of 2019, the Company has eliminated
redundancies, simplified processes, captured enterprise-wide efficiencies, and changed the way it operates to
enable the Company’s strategy through the implementation of over 150 separate initiatives. As a result of our
sustained focus, we were able to achieve our previously announced annualized run rate savings target of $200+
million at the end of Q3 2021, one quarter ahead of schedule. The program has contributed to an overall
improvement in the 2021 Retail segment selling, general and administrative expenses (“SG&A”) as a percent of
revenue (excluding Petroleum) by over 100 bps compared to 2019.
The following represents forward-looking information and readers are cautioned that actual results may vary.
The Company continues to execute on more than 100 initiatives to improve efficiency and enable capabilities to
deliver value to our customers and key stakeholders through its Operational Efficiency program. The Company
announced in Q3 2021 that it increased its Operational Efficiency target by $100 million to $300+ million, which
we expect to achieve in annualized run rate by the end of 2022.
Normalizing Items
The results of operations in 2021 and 2020 include costs relating to the Company’s Operational Efficiency
program which were considered as normalizing items. During the year, non-recurring costs relating to severance,
consulting, IT projects, and the continued wind down of non-core businesses amounted to $40.9 million. These
costs are included in cost of producing revenue, SG&A and other income (expense) in the consolidated
statements of income.
(C$ in millions)
Operational Efficiency program
Q4 2021
Q4 2020
2021
$
6.5 $
35.3 $
40.9 $
2020
56.7
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 7
Change3
5.4 %
5.8 %
4.7 %
MANAGEMENT'S DISCUSSION AND ANALYSIS
Selected Normalized Metrics – Consolidated
(C$ in millions, except
where noted)
Q4 2021
Normalizing
Items1
Revenue
$ 5,137.6 $
— $
Normalized
Q4 20212
5,137.6 $ 4,874.5 $
Q4 2020
Normalizing
Items1
— $
Normalized
Q4 20202
4,874.5
Cost of producing revenue
3,190.9
0.4
3,191.3
3,024.6
(9.5)
3,015.1
Gross margin
Gross margin rate4
Other expense
Selling, general and
$ 1,946.7 $
(0.4) $
1,946.3 $ 1,849.9 $
9.5 $
1,859.4
37.9 %
—
37.9 %
37.9 %
20 bps
$
5.2 $
(0.1) $
5.1 $
18.9 $
(17.2) $
38.1 % (26) bps
NM5
1.7
administrative expenses
1,167.4
(6.8)
1,160.6
1,053.6
(8.6)
1,045.0
Net finance costs
54.1
Income before income taxes $
720.0 $
Income tax expense
184.3
Net income
$
535.7 $
—
6.5 $
1.7
4.8 $
54.1
58.8
—
726.5 $
718.6 $
35.3 $
186.0
196.8
8.7
540.5 $
521.8 $
26.6 $
58.8
753.9
205.5
548.4
11.1 %
(8.1) %
(3.6) %
(9.5) %
(1.4) %
Net income attributable to
shareholders of CTC
508.5
4.8
513.3
488.8
Diluted EPS
$
8.34 $
0.08 $
8.42 $
7.97 $
26.6
0.43 $
515.4
(0.4) %
8.40
0.2 %
1 Refer to Normalizing Items table in this section for more details.
2 These normalized measures (excluding revenue and net finance costs) are non-GAAP financial measures. For further information and a detailed reconciliation
see section 9.2 of this MD&A.
3 Change is between normalized results, if any.
4 For further information about this measure see section 9.3 of this MD&A.
5 Not meaningful.
(C$ in millions, except
where noted)
2021
Normalizing
Items1
Normalized
20212
2020
Revenue
$ 16,292.1 $
— $ 16,292.1 $ 14,871.0 $
Normalizing
Items1
Normalized
20202
— $ 14,871.0
Change3
9.6 %
Cost of producing revenue
10,456.9
(1.4)
10,455.5
9,794.4
(9.5)
9,784.9
6.9 %
Gross margin
Gross margin rate4
Other (income) expense
Selling, general and
$ 5,835.2 $
1.4 $
5,836.6 $ 5,076.6 $
9.5 $
5,086.1
14.8 %
35.8 %
1 bps
35.8 %
34.1 %
6 bps
$
(23.5) $
(1.0) $
(24.5) $
48.7 $
(17.2) $
34.2 % 162 bps
NM5
31.5
administrative expenses
3,934.3
(38.5)
3,895.8
3,599.3
(30.0)
3,569.3
9.1 %
Net finance costs
222.5
—
222.5
256.5
—
256.5
(13.3) %
Income before income taxes $ 1,701.9 $
40.9 $
1,742.8 $ 1,172.1 $
56.7 $
1,228.8
Income tax expense
441.2
10.8
452.0
309.5
Net income
$ 1,260.7 $
30.1 $
1,290.8 $
862.6 $
Net income attributable to
shareholders of CTC
1,127.6
30.1
1,157.7
751.8
Diluted EPS
$
18.38 $
0.53 $
18.91 $
12.31 $
14.4
42.3 $
42.3
0.69 $
323.9
904.9
794.1
13.00
41.8 %
39.5 %
42.6 %
45.8 %
45.5 %
1 Refer to Normalizing Items table in this section for more details.
2 These normalized measures (excluding revenue and net finance costs) are non-GAAP financial measures. For further information and a detailed reconciliation
see section 9.2 of this MD&A.
3 Change is between normalized results, if any.
4 For further information about this measure see section 9.3 of this MD&A.
5 Not meaningful.
8 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Consolidated Results Commentary
2021 versus 2020
Diluted EPS for the fourth quarter of 2021 was $8.34 per share, $0.37 higher compared to the prior year.
Normalized diluted EPS1 was $8.42, up slightly compared to the prior year. Earnings from strong sales and gross
margin rate improvement within the Retail segment of $60.2 million more than offset one fewer week of operations
compared to 2020 and a decline in Financial Services income. The Financial Services segment income
decreased $52.6 million driven by a $29.8 million increase in the expected credit loss (“ECL”) allowance for loans
receivable compared to a $27.3 million allowance reduction in the prior year and increased investment in new
accounts.
The Company experienced less in-store shopping capacity restrictions this quarter compared to the prior year
when there were temporary store closures and restrictions in certain provinces in December 2020.
For the full year, Diluted EPS was $18.38, an increase of $6.07, or 49.3 percent from the prior year. The increase
in earnings was driven by higher earnings in both the Retail and Financial Services businesses.
As disclosed in the Q4 2020 MD&A, the Company’s consolidated financial results for the full year 2020, were
negatively impacted by net expenses of $137.6 million, or $1.60 EPS, due to the impact of COVID-19 related
market disruptions. A description of the primary drivers of the impact are outlined below:
In the Retail segment:
•
•
$59.5 million of additional operating expenses directly attributable to the Company’s COVID-19 efforts,
including a special support payment for active front-line employees and enhanced safety protocols for
employees and customers was included in SG&A expenses; and
$27.9 million of impairment costs in Q2 2020 related to the impact that the macro-economic environment
was expected to have on the timing and execution of certain growth strategies related to the Company’s
Musto sailing brand and on future cash flows for select SportChek stores was included in other (income)
expense.
In the Financial Services segment:
•
$44.9 million related to an increase in the ECL allowance resulting from forward looking economic
assumption changes at the onset of the pandemic in Q1 2020.
In 2021, the impact of these disruptions have been absorbed into the day-to-day operations of the Company.
2021 versus 2019
2021 marked a second consecutive year of significant growth in sales (including exceptional growth in
eCommerce) and margin rates across all Retail banners, which drove a significant increase in earnings relative to
2019.
Fourth quarter Diluted EPS increased from $5.42 in 2019 to $8.34 in 2021, growing 53.9 percent. Full-year
Diluted EPS increased from $12.58 in 2019 to $18.38 in 2021, growing 46.1 percent.
1 This measure is a non-GAAP financial measure or a non-GAAP ratio. For further information and a detailed reconciliation see section 9.2 of this MD&A.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
Consolidated Results Commentary (continued)
Q4 2021
Full Year
Consol-
idated
Results
Summary
p Diluted EPS: $0.37 per share
p Diluted EPS: $6.07 per share, or 49.3%
Consolidated
for
revenue
the quarter was
$5,137.6 million, an increase of $263.1 million, or
5.4 percent. Consolidated revenue excluding
Petroleum1 was $4,647.9 million, an increase of
2.8 percent compared to the prior year, mainly
attributable to revenue growth in the Retail
segment due to strong sales performance across
all banners. Revenue also increased within the
Financial Services segment due to higher credit
charges from strong receivables growth and
higher fee income from strong receivables growth
and credit card sales1, respectively, compared to
the prior year.
Consolidated revenue was $16,292.1 million, an
increase of $1,421.1 million, or 9.6 percent.
Consolidated revenue excluding Petroleum was
$14,554.9 million, an increase of 7.7 percent
primarily driven by revenue growth in the Retail
segment, partially offset by a decline in revenue
in the Financial Services segment. The Retail
segment revenue increase was driven by strong
growth across all banners led by Canadian Tire.
The revenue decline in the Financial Services
segment was mainly attributable to lower credit
charges resulting from lower receivable volumes
compared to the prior year.
Consolidated gross margin dollars were $1,946.7
million, an increase of $96.8 million, or 5.2
percent, compared to the prior year. The increase
in gross margin dollars was primarily attributable
to the Retail segment driven by strong revenue
and gross margin rate growth across all banners,
partially offset by lower margin in the Financial
Services segment due to an increase in the ECL
allowance for loans receivable of $29.8 million,
versus a reduction of $27.3 million in 2020.
Consolidated gross margin dollars were $5,835.2
million an increase of $758.6 million, or 14.9
percent, which was primarily attributable to the
increase in the Retail segment driven by strong
growth across all banners led by Canadian Tire.
The Financial Services segment also contributed
to the increase in gross margin dollars, largely
due to a decrease in the ECL allowance of $22.5
million compared to an increase of $67.2 million
in prior year and lower net write-offs.
Other expense was $5.2 million, a decrease of
$13.7 million from the prior year primarily due to
lower impairment charges and non-operational
foreign exchange gains compared to a loss in the
prior year, partially offset by higher real estate
related gains in the prior year. After normalizing
adjustments, other expense was higher by $3.4
million.
Other income was $23.5 million, an increase of
$72.2 million, from an expense of $48.7 million in
the prior year. Normalized Other income was
$24.5 million, an increase of $56.0 million, from
an expense of $31.5 million in the prior year.
Compared to the prior year, the increase was
mainly attributable to the Retail segment, relating
to an impairment charge of $27.9 million in the
prior year as well as non-operational foreign
exchange gains compared to losses in the prior
year.
Consolidated
SG&A
expenses
were
$1,167.4 million, an increase of $113.8 million or
10.8 percent compared to the prior year. The
increase in SG&A was mainly in the Retail
segment due to higher personnel costs relating to
variable compensation expense, and higher
volume-related and sales support costs including
marketing spend, supply chain volume-related
costs and IT costs, partially offset by savings from
the Operational Efficiency program. SG&A
expenses also increased within the Financial
Services segment, mainly due to higher credit
card acquisition costs and related marketing
spend.
Consolidated
SG&A
expenses
were
$3,934.3 million, an increase of $335.0 million or
9.3 percent. Normalized consolidated SG&A
expenses were $3,895.8 million, an increase of
$326.5 million or 9.1 percent. This increase was
mainly attributable to higher SG&A expenses in
the Retail segment due to higher personnel costs
relating to variable compensation expenses, and
higher volume-related and sales support costs
including marketing spend, supply chain volume-
related costs, and IT costs, partially offset by
COVID-19 related costs in the prior year that
were not
the current year and
additional savings from the Operational Efficiency
program. SG&A expenses also increased within
the Financial Services segment, mainly due to
higher credit card acquisition costs and related
marketing spend.
included
in
Net
finance costs during
the quarter were
$54.1 million, which were lower by 8.1 percent,
primarily due to lower lease related costs, lower
medium-term and short-term borrowings and
lower rates compared to the prior year.
Net finance costs were $222.5 million, which
were lower by 13.3 percent, primarily due to lower
lease related costs, and lower long-term and
short-term borrowings compared to the prior year.
1 For further information about this measure see section 9.3 of this MD&A.
10 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Consolidated Results Commentary (continued)
Q4 2021
Income taxes for the quarter were $184.3 million,
compared to $196.8 million in the prior year due
to a decrease in the effective tax rate for the
quarter, primarily due to lower non-deductible
stock option expense in the quarter.
Diluted EPS
in
the quarter was $8.34, an
increase of $0.37 or 4.6 percent. The increase in
earnings was primarily attributable to strong sales
and growth in gross margin rate within the Retail
segment, despite one fewer week of operations
compared to the prior year, partially offset by an
increase in the ECL allowance in the Financial
Services segment compared to a decrease in the
prior year.
Full Year
Income taxes for the period were $441.2 million
compared to $309.5 million, an increase of
$131.7 million compared to the prior year due to
higher income. There was a decrease in the
effective tax rate during this year, primarily due to
lower non-deductible stock option expense in the
year.
Diluted EPS was $18.38, an increase of $6.07 or
49.3 percent. The increase in earnings was due
to strong growth in the Retail segment, higher
earnings growth
the Financial Services
segment, higher other income as well as savings
from the Operational Efficiency program.
in
4.1.2 Consolidated Key Performance Measures, Excluding Petroleum
(C$ in millions) increase/(decrease)
Selling, general and administrative expenses
Normalized1 SG&A expenses adjusted for rent expense2 (excluding
depreciation and amortization3) as a percentage of revenue
excluding Petroleum4, 5
Income before income taxes
Normalized1 EBITDA6 adjusted for rent expense2 as a percentage of
revenue excluding Petroleum 4, 5
Q4 2021
Q4 2020
$
1,167.4 $
1,053.6 $
Change
113.8
23.3 %
$
720.0 $
21.4 %
718.6 $
192 bps
1.4
17.4 %
18.7 %
(126) bps
1 Refer to section 4.1.1 in this MD&A for a description of normalizing items.
2 Adjustments to SG&A include an addition of depreciation on right-of-use assets and net finance costs relating to lease liability as an estimate for rent expense.
3 Depreciation and amortization excluded amounted to $98.1 million (2020 - $100.3 million).
4 Revenue excludes Petroleum revenue, EBITDA excludes Petroleum gross margin.
5 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 9.2 of this MD&A.
6 Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”).
(C$ in millions) increase/(decrease)
Selling, general and administrative expenses
Normalized1 SG&A expenses adjusted for rent expense2 (excluding
depreciation and amortization3) as a percentage of revenue
excluding Petroleum4, 5
Income before income taxes
Normalized1 EBITDA adjusted for rent expense2 as a percentage of
revenue excluding Petroleum4, 5
2021
2020
$
3,934.3 $
3,599.3 $
24.7 %
24.1 %
$
1,701.9 $
1,172.1 $
Change
335.0
52 bps
529.8
14.4 %
12.1 %
232 bps
1 Refer to section 4.1.1 in this MD&A for a description of normalizing items.
2 Adjustments to SG&A include an addition of depreciation on right-of-use assets and net finance costs relating to lease liability as an estimate for rent expense.
3 Depreciation and amortization excluded amounted to $391.1 million (2020 - $399.8 million).
4 Revenue excludes Petroleum revenue, EBITDA excludes Petroleum gross margin.
5 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 9.2 of this MD&A.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Performance Measures Commentary
Normalized SG&A
expenses adjusted
for rent expense
(excluding
depreciation and
amortization)
as a percentage of
revenue excluding
Petroleum
Income before
income taxes
Normalized EBITDA
adjusted for rent
expense, as a
percentage of
revenue excluding
Petroleum
Q4 2021
p 192 bps
p $113.8 or 10.8% reported SG&A
Full Year
p 52 bps
p $335.0 or 9.3% reported SG&A
(excluding
depreciation
Normalized SG&A expenses adjusted for
rent
and
amortization) as a percentage of revenue
excluding Petroleum, was 23.3 percent, an
increase of 192 bps compared to prior year.
The increase in rate was primarily impacted
by higher SG&A expenses partially offset by
an increase in revenue.
(excluding
depreciation
Normalized SG&A expenses adjusted for
rent
and
amortization) as a percentage of revenue
excluding Petroleum,
increased 52 bps
compared to the prior year. The increase in
rate was mainly attributable to higher SG&A
expenses partially offset by an increase in
revenue.
The increase in the related SG&A expenses
is discussed under the Consolidated Results
commentary in the charts above.
The increase in the related SG&A expenses
is discussed under the Consolidated Results
commentary in the charts above.
segments
Contributions from both Retail and Financial
Services
to Consolidated
Normalized SG&A expenses adjusted for
and
rent
amortization) as a percentage of revenue
excluding Petroleum, were up compared to
the prior year mainly driven by higher SG&A
expenses.
depreciation
(excluding
rent
Retail Normalized SG&A expenses adjusted
for
(excluding depreciation and
amortization) as a percentage of revenue
flat
excluding Petroleum, was relatively
compared to the prior year.
to
Financial Services’ contribution
the
Consolidated Normalized SG&A expenses
adjusted for rent (excluding depreciation and
amortization), as a percentage of revenue,
was up compared to the prior year due to an
increase in marketing costs related to higher
credit card acquisitions.
p $1.4 million
increase
The
in earnings was primarily
attributable to strong sales and growth in
gross margin rate within the Retail segment,
partially offset by higher SG&A expenses as
well as an increase in the ECL allowance in
the Financial Services segment compared to
a decrease in the prior year.
p $529.8 million
in
The increase in earnings was due to strong
growth
the Retail segment, higher
earnings growth in the Financial Services
segment, as well as higher other income
partially offset by higher SG&A expenses.
q 126 bps
p 232 bps
for
Normalized EBITDA adjusted
rent
expense as a percentage of revenue,
excluding Petroleum, was 17.4 percent, a
decrease of 126 bps compared to the prior
year. The decrease in rate was mainly due
to the decline in Financial Services earnings
driven by the increase in the ECL allowance.
for
rent
Normalized EBITDA adjusted
expense as a percentage of
revenue,
excluding Petroleum, increased 232 bps
compared to the prior year. The increase in
rate was mainly due to an increase in gross
margin driven by strong growth in the Retail
segment across all banners, in particular
Canadian Tire, and due
to an overall
decrease in the ECL allowance at Financial
Services as well as higher other income.
This was partially offset by an increase in
SG&A for the reasons described above.
4.1.3 Seasonal Trend Analysis
The following table shows the consolidated financial performance of the Company by quarter for the last two
years.
(C$ in millions, except per
share amounts)
Revenue
Net income
Diluted EPS
Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019
$ 5,137.6 $ 3,913.1 $ 3,918.5 $ 3,322.9 $ 4,874.5 $ 3,986.4 $ 3,161.8 $ 2,848.3 $ 4,316.7
535.7
279.5
259.1
186.4
521.8
326.3
2.3
12.2
365.9
8.34
3.97
3.64
2.47
7.97
4.84
(0.33)
(0.22)
5.42
12 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.2 Retail Segment Performance
4.2.1 Retail Segment Financial Results
(C$ in millions, except where noted)
Retail sales1
Revenue
Gross margin dollars
Gross margin rate1
Other (income)
Q4 2021
Q4 2020
Change
2021
2020
Change
$ 5,661.0 $ 5,317.2
6.5 % $ 18,264.6 $ 16,864.4
$ 4,830.0 $ 4,582.2
5.4 % $ 15,083.1 $ 13,620.0
$ 1,764.7 $ 1,630.3
8.2 % $ 4,984.8 $ 4,358.7
8.3 %
10.7 %
14.4 %
36.5 %
35.6 %
96 bps
33.0 %
32.0 %
105 bps
$
(32.9) $
(10.1)
223.3 % $
(165.4) $
(70.8)
133.5 %
Selling, general and administrative expenses
1,115.9
1,011.9
10.3 %
3,787.1
3,471.0
9.1 %
Net finance costs
43.6
50.6
(13.9) %
187.4
220.2
(14.9) %
Income before income taxes
$
638.1 $
577.9
10.4 % $ 1,175.7 $
738.3
59.2 %
1 For further information about this measure see section 9.3 of this MD&A.
Selected Normalized Metrics – Retail
(C$ in millions, except
where noted)
Q4 2021
Normalizing
Items1
Revenue
$ 4,830.0 $
— $
Normalized
Q4 20212
4,830.0 $ 4,582.2 $
Q4 2020
Normalizing
Items1
— $
Normalized
Q4 20202 Change3
5.4 %
4,582.2
Cost of producing revenue
3,065.3
0.4
3,065.7
2,951.9
(9.5)
2,942.4
$ 1,764.7 $
(0.4) $
1,764.3 $ 1,630.3 $
9.5 $
1,639.8
36.5 %
—
36.5 %
35.6 %
20 bps
35.8 % 76 bps
$
(32.9) $
(0.1) $
(33.0) $
(10.1) $
(17.2) $
(27.3)
20.9 %
4.2 %
7.6 %
Gross margin
Gross margin rate4
Other (income)
Selling, general and
administrative expenses
1,115.9
(6.8)
1,109.1
1,011.9
(8.6)
1,003.3
10.5 %
Net finance costs
43.6
—
43.6
50.6
—
50.6
(13.9) %
Income before income
taxes
$
638.1 $
6.5 $
644.6 $
577.9 $
35.3 $
613.2
5.1 %
1 Refer to section 4.1.1 in this MD&A for a description of normalizing items.
2 These normalized measures (excluding revenue and net finance costs) are non-GAAP financial measures. For further information and a detailed reconciliation
see section 9.2 of this MD&A.
3 Change is between normalized results, if any.
4 For further information about this measure see section 9.3 of this MD&A.
(C$ in millions, except
where noted)
Normalizing
Items1
Normalized
20212
2021
2020
Normalizing
Items1
Normalized
Revenue
$ 15,083.1 $
— $ 15,083.1 $ 13,620.0 $
— $ 13,620.0
20202 Change3
10.7 %
Cost of producing revenue 10,098.3
(1.4)
10,096.9
9,261.3
(9.5)
9,251.8
9.1 %
Gross margin
Gross margin rate4
Other (income)
Selling, general and
$ 4,984.8 $
1.4 $
4,986.2 $ 4,358.7 $
9.5 $
4,368.2
14.1 %
33.0 %
1 bps
33.1 %
32.0 %
7 bps
32.1 % 99 bps
$
(165.4) $
(1.0) $
(166.4) $
(70.8) $
(17.2) $
(88.0)
89.1 %
administrative expenses
3,787.1
(38.5)
3,748.6
3,471.0
(30.0)
3,441.0
8.9 %
Net finance costs
187.4
—
187.4
220.2
—
220.2
(14.9) %
Income before income
taxes
$ 1,175.7 $
40.9 $
1,216.6 $
738.3 $
56.7 $
795.0
53.0 %
1 Refer to section 4.1.1 in this MD&A for a description of normalizing items.
2 These normalized measures (excluding revenue and net finance costs) are non-GAAP financial measures. For further information and a detailed reconciliation
see section 9.2 of this MD&A.
3 Change is between normalized results, if any.
4 For further information about this measure see section 9.3 of this MD&A.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.2.2 Retail Segment Key Performance Measures
(Year-over-year percentage change,
C$ in millions, except as noted)
Revenue1
Revenue, excluding Petroleum
4,340.3
4,227.3
2.7 % 13,345.9
12,261.3
Q4 2021
Q4 2020
Change
2021
2020
Change
$ 4,830.0 $ 4,582.2
5.4 % $ 15,083.1 $ 13,620.0
10.7 %
8.8 %
Store count
Retail square footage (in millions)
Retail sales growth2
Retail sales growth, excluding Petroleum2
Consolidated Comparable sales growth2, 3
Retail ROIC4, 5
Revenue1, 6
Store count7
Retail square footage (in millions)
Sales per square foot2, 8
Retail sales growth2, 9
Comparable sales growth2, 3
Revenue1
Store count
Retail square footage (in millions)
Sales per square foot2, 10
Retail sales growth2, 11
Comparable sales growth2, 3
Revenue1, 12
Store count
Retail square footage (in millions)
Sales per square foot2, 10
Retail sales growth2, 13
Comparable sales growth2, 3
Revenue1
Revenue1
Gas bar locations
Gross margin dollars
Retail sales growth2
Gasoline volume growth in litres
Comparable store gasoline volume growth in
litres3
1,711
34.2
6.5 %
4.5 %
11.3 %
13.6 %
1,741
34.5
9.9 %
13.6 %
9.5 %
10.8 %
8.3 %
6.7 %
8.2 %
n/a
6.2 %
11.0 %
9.5 %
n/a
$ 2,867.4 $ 2,864.0
0.1 % $ 9,197.1 $ 8,639.5
6.5 %
664
23.4
$
526 $
667
23.4
501
3.4 %
9.8 %
17.1 %
12.8 %
5.0 %
n/a
4.3 %
5.4 %
n/a
17.6 %
15.9 %
$
625.8 $
604.8
3.5 % $ 2,036.5 $ 1,814.8
12.2 %
375
7.2
$
326 $
397
7.5
277
5.8 %
15.9 %
0.5 %
(3.0) %
17.7 %
n/a
13.8 %
17.7 %
n/a
(8.5) %
(9.3) %
$
579.7 $
533.4
8.7 % $ 1,422.0 $ 1,213.2
17.2 %
380
3.6
$
390 $
381
3.6
334
9.6 %
11.9 %
15.0 %
7.6 %
16.8 %
n/a
17.8 %
19.2 %
n/a
(5.5) %
(6.8) %
$
250.4 $
196.1
27.6 % $
644.9 $
541.9
19.0 %
$
489.7 $
354.9
38.0 % $ 1,737.2 $ 1,358.7
27.9 %
292
$
52.2 $
296
48.7
28.4 %
(18.8) %
(1.4) %
(14.8) %
7.0 % $
191.2 $
170.1
12.4 %
22.4 %
(23.4) %
(1.6) %
(19.1) %
6.8 %
(18.9) %
0.4 %
(20.1) %
1 Revenue reported for Canadian Tire, SportChek, Mark’s and Petroleum include inter-segment revenue. Helly Hansen revenue represents external revenue
only. Therefore, in aggregate, revenue for Canadian Tire, SportChek, Mark’s, Petroleum, and Helly Hansen will not equal total revenue for the Retail segment.
2 For further information about this measure see section 9.3 of this MD&A.
3 Comparable sales growth excludes Petroleum. The Canadian Tire banner includes PartSource, PHL and Party City. Comparable sales growth and
comparable store gasoline volume growth has been calculated by aligning the 2020 fiscal calendar to match the 2021 fiscal calendar (i.e., sales from the first
week in 2021 are compared with the sales from the second week of 2020) and includes the sales from stores which were temporarily closed during 2021.
Comparable sales in the prior year, for SportChek and Mark’s, were calculated on sales up to March 18, 2020, beyond which their retail stores were closed.
4 Retail Return on Invested Capital (“ROIC”) is calculated on a rolling 12-month basis based on normalized earnings. The prior period figures for ROIC have been
restated to align with current-year calculation.
5 This is a non-GAAP financial measure. For further information and a detailed reconciliation see section 9.2 of this MD&A.
6 Revenue includes revenue from Canadian Tire, PartSource, PHL, Party City and Franchise Trust.
7 Store count includes stores from Canadian Tire, and other banner stores of 160 (2020: 163 stores). Other banners include PartSource, PHL and Party City.
8 Sales per square foot figures are calculated on a rolling 12-month basis, for the current year, this calculation includes the period in which the stores were
temporarily closed in the Retail segment. Retail space excludes seasonal outdoor garden centres, auto service bays, or warehouse and administrative space.
9 Retail sales growth includes sales from Canadian Tire, PartSource, PHL, Party City and the labour portion of Canadian Tire’s auto service sales.
10 Sales per square foot figures are calculated on a rolling 12-month basis, include both corporate and franchise stores and warehouse and administrative space.
For the current year, this calculation includes the period in which the stores were temporarily closed in the Retail segment.
11 Retail sales growth includes sales from both corporate and franchise stores.
12 Revenue includes the sale of goods to Mark’s franchise stores, Retail sales from Mark’s corporate stores, Mark’s wholesale revenue from its commercial
division, and includes ancillary revenue relating to embroidery and alteration services.
13 Retail sales growth includes Retail sales from Mark’s corporate and franchise stores, but excludes revenue relating to alteration and embroidery services.
14 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following chart shows the Retail segment, excluding Petroleum, Retail sales and revenue performance by
quarter for the last two years.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 15
Year-over-year Retail Sales and Revenue Growth5.1%3.9%(2.5)%9.3%19.1%13.6%11.0%17.8%8.2%1.6%4.5%6.7%5.1%4.8%(1.8)%(8.4)%18.6%20.1%8.4%26.8%23.4%(6.2)%2.7%8.8%Retail sales, excluding PetroleumRevenue, excluding PetroleumQ420192019Q12020Q22020Q32020Q420202020Q12021Q22021Q32021Q420212021 MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Segment Commentary
2021 versus 2020
Building on the exceptional growth in the prior year, for the quarter, Retail sales and revenue both increased 6.5
percent and 5.4 percent, respectively (despite one fewer week of Retail operations), driven by growth across all
banners. Investing in the right inventory and effective prioritization of shipments earlier in the year meant that the
Company was able to meet customer demand, enabling strong sales across all banners. The fourth quarter of
2021 experienced less restrictions limiting in-store shopping capacity compared to the prior year and, as a result,
the Company’s store network experienced increased in-store sales, particularly under the SportChek and Mark’s
banners. In-store shopping restrictions also had an impact on eCommerce sales1 penetration, which was lower in
the quarter compared to the prior year. However, the eCommerce penetration rate1 remained nearly double that
of 2019, at 9.5 percent, with close to $0.5 billion in sales in the quarter.
For the quarter, Retail income before income taxes was $638.1 million compared to $577.9 million in the prior
year. The increase in earnings was primarily driven by strong sales and margin rate growth at Canadian Tire,
SportChek and Mark’s, which was partially offset by an increase in SG&A expenses.
Retail sales and revenue both increased for the full year, despite one fewer week of Retail operations, driven by
growth across all banners. Consolidated owned brands penetration1 across retail banners increased 63 bps to
37.5 percent in 2021 compared to 36.9 percent in the prior year, contributing to the strong sales results.
Retail income before taxes for the full year was $1,175.7 million compared to $738.3 million in the prior year. The
increase in earnings was driven by strong sales and margin growth across all Retail banners. The Retail SG&A
rate was relatively flat compared to the prior year as the savings from the Operational Efficiency program were
offset by higher supply chain and variable compensation costs.
2021 versus 2019
The Retail segment performance marked a second consecutive year of significant growth compared to 2019 (the
last comparable pre-pandemic quarter). For the quarter, Retail income before income taxes was up 81.5 percent
compared to 2019, while, for the year, Retail income before income taxes was also up 81.5 percent, driven by the
growth in sales and improvement in both margin and SG&A rates. Margin rate improved due to favourable
product mix, an increase in owned brands penetration and active management of promotional mix, benefiting the
Company’s cost and margin-sharing arrangement with its Dealers, partially offset by higher freight costs. The full-
year Retail SG&A rate1 improved by over 100 bps over 2019, driven by savings from the Operational Efficiency
program and the leverage achieved from higher revenue.
1 For further information about this measure see section 9.3 of this MD&A.
16 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Retail Sales
Q4 2021
p $343.8 million or 6.5%
p 11.3% in Comparable sales growth
Full Year
p $1,400.2 million or 8.3%
p 8.2% in Comparable sales growth
Retail sales of $5,661.0 million grew by 6.5
percent, and excluding Petroleum, Retail
sales grew 4.5 percent, or $217.8 million
compared to prior year, despite one fewer
week of operations compared to the fourth
quarter of 2020. Retail sales growth was
driven by strong performance and customer
demand across the banners.
Retail sales of $18,264.6 million grew by 8.3
percent, and excluding Petroleum, Retail
sales grew 6.7 percent or $1,021.4 million.
Strong growth across all banners led by
Canadian Tire,
the
eCommerce penetration rate, contributed to
growth in Retail sales. eCommerce sales
were $2.1 billion for the year.
including growth
in
Vs. 2019
Retail sales, excluding Petroleum, grew 18.6
percent.
Vs. 2019
Retail sales, excluding Petroleum, grew 18.5
percent.
Canadian Tire Retail sales were up 3.4
percent, despite one
fewer week of
operations and against an exceptional
growth in the prior year of 17.1 percent. The
increase in retail sales was in the majority of
categories, with half achieving double digit
growth. Top performing businesses were
Seasonal demonstrating our prominence as
Canada’s Christmas Store, Tires as a result
of pent-up demand and a strong in-stock
position and Hockey due to the return to
organized sports. Owned Brands achieved
strong growth, increasing penetration lead
by CANVAS, NOMA and Motomaster.
Vs. 2019
Retail sales were up 21.1 percent.
Retail sales growth was 5.8
fewer week of
percent despite one
operations and
the closure of National
Sports. SportChek continued to benefit from
the resumption of organized team sports.
Top performing categories were Hockey,
Athletic Footwear and Clothing.
Vs. 2019
Retail sales were up 6.2 percent despite the
closure of National Sports.
Retail sales grew 9.6 percent,
despite one fewer week of operation and
against the previous strongest quarter on
record due to the resurgence of in-store
inventory
shopping
the Casualwear
management.
business and
Industrial business
contributed to the growth in sales.
Both
the
effective
and
Vs. 2019
Retail sales were higher by 22.6 percent.
Petroleum Retail sales increased
28.4 percent due to higher per litre gas
prices and gas volumes, partially offset by
lower non-gas sales and one fewer week in
the quarter.
Vs. 2019
Petroleum retail sales were up 4.3 percent.
Canadian Tire Retail sales had strong
growth of 4.3 percent despite one fewer
week of operations and against exceptional
growth in the prior year of 17.6 percent. The
increase in retail sales was in the majority of
categories with Seasonal
businesses
leading
Owned Brands
demonstrated its value as a strategic asset
to Canadian Tire over indexing on growth.
the growth.
Vs. 2019
Retail sales were up 22.7 percent.
Retail sales increased 13.8
percent, driven by stronger customer
demand and less stringent in-store shopping
restrictions compared to the prior year.
Vs. 2019
Retail sales were up 4.1 percent despite the
closure of National Sports and aided by
growth in eCommerce.
Retail sales increased 17.8
percent, driven by stronger customer
demand and less stringent in-store shopping
restrictions compared to the prior year.
Vs. 2019
Retail sales were higher by 11.4 percent.
Petroleum Retail sales increased by
22.4 percent due to higher per litre gas
prices and non-gas sales, partially offset by
a slight decline in gas volumes and one
fewer week in the year.
Vs. 2019
Petroleum
percent.
retail sales decreased 6.3
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Revenue
Q4 2021
p $247.8 million or 5.4%
p 2.7% excluding Petroleum
Full Year
p $1,463.1 million or 10.7%
p 8.8% excluding Petroleum
Retail revenue was $4,830.0 million, an
increase of 5.4 percent, against exceptional
growth of 14.9 percent in the prior year and
despite one less week of operations this
quarter. The increase in revenue was due to
strong growth at all banners, especially Helly
Hansen, Mark’s and SportChek.
Vs. 2019
Retail revenue grew by 21.1 percent, and
excluding Petroleum, Retail revenue was up
23.3 percent. Canadian Tire was up 28.4
percent, SportChek was up 1.1 percent, and
Mark’s was up 21.7 percent.
Retail revenue was $15,083.1 million, an
increase of 10.7 percent, compared to the
prior year. Retail revenue increased across
all banners driven by growth at Canadian
Tire primarily attributable to strong shipment
growth.
Vs. 2019
Retail revenue grew by 14.2 percent, and
excluding Petroleum, Retail revenue was up
17.9 percent. Canadian Tire was up 24.0
percent and Mark’s was up 11.6 percent,
while SportChek remained flat.
Gross Margin
p $134.4 million or 8.2%
p 96 bps in gross margin rate
p 8.3% excluding Petroleum
p 204 bps in gross margin rate,
excluding Petroleum
p $626.1 million or 14.4%
p 105 bps in gross margin rate
p 14.4% excluding Petroleum
p 176 bps in gross margin rate,
excluding Petroleum
Retail
gross margin
dollars were
$1,764.7 million, an increase of $134.4
million. Excluding Petroleum, gross margin1
dollars were $1,712.5 million, or an increase
of $130.9 million. The increase was due to
the increase in revenue described above
and an increase in gross margin rate.
Retail
gross margin
dollars were
$4,984.8 million, an increase of $626.1
million. Excluding Petroleum, gross margin
dollars were $4,793.6 million, an increase of
$605.0 million, primarily driven by an
increase
the
in revenue attributable
reasons described above and due to an
increase in gross margin rate.
to
Gross margin rate, excluding Petroleum1,
increased by 204 bps compared to the prior
increased
year. The gross margin rate
across
led by
the majority of banners
Canadian Tire. Canadian Tire’s margin rate
improved primarily attributable to favourable
product mix, an increase in owned brands
penetration and active management of
promotional mix, benefiting the Company’s
cost and margin-sharing arrangement with
its Dealers, partially offset by higher freight
costs. SportChek and Mark’s margin rates
improved due to improved product margins
and active management of promotional mix
in the quarter.
Gross margin rate, excluding Petroleum,
increased by 176 bps. The gross margin
rate increased across the banners led by
Canadian Tire. Canadian Tire’s margin rate
improved primarily attributable to favourable
product mix, an increase in owned brands
penetration and active management of
promotional mix, benefiting the Company’s
cost and margin-sharing arrangement with
its Dealers, partially offset by higher freight
costs. SportChek and Mark’s margin rates
improved due to improved product margins
and active management of promotional mix
in the quarter.
Other Income
p $22.8 million or 223.3%
p $94.6 million or 133.5%
Other income was $32.9 million, higher by
$22.8 million, mainly due to asset write-offs
in the prior year which did not recur this year
in addition to foreign exchange losses at
Helly Hansen in the prior year, while the
current year resulted in foreign exchange
gains.
Other income was $165.4 million, higher by
$94.6 million. Compared to the prior year,
the increase was mainly attributable to a
impairment charge of
COVID-19 related
$27.9 million in the prior year as well as
operational asset write-offs which did not
recur in the current year, non-operational
foreign exchange gains compared to a loss
in the prior year, and higher real estate
related gains.
1 For further information about this measure see section 9.3 of this MD&A.
18 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Selling, General &
Administrative
Expenses
Q4 2021
p $104.0 million or 10.3%
Full Year
p $316.1 million or 9.1%
SG&A expenses were $1,115.9 million, an
increase of $104.0 million, or 10.3 percent.
The increase was mainly attributable to
higher personnel costs relating to variable
compensation
higher
expenses,
volume-related and sales support costs
including marketing spend, which had been
reduced in the prior year due to pandemic-
related concerns, supply chain volume-
IT sustaining costs,
related costs, and
partially offset by savings
the
Operational Efficiency program.
from
and
and
SG&A expenses were $3,787.1 million, an
increase of $316.1 million, or 9.1 percent.
This increase was mainly attributable to
higher personnel costs relating to variable
compensation
higher
expenses,
volume-related and sales support costs
including marketing spend, which had been
reduced in the prior year due to pandemic-
related concerns, supply chain volume-
related costs, and IT costs. These increases
were partially offset by net additional costs in
the prior year relating to the Company’s
COVID-19 efforts, including premium pay,
and further Operational Efficiency program
savings compared to the prior year.
Earnings Summary p $60.2 million an increase of 10.4%
p $437.4 million an increase of 59.2%
Income before income taxes was $638.1
million, an increase of $60.2 million. The
increase in income was attributable mainly
to strong margin growth at Canadian Tire,
SportChek and Mark’s partially offset by an
increase in SG&A expenses for the reasons
described above, as well as higher
normalized costs in the prior year relating to
the closure of National Sports banner.
Normalized income before income taxes
was $644.6 million, an increase of $31.4
million.
in gross margin
Income before income taxes was $1,175.7
million, an increase of $437.4 million. The
increase in income was primarily driven by
exceptional sales growth at all banners, and
improvement
rates at
Canadian Tire, SportChek and Mark’s.
Higher other
the
Operational Efficiency program, and net
expenses included in the prior year relating
to the Company’s COVID-19 efforts also
contributed
in earnings
compared to the prior year, partially offset by
an
the SG&A expenses
attributable to the reasons described above.
income, savings
increase
increase
from
the
to
in
4.2.3 Retail Segment Seasonal Trend Analysis
Quarterly operating net income and revenue are affected by seasonality. The fourth quarter typically generates
the greatest contribution to revenue and earnings, and the first quarter the least. The following table shows the
Retail segment financial performance of the Company by quarter for the last two years.
(C$ in millions, except per
share amounts)
Retail sales
Revenue
Income (loss) before income
taxes
Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019
$ 5,661.0 $ 4,603.2 $ 4,882.6 $ 3,117.8 $ 5,317.2 $ 4,414.4 $ 4,375.7 $ 2,757.1 $ 4,838.2
4,830.0 3,607.1 3,623.2 3,022.8 4,582.2 3,684.8 2,849.8 2,503.2 3,989.2
638.1
226.5
208.6
102.5
577.9
326.2
(66.2)
(99.6)
351.6
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
.
4.3 Financial Services Segment Performance
4.3.1 Financial Services Segment Financial Results
(C$ in millions, except where noted)
Q4 2021
Q4 2020
Change
2021
2020
Change
Revenue
Gross margin dollars
Gross margin rate1
Other (income) expense
Selling, general and administrative expenses
Net finance (income)
$
$
$
312.4 $
295.3
5.8 % $ 1,213.3 $ 1,248.4
170.7 $
206.6
(17.4) % $
790.9 $
645.7
(2.8) %
22.5 %
54.6 %
69.9 % (1,531) bps
65.2 %
51.7 % 1,346 bps
(1.0) $
109.2
(0.5)
(0.2)
91.6
(0.4)
NM2 $
19.3 %
20.5 %
2.5 $
0.6
310.9 %
359.3
(3.3)
319.3
(1.5)
12.5 %
117.3 %
Income before income taxes
$
63.0 $
115.6
(45.5) % $
432.4 $
327.3
32.1 %
1 For further information about this measure see section 9.3 of this MD&A.
2 Not meaningful.
Financial Services Segment Commentary
During the fourth quarter, income before income taxes was $63.0 million, a decrease of $52.6 million, primarily
attributable to a decrease in gross margin of $35.9 million and higher operating expenses primarily due to higher
credit card acquisition and marketing costs. The gross margin decrease was mainly driven by higher net
impairment losses of $49.5 million due to changes in the allowance for loans receivable. This was partially offset
by higher revenue of $17.1 million, led by higher interest income from receivable growth and strong credit card
sales which resulted in higher fee income. Gross average accounts receivable1 (“GAAR”) was 6.3 percent higher
relative to the prior year due to increased cardholder activity as the average number of active accounts in the
quarter increased by 5.1 percent.
The ECL allowance1 for loans receivable was $841.5 million, an increase of $29.8 million from Q3 2021, driven by
strong growth in receivables, which were up $321.2 million from Q3 2021. The ECL allowance rate declined in the
quarter to 13.2 percent.
For the full year, income before income taxes increased $105.1 million from the prior year, resulting primarily from
a 22.5 percent, or $145.2 million, increase in gross margin. The increase in gross margin was primarily
attributable to lower net impairment losses of $195.8 million. Within the year, Financial Services decreased its
allowances for loans receivable by $22.5 million compared to an increase in the prior year of $67.2 million. The
decrease in the year was a result of the continued strength in portfolio metrics such as delinquency and write-off
rates. Throughout the year, the portfolio remained operationally strong with historically low delinquency trends
and an improvement in the net credit card write-off rate1 of 175 bps.
1 For further information about this measure see section 9.3 of this MD&A.
20 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Services Segment Commentary (continued)
Revenue
Q4 2021
p $17.1 million or 5.8%
Full Year
q $35.1 million or 2.8%
Revenue for the quarter was $312.4 million, an
increase of $17.1 million, or 5.8 percent
compared to the prior year. The increase in
revenue was mainly attributable to higher interest
and fee income driven by strong receivables
growth and credit card sales, respectively.
Revenue was $1,213.3 million, a decline of $35.1
million, or 2.8 percent compared to the prior year.
The decline in revenue was primarily attributable
to lower credit charges, attributable to both lower
GAAR and yield.
Gross
Margin
q $35.9 million or 17.4%
p $145.2 million or 22.5%
Gross margin was $170.7 million, a decrease of
$35.9 million, or 17.4 percent, compared to the
prior year. The decrease in gross margin was
mainly due to higher net impairment losses,
attributable to the increase in ECL allowance for
loans receivable, compared to a reduction in the
allowance in the prior year.
Gross margin was $790.9 million, an increase of
$145.2 million, or 22.5 percent, compared to the
prior year. The increase in gross margin dollars
was mainly due to lower net impairment losses,
resulting from a reduction in the ECL allowance of
$22.5 million, compared to an increase of $67.2
million in the prior year, and lower net write-offs,
which were partially offset by a decrease in
revenue.
SG&A
Expenses
p $17.6 million or 19.3%
p $40.0 million or 12.5%
SG&A expenses were $109.2 million, an increase
of $17.6 million, or 19.3 percent. The increase in
SG&A expenses was primarily due to an increase
in marketing costs related to higher credit card
acquisition costs.
SG&A was $359.3 million, an increase of $40.0
million or 12.5 percent. The increase in SG&A
expenses was primarily due to an increase in
marketing costs related to higher credit card
acquisition costs.
Earnings
Summary
q $52.6 million or 45.5%
p $105.1 million or 32.1%
Income before income taxes was $63.0 million, a
decrease of $52.6 million, or 45.5 percent. The
decrease in income before income taxes was
primarily due to a lower gross margin and higher
SG&A expenses attributable
the reasons
described above.
to
Income before income taxes was $432.4 million,
an increase of $105.1 million or 32.1 percent. The
increase in the income before income taxes was
primarily due to a higher gross margin, which was
partially offset by an increase in SG&A expenses
attributable to the reasons described above.
4.3.2 Financial Services Segment Key Performance Measures
$
5,834
1.1 %
Change
24.8 %
20.6 %
20.8 %
Q4 2021
Q4 2020
6,200 $
(C$ in millions, except where noted)
Credit card sales growth1
GAAR
Revenue (as a % of GAAR)1, 2
Average number of accounts with a balance
(thousands)
Average account balance1 (whole $)
Net credit card write-off rate1, 2
Past due credit card receivables3 (“PD2+”)
Allowance rate1
Operating expenses (as a % of GAAR)1, 2
Return on receivables1, 2
1 For further information about this measure see section 9.3 of this MD&A.
2 Figures are calculated on a rolling 12-month basis.
3 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 9.2 of this MD&A.
2,843 $
14.8 %
13.2 %
5.3 %
4.1 %
7.4 %
5.5 %
2.0 %
2.0 %
5.8 %
6.1 %
2,180
2,813
2,074
$
6.3 % $
5.1 %
1.1 % $
2021
2020
Change
22.6 %
(3.9) %
5,876 $
6,009
(2.2) %
n/a
n/a
2,103
2,060
2,794 $
2,915
2.0 %
(4.2) %
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Services Segment Scorecard
To evaluate the overall financial performance of the Financial Services segment, the following scorecard
demonstrates how Financial Services is progressing towards achieving its strategic objectives.
Q4 2021 vs. Q4 2020
Growth
p 6.3% in GAAR
p 24.8% in credit card sales growth
p 5.1% in average number of accounts with a balance
p 1.1% in average account balance
GAAR increased by 6.3 percent relative to last year driven by increased customer activity. The
average number of active accounts for the quarter increased by 5.1 percent along with an
increase in average account balance by 1.1 percent.
Credit card sales grew by 24.8 percent over the prior year driven by strong sales at both Retail
segment banners and external merchants.
Performance
p 191 bps in return on receivables
q 13 bps in revenue as a % of GAAR
p 80 bps in OPEX as a % of GAAR
Return on receivables increased by 191 bps compared to the prior year due to higher earnings
driven by lower net impairment losses.
Operating expenses as a percentage of GAAR increased by 80 bps compared to the prior year
due to increased marketing costs related to credit card acquisitions.
Operational metrics p 4 bps in PD2+ rate
q 175 bps in net credit card write-off rate
q 13.2% allowance rate, down 161 bps
The PD2+ rate was 4 bps higher than the prior year and continued to be below historical levels
due to continued strong customer payments.
The decrease in the net write-off rate compared to the prior year was primarily driven by a
decline in both regular write-offs and insolvencies, resulting from improved risk across the
portfolio.
The allowance rate decreased by 161 bps from Q4 2020 to 13.2 percent reflecting the
continued strength in portfolio metrics, as evidenced by sustained strong payment and low
aging and delinquency rates. Management continues to assess allowance with consideration
for ongoing uncertainty associated with the impacts of COVID-19 on the economy.
4.3.3 Financial Services Segment Seasonal Trend Analysis
Quarterly operating net income and revenue are affected by seasonality. In the first quarter, the Financial
Services segment typically contributes the majority of consolidated earnings. The following table shows the
financial performance of the segment by quarter for the last two years.
(C$ in millions)
Revenue
Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019
$ 312.4 $ 307.6 $ 296.1 $ 297.2 $ 295.3 $ 301.3 $ 309.9 $ 341.9 $ 333.0
Income before income taxes
63.0
117.7
125.3
126.4
115.6
90.5
51.0
70.2
109.5
22 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.4 CT REIT Segment Performance
4.4.1 CT REIT Segment Financial Results
(C$ in millions)
Property revenue1
Property expense1
General and administrative expense (“G&A”)
Net finance costs
Fair value (gain) loss adjustment3
Income before income taxes
Q4 2021
Q4 2020
Change
2021
$
129.5 $
126.8
2.1 % $
514.5 $
27.1
3.8
26.4
(53.2)
$
125.4 $
27.8
3.9
27.2
53.9
14.0
(2.5) %
(0.2) %
(3.0) %
NM2
793.4 % $
107.3
14.5
105.7
(169.9)
2020
502.3
110.8
12.9
107.9
87.4
456.9 $
183.3
Change
2.4 %
(3.1) %
12.1 %
(2.0) %
NM2
149.2 %
1 For further information about this measure see section 9.3 of this MD&A.
2 Not meaningful.
3 Fair value is eliminated on consolidation.
The following shows the CT REIT year-over-year property revenue performance by quarter for the last two years.
CT REIT Segment Commentary
Earnings at CT REIT were positively impacted by an increase in property revenue and a decrease in property
expenses and net financing costs during the quarter. The increase in revenue was mainly attributable to
contractual rent escalations during the year, additional base rent related to properties acquired and developments,
and intensifications completed during 2021 and 2020. The decrease in property expenses was attributable to
lower expected credit losses relating to assistance provided to tenants. The decrease in net financing costs was
largely due to a prepayment cost related to the redemption of the Series C senior unsecured debentures.
Earnings increased $111.4 million relative to the prior year due primarily to the positive fair value adjustment on
investment properties compared to a loss in the prior year.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 23
Year-over-year Property Revenue3.7%3.5%4.3%2.9%1.2%2.5%2.7%2.4%3.2%1.9%2.1%2.4%Property RevenueQ420192019Q12020Q22020Q32020Q420202020Q12021Q22021Q32021Q420212021
MANAGEMENT'S DISCUSSION AND ANALYSIS
CT REIT Segment Commentary (continued)
Q4 2021
p $2.7 million or 2.1%
Property
Revenue
Full Year
p $12.2 million or 2.4%
Property revenue was $129.5 million, an increase
of $2.7 million, or 2.1 percent. The increase was
rent escalations,
mainly due
additional base
to properties
acquired, and developments and intensifications
completed during 2021 and 2020.
to contractual
rent
relating
Property revenue was $514.5 million, an increase
of $12.2 million, or 2.4 percent. The increase was
rent escalation,
mainly due
additional base
to properties
acquired and developments and intensifications
completed during 2021 and 2020.
to contractual
relating
rent
Property
Expense
q $0.7 million or 2.5%
q $3.5 million or 3.1%
G&A
Expenses
Net
Finance
Cost
Fair Value
Adjustme-
nt on
Investment
Properties
Earnings
Summary
The property expense was $27.1 million, a
decrease of $0.7 million, or 2.5 percent. The
decrease in property expense was primarily due
to the reduction of the expected credit losses
relating to assistance provided to tenants.
The property expense was $107.3 million, a
decrease of $3.5 million, or 3.1 percent. The
decrease in property expense was primarily due
to the reduction of CT REIT’s assistance to its
tenants, and lower operating expenses.
q $0.1 million or flat to the prior year
p $1.6 million or 12.1%
G&A expense was $3.8 million, flat to the prior
year.
G&A expense was $14.5 million, an increase of
$1.6 million, or 12.1 percent. The increase was
primarily due to higher personnel costs partially
offset by lower professional fees.
q $0.8 million or flat to the prior year
q $2.2 million or 2.0%
Net finance cost of $26.4 million was overall in
line with the prior year.
Net finance cost was $105.7 million, a decrease
of $2.2 million or 2.0 percent. The decrease was
mainly attributable to decreased interest on the
Class C LP Units.
p $107.1 million
p $257.3 million
The
fair value adjustment on
investment
properties was a gain of $53.2 million, mainly
driven by changes to investment metrics within
the portfolio based on recent market activity and
the reduction
in COVID-19 pandemic-related
impacts which were present in the prior year.
The
fair value adjustment on
investment
properties was a gain of $169.9 million, mainly
driven by changes to investment metrics within
the portfolio based on recent market activity, as
well as contractual rent escalations.
p $111.4 million or 793.4%
p $273.6 million or 149.2%
Income before income taxes was $125.4 million,
an increase of $111.4 million, or 793.4 percent.
The increase in earnings was primarily due to the
fair value adjustments on investment properties,
partially offset by an increase in the weighted
average number of units outstanding - basic.
Income before income taxes was $456.9 million,
an increase of $273.6 million, or 149.2 percent.
The increase in earnings was primarily due to fair
value adjustment on
investment properties,
partially offset by an increase in the weighted
average number of units outstanding - basic.
24 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.4.2 CT REIT Segment Key Performance Measures
(C$ in millions)
Net operating income1
Funds from operations1
Adjusted funds from operations1
1 This measure is a non-GAAP financial measure. For further information and a detailed reconciliation see section 9.2 of this MD&A.
4.2 % $
100.9 $
401.1 $
Q4 2021
Q4 2020
7.2 %
5.6 %
Change
287.6
256.6
71.9
64.1
2021
59.8
96.8
68.1
$
2020
381.5
270.8
236.5
Change
5.1 %
6.2 %
8.5 %
Net operating income (“NOI”)
NOI for the quarter and full year increased by 4.2 percent and 5.1 percent, respectively, compared to the prior
year, primarily due to the rent escalations for CTC banner leases and the acquisition of income-producing
properties completed in 2021 and 2020.
Funds from operations (“FFO”)
FFO for the quarter and full year increased by 5.6 percent and 6.2 percent, respectively, compared to the prior
year, primarily due to the impact of NOI variances.
Adjusted funds from operations (“AFFO”)
AFFO for the quarter and full year increased by 7.2 percent and 8.5 percent, respectively, compared to the prior
year, primarily due to the impact of NOI variances.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.0 Balance Sheet Analysis, Liquidity, and Capital Resources
5.1 Selected Balance Sheet Highlights
Selected line items from the Company’s assets and liabilities, as at January 1, 2022 and the year-over-year
change versus January 2, 2021, are noted below:
Total change
p $
1,425.1
Selected Asset
January 1, 2022
Cash and cash equivalents
Loans receivable (current portion)
Merchandise inventories
Right-of-use assets
Investment property
Property and equipment
1,751.7
5,613.2
2,480.6
1,786.1
460.7
4,549.3
Total change
p $
749.0
Selected Liability
January 1, 2022
3,893.7
2,914.3
108.2
427.5
2,275.8
Deposits
Trade and other payables
Short-term borrowings
Loans
Lease liabilities
Assets
Cash and cash
equivalents
Loans receivable
(current portion)
Merchandise
inventories
Right-of-use
assets
Investment
property
Property and
equipment
p $424.5 million
Refer to section 5.2 in this MD&A for further details.
p $581.4 million
The increase was mainly attributable to increased GAAR growth in the Financial
Services segment from both the number of accounts and the average balance as
well as a reduction in the Company’s allowance for loans receivable.
p $167.7 million
The increase was primarily driven by higher inventory levels at Canadian Tire in
advance of the spring and summer seasons in anticipation of potential supply
chain disruptions, partially offset by reduction of inventory at SportChek.
p $89.4 million
The increase was driven by the renewal of leases, and thus longer lease terms
remaining, based on an annual review of expiring leases performed in Q3 2021.
p $74.9 million
The increase was attributable to land and building acquisitions by CT REIT during
2021.
p $251.1 million
The increase was driven by the construction of the Greater Toronto Area and
Montreal distribution centres and Canadian Tire store investments.
26 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Year-over-year change inassets424.5581.4167.789.474.9251.1Year-over-year change inliabilities384.0406.0(57.2)(79.1)49.3
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liabilities
Deposits
p $384.0 million
The increase was mainly driven by growth in demand deposits in the Financial
Services segment.
Trade and other
payables
p $406.0 million
The increase was primarily driven by the timing of non-merchandise vendor
payments, increase in accrued liabilities for the Automatic Securities Purchase
Plan (“ASPP”) commitment as well as higher variable compensation accruals,
partially offset by a decrease in the fair value position for foreign exchange
derivative contracts.
Short-term
borrowings
Loans
q $57.2 million
The decrease was mainly attributable to a partial repayment of Glacier asset-
backed commercial paper.
q $79.1 million
The decrease was attributable to repayment of Franchise Trust loans by Dealers
due to strong results in Canadian Tire stores.
Lease liabilities
p $49.3 million
The increase was driven by renewal of leases that were soon to be expiring based
on an annual review of expiring leases performed in Q3 2021.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.2 Summary Cash Flows
The Company’s cash and cash equivalents position, net of bank indebtedness, was $1,751.7 million as at
January 1, 2022. Selected line items from the Company’s Consolidated Statements of Cash Flows for the
quarters and years ended January 1, 2022 and January 2, 2021 are noted in the following tables:
(C$ in millions)
Cash generated from operating activities
Cash (used for) investing activities
Cash (used for) financing activities
Cash generated in the period
(C$ in millions)
Cash generated from operating activities
Cash (used for) investing activities
Cash (used for) financing activities
Cash generated in the period
Q4 2021
Q4 2020
Change
1,141.1 $
785.3 $
(357.6)
(567.2)
216.3 $
(355.2)
(398.9)
31.2 $
355.8
(2.4)
(168.3)
185.1
2021
2020
Change
1,814.4 $
2,442.8 $
(736.5)
(653.4)
(848.0)
(462.7)
424.5 $
1,132.1 $
(628.4)
111.5
(190.7)
(707.6)
$
$
$
$
Q4 2021
p $355.8 million change
Operating
activities
Full Year
q $628.4 million change
Excluding
in
the
impact of changes
loans
receivable, operating activities generated $573
million more cash in 2021 due to changes in
working capital and lower income tax payments in
the quarter. During the quarter, loans receivable
grew $226.9 million, versus $9.7 million in Q4
2020, resulting in a year-over-year use of cash of
$217.2 million.
Excluding
in
the
impact of changes
loans
receivable and taxes paid, operating activities
generated $916.9 million more cash in 2021
versus 2020 due to higher net income and
changes in working capital. During 2021, loans
receivable grew $486.8 million, versus a decline
in 2020 of $925.1 million resulting in a year-over-
year use of cash of $1,411.9 million. In addition,
income tax payments were $133.4 million higher
due to improved earnings.
Investing
activities
p $2.4 million change
q $111.5 million change
The marginal increase in cash used for investing
activities was primarily due to higher capital
expenditures offset by an increase in investments
in Q4 2020 (as compared to being relatively flat in
Q4 2021).
The decrease in cash used for investing activities
was primarily due to an increase in investments in
2020 (compared to being relatively flat in 2021),
partially offset by higher capital expenditures.
Financing
activities
p $168.3 million change
p $190.7 million change
The increase in cash used for financing activities
was primarily due to less cash generated from
deposits in the quarter, as compared to an
increase in Q4 2020, and the resumption of the
share buy-back program in Q4 2021. This was
partially offset by a lower repayment of short-term
borrowings in Q4 2021.
The increase in cash used for financing activities
of $190.7 million versus prior year was due to a
reduction in cash generated from deposits of
$681.6 million, partially offset by a
lower
repayment of short-term borrowings in 2021 and
the repayment of $250 million in medium term
notes in 2020.
28 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.3 Capital Management
The definition of capital varies from company to company, from industry to industry, and for different purposes. In
the process of managing the Company’s capital, Management includes the following items in its definition of
capital, which includes GCCT indebtedness but excludes Franchise Trust indebtedness:
(C$ in millions)
Capital components
Deposits
Short-term borrowings
Current portion of long-term debt
Long-term debt
Long-term deposits
Total debt
Redeemable financial instrument
Share capital
Contributed surplus
Retained earnings
Total capital under management
2021 % of total
2020
% of total
$
1,908.4
13.5 % $
1,228.0
108.2
719.8
3,558.7
1,985.3
0.8 %
5.1 %
165.4
150.5
25.2 %
4,115.7
14.0 %
2,281.7
$
8,280.4
58.6 % $
7,941.3
567.0
593.6
2.9
4.0 %
4.2 %
— %
567.0
597.0
2.9
9.3 %
1.3 %
1.1 %
31.1 %
17.2 %
60.0 %
4.3 %
4.5 %
— %
4,696.5
33.2 %
4,136.9
31.2 %
$ 14,140.4
100.0 % $ 13,245.1
100.0 %
The Company’s objectives when managing capital are:
•
Ensuring sufficient liquidity to meet its financial obligations when due and to execute its operating and
strategic plans;
• Maintaining healthy liquidity reserves and the ability to access additional capital from multiple sources, if
required; and
• Minimizing its after-tax cost of capital while taking into consideration the key risks outlined in section 10.1
of this MD&A including current and future industry, market, and economic risks and conditions, and the
uncertainty in the duration and severity of the COVID-19 pandemic and its long-term impact on CTC.
5.3.1 Canadian Tire Bank's Regulatory Environment
CTB manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions
of Canada (“OSFI”). OSFI’s regulatory capital guidelines are based on the international Basel Committee on
Banking Supervision framework entitled Basel III: A Global Regulatory Framework for More Resilient Banks and
Banking Systems, which came into effect in Canada on January 1, 2013, and measures capital in relation to
credit, market, and operational risks. The Bank has various capital policies, procedures, and controls in place,
including an annual Internal Capital Adequacy Assessment Process (“ICAAP”), which it utilizes to achieve its
goals and objectives.
The Bank’s objectives include:
• maintaining strong capital ratios, as measured by regulatory guidelines and internal targets; and
• holding sufficient capital to maintain the confidence of investors and depositors.
As at Q4 2021, CTB complied with all regulatory capital guidelines established by OSFI and its internal targets as
determined by its ICAAP.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 29
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.4 Investing
5.4.1 Capital Expenditures
The Company’s capital expenditures for the periods ended January 1, 2022 and January 2, 2021 were as follows:
(C$ in millions)
Real estate
Information technology
Other operating
Operational Efficiency program
$
2021
283.1 $
144.5
106.0
55.4
2020
91.8
75.4
49.0
51.5
Distribution capacity
Operating capital expenditures1
CT REIT acquisitions and developments excluding vend-ins from CTC
Total capital expenditures2
1 This measure is a non-GAAP financial measure. For further information and a detailed reconciliation see section 9.2 of this MD&A.
2 Capital expenditures are presented on an accrual basis and include software additions, but exclude right-of-use asset additions, acquisitions relating to
669.8 $
803.9 $
134.1
80.8
141.4
452.4
311.0
43.3
$
$
business combinations, intellectual properties, and tenant allowances received.
Total capital
expenditures
Full Year
p $351.5 million
The increase in total capital expenditures was driven by higher spend on operating capital
expenditures, which was attributable to an increase in Real Estate, Information Technology, other
operating and distribution capacity spend.
The Company’s operating capital expenditures, totalled $669.8 million, a significant increase from
$311.0 million in 2020 and $444.2 million in 2019, driven primarily by a catch up in spend on 2020
projects that were deferred due primarily to pandemic related restrictions.
Capital Commitments
The Company had commitments of approximately $136.1 million as at January 1, 2022 (2020 – $263.9 million) for
the acquisition of tangible and intangible assets.
Operating Capital Expenditures
The Company’s full-year operating capital expenditures were $669.8 million, within the Company’s previously
disclosed range of $650 million to $700 million, including capital required to fund the Company’s Operational
Efficiency program and increases in distribution centre capacity.
30 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.5 Liquidity and Financing
Management is focused on ensuring that it has sufficient liquidity, both through maintaining a strong balance
sheet and the ability to access additional capital from multiple sources, if required. Several alternative financing
sources are available to its Retail, Financial Services, and CT REIT segments to meet the Company’s financial
obligations when due and to execute its operating and strategic plans.
The current economic, operating, and capital market environment continues to support an increased emphasis on
liquidity and capital management.
As at Q4 2021 CTC, CT REIT, CTB and Helly Hansen each complied with all financial covenants under the
agreements for the committed bank lines of credit listed in the Financing Source table below.
As at January 1, 2022
(C$ in millions)
Cash and cash equivalents
Short-term investments
Less: Bank indebtedness
Consolidated
Retail
Financial
Services
CT REIT
$
1,751.7 $
707.6 $
1,040.5 $
606.2
—
—
—
606.2
—
3.6
—
—
3.6
Total net cash and cash equivalents and short-term
investments1
$
2,357.9 $
707.6 $
1,646.7 $
Committed Bank Lines of Credit
5,335.4
2,785.4
2,250.0
300.0
Less: Borrowings outstanding2
Less: U.S. commercial paper outstanding
Less: Letters of credit outstanding
Available Committed Bank Lines of Credit
Liquidity1
58.0
—
5.8
58.0
—
—
—
—
—
—
—
5.8
5,271.6 $
2,727.4 $
2,250.0 $
294.2
7,629.5 $
3,435.0 $
3,896.7 $
297.8
$
$
1 This measure is a non-GAAP financial measure with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented
by other issuers.
2 For further information about this measure see section 9.3 of this MD&A.
The Company ended the quarter with $2.4 billion cash and short-term investments and $7.6 billion in liquidity with
$3.4 billion, $3.9 billion and $297.8 million at its Retail, Financial Services, and CT REIT segments, respectively.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 31
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financing Source
Committed Bank
Lines of Credit
Commercial Paper
Programs
Medium-Term
Notes and Senior
Unsecured
Debentures
Asset-backed
Senior and
Subordinated Term
Notes
Broker GIC
Deposits
Retail Deposits
Real Estate
Provided by a syndicate of seven Canadian and three international financial institutions, $1,975
million in an unsecured line of credit is available to CTC for general corporate purposes. The expiry
date for $1,850 million of the commitment amount is July 2026. The remaining $125 million expires
in August 2024. As at January 1, 2022, CTC had no borrowings under this line of credit.
Provided by a syndicate of five Canadian financial institutions, $710 million in an unsecured line of
credit is available to CTC for general corporate purposes, expiring in June 2022. As at January 1,
2022, CTC had no borrowings under this line of credit.
Provided by a syndicate of seven Canadian financial institutions, $300 million in an unsecured line
of credit is available to CT REIT for general business purposes, expiring in September 2026. As at
January 1, 2022, CT REIT had no borrowings under this line of credit.
Scotiabank has provided CTB with a $500 million unsecured line of credit and $1.75 billion in
securitized note purchase facilities for the purchase of senior and subordinated notes issued by
GCCT. These facilities expire in October 2024. As at January 1, 2022, CTB had no borrowings
under its line of credit and note purchase facilities, other than a nominal balance on a note purchase
facility to maintain GCCT’s ownership interest.
Helly Hansen has a 350 million Norwegian Krone (”NOK”) secured line of credit and a NOK 350
million factoring facility (totalling $50.2 million C$ equivalent each) provided by a Norwegian bank,
expiring October 2022. As at January 1, 2022, Helly Hansen had $58.0 million of C$ equivalent
borrowings (NOK 404.5 million) outstanding on its facilities.
CTC has a commercial paper program that allows it to issue up to a maximum aggregate principal
amount of US$1.0 billion of short-term promissory notes in the United States. Terms to maturity for
the promissory note range from one to 270 days. Notes are issued at a discount and rank equally in
right of payment with all other present and future unsecured and unsubordinated obligations to
creditors of CTC. As at January 1, 2022, CTC had no U.S. commercial paper outstanding.
Concurrent with CTC’s US$ commercial paper issuances, CTC enters into foreign exchange
derivatives to hedge the foreign currency risk associated with both the principal and interest
components of the borrowings under the program. CTC does not designate these debt derivatives
as hedges for accounting purposes.
As at January 1, 2022, GCCT had $50.1 million of asset-backed commercial paper notes
outstanding.
As at January 1, 2022, CTC had an aggregate principal amount of $951.7 million of medium-term
notes outstanding.
As at January 1, 2022, CT REIT had an aggregate principal amount of $1,075 million of senior
unsecured debentures outstanding.
As at January 1, 2022, GCCT had an aggregate principal amount of $2,184 million of asset-backed
term notes outstanding consisting of $2,042 million principal amount of senior-term notes and $142
million principal amount of subordinated-term notes.
Funds continue to be readily available to CTB through broker networks. As at January 1, 2022, CTB
held $2,523.6 million in broker GIC deposits.
Retail deposits consist of HIS and retail GIC deposits held by CTB, available both within and outside
a Tax-free savings account. As at January 1, 2022, CTB held $1,380.2 million in retail deposits.
CTC can undertake strategic real estate transactions involving properties not owned by CT REIT. It
also owns an investment in CT REIT in the form of publicly traded CT REIT Units. As at January 1,
2022 CTC had a 69.0 percent effective ownership interest in CT REIT.
Additional sources of funding are available to CT REIT, as appropriate, including the ability to access
debt and equity markets, subject to the terms and conditions of CT REIT’s Declaration of Trust and
all applicable regulatory requirements.
32 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Credit Ratings
A credit rating generally provides an indication of the risk that the borrower will not fulfill its full obligations in a
timely manner with respect to both interest and principal commitments. Ratings for long-term debt instruments
range from highest credit quality (generally “AAA”) to default in payment (generally “D”). Ratings for short-term
debt instruments range from “R-1 (high)” (DBRS Morningstar), “A-1+” (S&P), “P-1” (Moody’s), or “F1+” (Fitch),
representing the highest credit quality to “D” (DBRS Morningstar and Fitch), “C” (S&P and Fitch), and “not
prime” (Moody’s) for the lowest credit quality of securities rated.
Credit Rating Summary
Rating
Trend
Rating Outlook
Rating Outlook
Rating Outlook
DBRS Morningstar
S&P
Moody’s
Fitch
Canadian Tire Corporation
Issuer rating
Medium-term notes
U.S. Commercial Paper
Glacier Credit Card Trust
Asset-backed senior-term
notes1
Asset-backed subordinated-
term notes1
Asset-backed commercial
paper
CT REIT
Issuer rating
Senior unsecured debentures
BBB
BBB
—
Stable
Stable
—
BBB
BBB
A-2
AAA (sf)
A (sf)
R-1 (high) (sf)
—
—
—
AAA (sf)
A (sf)
—
Stable
—
—
—
—
—
BBB
BBB
Stable
Stable
BBB
BBB
Stable
—
—
—
P-2
—
—
Stable
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
AAA (sf)
Stable
A (sf)
Stable
F1+ (sf)
—
—
—
—
—
1 DBRS Morningstar rates all Series of term notes, S&P rates all Series of term notes except the Series 2018-1 term notes, and Fitch only rates the Series 2018-1
term notes.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 33
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.5.1 Contractual Obligations, Guarantees, and Commitments
The Company funds capital expenditures, working capital needs, dividend payments, and other financing needs,
such as debt repayments and Class A Non-Voting Share purchases under a Normal Course Issuer Bid (“NCIB”),
from a combination of sources. The following table shows the Company’s contractual obligations required to be
paid over the next five years and beyond. The Company believes it has sufficient liquidity available to meet its
contractual obligations as at January 1, 2022.
Contractual Obligations Due by Period
(C$ in millions)
Deposits
Total debt1
Lease obligations
Purchase obligations
Other obligations
Interest payments
2022
2023
2024
2025
2026
2027 &
beyond
Total
$ 1,918.5 $
583.5 $
490.4 $
584.6 $
326.8 $
— $ 3,903.8
720.1
1,040.1
373.3
3,103.3
48.5
352.7
230.6
23.3
560.4
298.6
202.5
17.0
187.3
146.2
111.6
680.4
262.0
167.6
8.8
82.8
208.0
1,075.0
4,284.0
210.2
167.4
5.6
725.1
2,221.9
361.3
4,232.7
62.9
240.7
0.1
103.3
831.5
1
Includes current debt, long-term debt (senior and subordinated term notes), Glacier Trust term notes, and mortgages. Details of both can be found in note 23 to
the consolidated financial statements.
$ 6,351.0 $ 2,376.4 $ 1,680.5 $ 1,786.2 $
980.9 $ 2,402.2 $ 15,577.2
In the normal course of business, the Company enters into numerous agreements that may contain features that
meet the definition of a guarantee. For a discussion of the Company’s significant guarantees and commitments,
refer to Note 34 to the Company’s consolidated financial statements. The Company’s maximum exposure to
credit risk with respect to such guarantees and commitments is provided in Note 5 of the Company’s 2021
consolidated financial statements.
5.6 Funding Costs
The table below shows the funding costs relating to short-term and long-term debt, excludes deposits held by
CTB, Franchise Trust indebtedness, and lease liability interest:
(C$ in millions)
Interest expense1
Cost of debt1
1 For further information about this measure see section 9.3 of this MD&A.
2021
$
147.1
$
3.25 %
2020
170.0
3.06 %
For a discussion of the liquidity and credit risks associated with the Company’s ability to generate sufficient
resources to meet its financial obligations, refer to section 10.1 in this MD&A.
34 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.0 Equity
6.1 Shares Outstanding
(C$ in millions)
Authorized
3,423,366 Common Shares
100,000,000 Class A Non-Voting Shares
Issued
3,423,366 Common Shares (2020 – 3,423,366)
56,723,758 Class A Non-Voting Shares (2020 – 57,383,758)
2021
2020
$
$
0.2 $
593.4
593.6 $
0.2
596.8
597.0
Each year, the Company files a notice to make an NCIB with the Toronto Stock Exchange (“TSX”) which allows it
to purchase its Class A Non-Voting Shares on the open market through the facilities of the TSX and/or alternative
Canadian trading systems, if eligible, at the market price of the shares at the time of purchase or as otherwise
permitted under the rules of the TSX and applicable securities laws. Class A Non-Voting Shares purchased by the
Company pursuant to the NCIB are restored to the status of authorized but unissued shares. Security holders
may obtain a copy of the notice, without charge, by contacting the Corporate Secretary of the Company.
On February 19, 2021, the TSX accepted the Company’s notice of intention to make an NCIB to purchase up to
5.4 million Class A Non-Voting Shares during the period March 2, 2021 to March 1, 2022 (the “2021-22 NCIB”).
During Q4 2021, the TSX accepted a new automatic securities purchase plan which expires on March 1, 2022
(the “2021-22 ASPP”) and which allows a designated broker to purchase Class A Non-Voting Shares under the
2021-22 NCIB during the Company’s blackout periods.
The following represents forward-looking information and readers are cautioned that actual results may vary.
On November 11, 2021, the Company announced that it intends to purchase up to $400 million of Class A Non-
Voting Shares by the end of 2022, in excess of the amount required for anti-dilutive purposes, and subject to
regulatory approval of the Company’s 2022-23 NCIB in Q1 2022 as discussed below (the “2021-22 Share
Purchase Intention”).
During Q4 2021, the Company provided notice to its broker (the “Notice”) to purchase Class A Non-Voting Shares
under the 2021-22 ASPP during the Company’s blackout period commencing on January 2, 2022 (the “Blackout
Period”). All such purchases will be made pursuant to the 2021-22 Share Purchase Intention. As at January 1,
2022, an obligation to purchase $163.2 million of Class A Non-Voting Shares (2020 – n/a) was recognized under
the 2021-22 ASPP in trade and other payables. This represents the maximum possible purchases during the
Blackout Period.
The following table summarizes the Company’s purchases related to the 2021-22 Share Purchase Intention
during fiscal 2021:
(C$ in millions)
Shares purchased in fiscal 2021 under the 2021-22 Share Purchase Intention
$
116.2
The Company intends to enter into a new NCIB to purchase up to 5.3 million Class A Non-Voting Shares during
the period March 2, 2022 to March 1, 2023 (the “2022-23 NCIB”). The Company also intends to enter into one or
more automatic securities purchase plans, in each case with a designated broker, to allow it purchase Class A
Non-Voting Shares during the Company’s blackout periods that occur during the 2022-23 NCIB (the “2022-23
ASPP”). The 2022-23 NCIB and the 2022-23 ASPP are subject to TSX approval.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 35
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.2 Dividends
The Company has a long-term dividend payout ratio1 target of approximately 30 to 40 percent of the prior year
normalized net income, after considering the period-end cash position, future cash flow requirements, capital
market conditions, and investment opportunities. The long-term dividend payout ratio may fluctuate in any
particular year due to unusual or non-recurring events.
The Company declared dividends payable to holders of Class A Non-Voting Shares and Common shares at a rate
of $1.300 per share, payable on June 1, 2022, to shareholders of record as of April 30, 2022. The dividend is
considered an eligible dividend for tax purposes.
6.3 Equity Derivative Contracts
The Company enters into equity-derivative contracts to partially offset its exposure to fluctuations in stock-options,
performance share units, restricted share units and deferred share units’ expenses. The Company currently uses
floating-rate equity forwards.
During Q4 2021, 300,000 units of equity forward contracts that hedged stock-options, performance share units,
restricted share units and deferred share units settled and resulted in a cash receipt of approximately $25.1
million. 475,000 units of new equity forward contracts were entered into in Q4 2021 with a hedge rate of $177.99.
7.0 Tax Matters
In the ordinary course of business, the Company is subject to ongoing audits by tax authorities. While the
Company has determined that its tax filing positions are appropriate and supportable, from time to time certain
matters are reviewed and challenged by the tax authorities.
With respect to temporary differences relating to and arising from the Company’s investment in its subsidiaries,
the Company is able to control and has no plans that would result in the realization of the respective temporary
differences. Accordingly, the Company has not provided for deferred taxes relating to these respective temporary
differences that might otherwise occur from transactions relating to the Company’s investment in its subsidiaries.
The Company regularly reviews the potential for adverse outcomes with respect to tax matters. The Company
believes that the ultimate disposition of these matters will not have a material adverse effect on its liquidity,
consolidated financial position, or net income, because the Company has determined that it has adequate
provision for these tax matters. Should the ultimate tax liability materially differ from the provision, the Company’s
effective tax rate and its earnings could be affected positively or negatively in the period in which the matters are
resolved.
Income taxes for the quarter ended January 1, 2022 were $184.3 million compared to $196.8 million in 2020. The
effective tax rate for the quarter ended January 1, 2022 decreased to 25.6 percent from 27.4 percent in 2020
primarily due to lower non-deductible stock option expense in the period.
Income taxes for the full year ended January 1, 2022 were $441.2 million compared to $309.5 million in 2020.
The effective tax rate for the full year ended January 1, 2022 decreased to 25.9 percent from 26.4 percent in 2020
primarily due to lower non-deductible stock option expense as a result of the increase in income.
1 For further information about this measure see section 9.2 of this MD&A.
36 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
8.0 Accounting Policies and Estimates
8.1 Critical Accounting Estimates
The Company estimates certain amounts, which are reflected in its consolidated financial statements using
detailed financial models based on historical experience, current trends, and other assumptions. Actual results
could differ from those estimates. In Management’s judgment, the accounting estimates and policies detailed in
Note 2 and Note 3 to the Company’s 2021 Consolidated Financial Statements do not require Management to
make assumptions about matters that are highly uncertain and, accordingly, none of those estimates are
considered a “critical accounting estimate” as defined in Form 51-102F1 – Management’s Discussion and
Analysis, published by the Canadian Securities Administrators, except for the allowance for loan impairment in the
Financial Services segment.
Details of the accounting policies that are subject to judgments and estimates that the Company believes could
have the most significant impact on the amounts recognized in its consolidated financial statements, including the
extent to which the impacts of the COVID-19 pandemic affect the judgments and estimates, are described in Note
2 to the Company’s 2021 Consolidated Financial Statements and Notes.
8.2 Changes in Accounting Policies
Standards, Amendments and Interpretations Issued and Adopted
Effective in the first quarter 2021, the Company adopted Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16), issued in August 2020. These amendments
address issues that arise from the implementation of interest rate benchmarks (e.g., interbank offered rates
[“IBORs”]) reform, where IBORs will be replaced with alternative benchmark rates.
For financial instruments carried at amortized cost, the amendments introduce a practical expedient such that, if a
change in the contractual cash flow occurs as a direct consequence of IBOR reform and on an economically
equivalent basis, the change will be accounted for by updating the effective interest rate prospectively with no
immediate gain or loss recognized. As at January 1, 2022, except for short and long-term investments of $243.4
million that specify a three-month tenor of the Canadian Dollar Offered Rate (“CDOR”), the Company’s exposure
to non-derivative financial assets and financial liabilities to IBORs subject to reform is not significant.
The amendments also provide temporary relief that allow for hedging relationships to continue upon the
replacement of an existing interest rate benchmark with an alternative benchmark rate under certain qualifying
conditions, including the amendment of the hedge designation and documentation to reflect the new rate, and
permit new hedging relationships that are in the scope of the Phase 2 amendments.
The Company enters into interest rate swap contracts to hedge the exposure against interest rate risk on the
future interest payments of certain debt issuances and deposits. The Company also enters into “swaption”
derivative financial instruments that provide an option to enter into an interest rate swap as part of the Company’s
strategy to manage its interest rate exposure risk on the future interest payments of certain debt issuances and
deposits. Where hedge accounting can be applied, the Company accounts for these derivatives as cash flow
hedges.
Under IBOR reform, CDOR is expected to be subject to discontinuance, changes in methodology, or become
unavailable. The Company’s hedging relationships have significant exposure to the CDOR benchmark.
Since the first quarter of 2021, the Company adhered to the International Swaps and Derivatives Association
Fallbacks Protocol (“ISDA Protocol”). The ISDA Protocol provides specific fallbacks depending on whether the
relevant IBOR has been permanently discontinued or is temporarily unavailable. It provides an efficient
amendment mechanism for mutually adhering counterparties to incorporate these fallback provisions into legacy
derivative contract agreements.
For aspects of hedge accounting not covered by the amendments and hedges that are not directly impacted by
the IBOR reform, the accounting policies as described in Note 3 to the Company’s 2021 Consolidated Financial
Statements and Notes continue to apply.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 37
MANAGEMENT'S DISCUSSION AND ANALYSIS
Standards, Amendments and Interpretations Issued but not yet Adopted
The following new standards, amendments and interpretations have been issued but are not effective for the fiscal
year ending January 1, 2022 and, accordingly, have not been applied in preparing the consolidated financial
statements.
Insurance Contracts
In May 2017, the International Accounting Standards Board (“IASB”) issued IFRS 17 – Insurance Contracts
(“IFRS 17”), which replaces IFRS 4 – Insurance Contracts and establishes a new model for recognizing insurance
policy obligations, premium revenue, and claims-related expenses. In June 2020, the IASB issued ‘Amendments
to IFRS 17’ to address concerns and implementation challenges identified after IFRS 17 was published in 2017.
The amendments also deferred the effective date for two years to January 1, 2023. Early adoption is permitted.
The Company is assessing the potential impact of this standard.
Improving accounting policy disclosures and clarifying distinction between accounting policies
and accounting estimates (Amendments to IAS 1 and IAS 8)
In February 2021, the IASB issued narrow-scope amendments to IAS 1 – Presentation of Financial Statements
(“IAS 1”), IFRS Practice Statement 2 – Making Materiality Judgments (“IFRS Practice Statement 2”) and IAS 8 –
Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”).
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than
their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to
apply the concept of materiality to accounting policy disclosures.
The amendments to IAS 8 clarify how companies distinguish changes in accounting policies from changes in
accounting estimates. That distinction is important because changes in accounting estimates are applied
prospectively only to future transactions and other future events, but changes in accounting policies are generally
also applied retrospectively to past transactions and other past events.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023. Earlier
application is permitted. The Company is assessing the potential impact of these amendments.
Deferred Tax related to assets and liabilities arising from a single transaction (Amendments to
IAS 12)
In May 2021, the IASB issued targeted amendments to IAS 12 – Income Taxes to specify how companies account
for deferred tax on transactions such as leases and decommissioning obligations. In specific circumstances,
companies are exempt from recognizing deferred tax when they recognize assets or liabilities for the first time.
Previously, there had been some uncertainty about whether the exemption applied to transactions such as leases
and decommissioning obligations transactions for which companies recognize both an asset and a liability. The
amendments clarify that the exemption does not apply and that companies are required to recognize deferred tax
on such transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases
and decommissioning obligations. The amendments are effective for annual reporting periods beginning on or
after January 1, 2023, with early application permitted. The Company has assessed there to be no impact on
deferred taxes as a result of the amendment.
38 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
9.0 Key Performance Measures
9.1 Key Performance Measures
The Company uses certain Key Performance Measures which provide useful information to both Management
and investors in measuring the financial performance and financial condition of the Company. These measures
are classified as GAAP measures, non-GAAP financial measures, non-GAAP ratios, capital management
measures and supplementary financial measures, as well as non-financial measures. Non-GAAP financial
measures and non-GAAP ratios are described in section 9.2 of this MD&A, supplementary financial measures are
described in section 9.3 of this MD&A and capital management measures are described in section 5.3 of this
MD&A. Certain supplementary financial measures do not form part of the Company’s financial statements.
9.2 Non-GAAP Financial Measures and Ratios
The Company prepares and presents its financial information on a GAAP basis. Management uses many
measures to assess performance, including non-GAAP financial measures and non-GAAP ratios. Non-GAAP
financial measures and non-GAAP ratios have no standardized meanings under GAAP and may not be
comparable to similar measures of other companies.
Management considers both reported and normalized results and measures useful in evaluating the performance
of the core business operations of the Company. Management uses normalized results to assess changes in
financial performance across periods on a comparable basis by removing specified items not related to the core
business operations of the Company that are infrequent and non-operational in nature. The items, which can
include acquisition-related transaction costs, restructuring or discontinued operations costs, operational efficiency
program costs, one-time costs for new program roll-outs, and infrequent, non-operational fair value adjustments,
are removed from cost of producing revenue, SG&A and other income (expense), where applicable. Explanations
of normalizing items can be found in subsection 4.1.1.
Normalized Cost of Producing Revenue
Normalized cost of producing revenue is most directly comparable to cost of producing revenue, a GAAP
measure reported in the consolidated financial statements. The following table reconciles normalized cost of
producing revenue to cost of producing revenue.
(C$ in millions)
Cost of producing revenue
Less normalizing items:
Operational Efficiency program
Q4 2021
Q4 2020
2021
2020
$
3,190.9 $
3,024.6 $ 10,456.9 $
9,794.4
(0.4)
9.5
1.4
9.5
Normalized cost of producing revenue
$
3,191.3 $
3,015.1 $ 10,455.5 $
9,784.9
Retail Normalized Cost of Producing Revenue
Retail normalized cost of producing revenue is most directly comparable to Retail cost of producing revenue, a
GAAP measure reported in the consolidated financial statements. The following table reconciles Retail
normalized cost of producing revenue to Retail cost of producing revenue.
(C$ in millions)
Cost of producing revenue
Less:
Financial Services cost of producing revenue
Eliminations and adjustments
Retail cost of producing revenue
Less normalizing items:
Operational Efficiency program
Q4 2021
Q4 2020
2021
2020
$
3,190.9 $
3,024.6 $ 10,456.9 $
9,794.4
141.7
(16.1)
88.7
(16.0)
422.4
(63.8)
602.7
(69.6)
$
3,065.3 $
2,951.9 $ 10,098.3 $
9,261.3
(0.4)
9.5
1.4
9.5
Retail normalized cost of producing revenue
$
3,065.7 $
2,942.4 $ 10,096.9 $
9,251.8
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 39
MANAGEMENT'S DISCUSSION AND ANALYSIS
Normalized Gross Margin and Normalized Gross Margin Rate
Normalized gross margin and normalized gross margin rate are used as additional measures when assessing the
amount of revenue retained after incurring direct costs associated with the products and services the Company
provides. The following table reconciles normalized gross margin to gross margin, a GAAP measure reported in
the consolidated financial statements.
Normalized gross margin rate is normalized gross margin divided by revenue.
(C$ in millions)
Gross margin
Add normalizing items:
Operational Efficiency program
Normalized gross margin
Q4 2021
Q4 2020
2021
2020
$
1,946.7 $
1,849.9 $
5,835.2 $
5,076.6
(0.4)
9.5
1.4
9.5
$
1,946.3 $
1,859.4 $
5,836.6 $
5,086.1
Retail Normalized Gross Margin and related measures
Retail normalized gross margin, Retail normalized gross margin excluding Petroleum, Retail normalized gross
margin rate, and Retail normalized gross margin rate excluding Petroleum are used as additional measures when
assessing the amount of revenue retained after incurring direct costs associated with the products and services
the Company provides. Retail normalized gross margin and its successive derivations are most directly
comparable to gross margin, a GAAP measure reported in the consolidated financial statements.
Retail normalized gross margin rate is retail normalized gross margin divided by revenue. Retail normalized gross
margin rate excluding Petroleum is retail normalized gross margin excluding Petroleum, divided by revenue
excluding Petroleum.
(C$ in millions)
Gross margin
Less:
Financial Services gross margin
CT REIT gross margin
Eliminations and adjustments
Retail gross margin
Add normalizing items:
Operational Efficiency program
Retail normalized gross margin
Less: Petroleum gross margin
Q4 2021
Q4 2020
2021
2020
$
1,946.7 $
1,849.9 $
5,835.2 $
5,076.6
170.7
129.5
206.6
126.8
790.9
514.5
645.7
502.3
(118.2)
(113.8)
(455.0)
(430.1)
$
1,764.7 $
1,630.3 $
4,984.8 $
4,358.7
(0.4)
9.5
1.4
9.5
$
1,764.3 $
1,639.8 $
4,986.2 $
4,368.2
52.2
48.7
191.2
170.1
Retail normalized gross margin excluding Petroleum
$
1,712.1 $
1,591.1 $
4,795.0 $
4,198.1
Normalized Other Expense (Income)
The following table reconciles normalized other expense (income) to other expense (income), a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Other expense (income)
Add normalizing items:
Operational Efficiency program
Normalized other expense (income)
Q4 2021
Q4 2020
2021
5.2 $
18.9 $
(23.5) $
2020
48.7
(0.1)
5.1 $
(17.2)
(1.0)
1.7 $
(24.5) $
(17.2)
31.5
$
$
40 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Normalized Other (Income)
The following table reconciles Retail normalized other (income) to Retail other (income), a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Other expense (income)
Less:
Financial Services other (income) expense
CT REIT other (income)
Eliminations and adjustments
Retail other (income)
Add normalizing items:
Operational Efficiency program
Retail normalized other (income)
2020
48.7
0.6
—
Q4 2021
Q4 2020
2021
$
5.2 $
18.9 $
(23.5) $
(1.0)
—
39.1
(0.2)
—
29.2
2.5
—
139.4
118.9
$
(32.9) $
(10.1) $
(165.4) $
(70.8)
(0.1)
(17.2)
(1.0)
$
(33.0) $
(27.3) $
(166.4) $
(17.2)
(88.0)
Normalized SG&A expenses and related measures
Normalized SG&A, normalized SG&A adjusted for rent expense (excluding depreciation and amortization), and
normalized SG&A adjusted for rent expense (excluding depreciation and amortization) as a percentage of
revenue excluding Petroleum are used as additional measures when assessing the performance of the
Company’s ongoing operations. Normalized SG&A, and its successive derivations are most directly comparable
to SG&A, a GAAP measure reported in the consolidated financial statements. SG&A is adjusted for normalizing
items, further adjusted for rent expense, depreciation and amortization. Management has adjusted SG&A to
include an estimate of rent expense, a significant operating expense for its retail business. Management removes
Petroleum revenue because it may complicate variances, especially when reviewing the measure as a ratio.
Normalized SG&A adjusted for rent expense excluding depreciation and amortization as a percentage of revenue
excluding Petroleum is a non-GAAP ratio that is calculated by dividing normalized SG&A adjusted for rent
expense, depreciation and amortization, by revenue excluding Petroleum.
(C$ in millions)
Q4 2021
Q4 2020
2021
2020
Selling, general and administrative expenses
$
1,167.4 $
1,053.6 $
3,934.3 $
3,599.3
Less normalizing items:
Operational Efficiency program
6.8
8.6
38.5
30.0
Normalized selling, general and administrative expenses
$
1,160.6 $
1,045.0 $
3,895.8 $
3,569.3
Add:
Net finance costs, related to leases
21.0
22.2
85.2
92.4
Less:
Depreciation and amortization, other than right-of-use assets
98.1
100.3
391.1
399.8
Normalized selling, general and administrative expenses
adjusted for rent expense excluding depreciation and
amortization
$
1,083.5 $
966.9 $
3,589.9 $
3,261.9
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 41
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Normalized SG&A expenses and related measures
Retail normalized SG&A and Retail normalized SG&A adjusted for rent expense (excluding depreciation and
amortization) are used as additional measures when assessing the performance of the Company’s ongoing
operations. These two metrics are most directly comparable to SG&A, a GAAP measure reported in the
consolidated financial statements. Management has adjusted Retail SG&A to include an estimate of rent
expense, a significant operating expense for its retail business.
(C$ in millions)
Q4 2021
Q4 2020
2021
2020
Selling, general and administrative expenses
$
1,167.4 $
1,053.6 $
3,934.3 $
3,599.3
Less:
Financial Services selling, general and administrative expenses
CT REIT selling, general and administrative expenses
Eliminations and adjustments
109.2
30.9
(88.6)
91.6
31.7
359.3
121.8
319.3
123.7
(81.6)
(333.9)
(314.7)
Retail selling, general and administrative expenses
$
1,115.9 $
1,011.9 $
3,787.1 $
3,471.0
Less normalizing items:
Operational Efficiency program
6.8
8.6
38.5
30.0
Retail normalized selling, general and administrative expenses
$
1,109.1 $
1,003.3 $
3,748.6 $
3,441.0
Add:
Retail net finance costs, related to leases
50.5
53.9
207.3
220.9
Less:
Retail depreciation and amortization, other than right-of-use assets
78.7
81.0
314.0
325.4
Retail normalized selling, general and administrative expenses
adjusted for rent expense (excluding depreciation and
amortization)
$
1,080.9 $
976.2 $
3,641.9 $
3,336.5
42 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
EBITDA and related measures
EBITDA, normalized EBITDA, normalized EBITDA adjusted for rent expense, and normalized EBITDA adjusted
for rent expense as a percentage of revenue excluding Petroleum are used as additional measures when
assessing the performance of the Company’s ongoing operations and its ability to generate cash flows to fund its
cash requirements, including capital expenditures. EBITDA and its successive derivations are most directly
comparable to income before income tax, a GAAP measure reported in the consolidated financial statements, and
is adjusted by deducting finance costs, depreciation and amortization. EBITDA itself is then adjusted for
normalizing items and finally adjusted for rent expense. Management has adjusted EBITDA to include an estimate
of rent expense, a significant operating expense for its retail business, and removes the effect of Petroleum
operations because it may complicate variances, especially when reviewing the measure as a ratio.
Normalized EBITDA Adjusted for Rent Expense as a Percentage of Revenue excluding Petroleum is a non-GAAP
Ratio that is calculated by dividing the Normalized EBITDA Adjusted for Rent Expense by Revenue excluding
Petroleum.
(C$ in millions)
Income before income taxes
Add:
Depreciation and amortization, other than right-of-use assets1
Depreciation of right-of-use assets
Net finance costs, other than those related to leases
Net finance costs, related to leases
EBITDA
Add normalizing items:
Operational Efficiency program
Normalized EBITDA
Less:
Depreciation of right-of-use assets
Net finance costs, related to leases
Q4 2021
Q4 2020
2021
2020
$
720.0 $
718.6 $
1,701.9 $
1,172.1
103.2
103.5
75.1
33.1
21.0
71.9
36.6
22.2
408.8
292.7
137.3
85.2
412.7
282.6
164.1
92.4
$
952.4 $
952.8 $
2,625.9 $
2,123.9
6.5
35.3
40.9
56.7
$
958.9 $
988.1 $
2,666.8 $
2,180.6
75.1
21.0
71.9
22.2
292.7
85.2
282.6
92.4
Normalized EBITDA adjusted for rent expense
$
862.8 $
894.0 $
2,288.9 $
1,805.6
1 Depreciation and amortization reported in cost of producing revenue for the 13 and 52 weeks ended January 1, 2022 was $5.1 million (2020 – $3.2 million) and
$17.7 million (2020 – $12.9 million).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 43
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail EBITDA and related measures
Retail EBITDA, Retail normalized EBITDA, and Retail normalized EBITDA adjusted for rent expense are used as
additional measures when assessing the performance of the Retail segment’s ongoing operations and its ability to
generate cash flows to fund its cash requirements, including capital expenditures. EBITDA and its successive
derivations are most directly comparable to income before income tax, a GAAP measure reported in the
consolidated financial statements, and is adjusted by deducting finance costs, depreciation and amortization.
EBITDA is then adjusted for normalizing items and rent expense. Management has adjusted EBITDA to include
an estimate of rent expense, a significant operating expense for the Retail segment.
(C$ in millions)
Income before income taxes
Less:
Financial Services income before income taxes
CT REIT income before income taxes
Eliminations and adjustments
Retail income before income taxes
Add:
Retail depreciation and amortization, other than right-of-use assets1
Retail depreciation of right-of-use assets
Retail net finance (income), other than related to leases
Retail net finance costs, related to leases
Retail EBITDA
Add normalizing items
Operational Efficiency program
Retail Normalized EBITDA
Less:
Q4 2021
Q4 2020
2021
2020
$
720.0 $
718.6 $
1,701.9 $
1,172.1
63.0
115.6
125.4
(106.5)
14.0
11.1
432.4
456.9
327.3
183.3
(363.1)
(76.8)
$
638.1 $
577.9 $
1,175.7 $
738.3
83.8
138.4
(6.9)
50.5
84.2
132.1
(3.3)
53.9
331.7
541.5
(19.9)
207.3
338.3
520.0
(0.7)
220.9
$
903.9 $
844.8 $
2,236.3 $
1,816.8
6.5
35.3
40.9
56.7
$
910.4 $
880.1 $
2,277.2 $
1,873.5
Retail depreciation of right-of-use assets
Retail net finance costs, related to leases
138.4
50.5
132.1
53.9
541.5
207.3
520.0
220.9
Retail Normalized EBITDA adjusted for rent expense
$
721.5 $
694.1 $
1,528.4 $
1,132.6
1 Depreciation and amortization reported in cost of producing revenue for the 13 and 52 weeks ended January 1, 2022 was $5.1 million (2020 – $3.2 million) and
$17.7 million (2020 – $12.9 million).
Normalized Income Before Income Taxes
Normalized income before income taxes is used as an additional measure to assess the Company’s underlying
operating performance and assists in making decisions regarding the ongoing operations of its business. The
following table reconciles normalized net income to net income which is a GAAP measure reported in the
consolidated financial statements.
(C$ in millions)
Income before income taxes
Add normalizing items:
Operational Efficiency program
Q4 2021
Q4 2020
2021
2020
$
720.0 $
718.6 $
1,701.9 $
1,172.1
6.5
35.3
40.9
56.7
Normalized income before income taxes
$
726.5 $
753.9 $
1,742.8 $
1,228.8
44 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Retail Normalized Income Before Income Taxes
Retail normalized income before income taxes is used as an additional measure to assess the Company’s
underlying operating performance and assists in making decisions regarding the ongoing operations of its
business. The following table reconciles Retail normalized net income to net income which is a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Income before income taxes
Less:
Financial Services income before income taxes
CT REIT income before income taxes
Eliminations and adjustments
Retail income before income taxes
Add normalizing items:
Operational Efficiency program
Q4 2021
Q4 2020
2021
2020
$
720.0 $
718.6 $
1,701.9 $
1,172.1
63.0
115.6
125.4
(106.5)
14.0
11.1
432.4
456.9
327.3
183.3
(363.1)
(76.8)
$
638.1 $
577.9 $
1,175.7 $
738.3
6.5
35.3
40.9
56.7
Retail normalized income before income taxes
$
644.6 $
613.2 $
1,216.6 $
795.0
Normalized Income Tax
Management uses normalized income tax in order to calculate normalized net income. The tax effect of
normalizing items is calculated by multiplying normalizing items by the statutory tax rate. The following table
reconciles Normalized income tax to income tax which is a GAAP measure reported in the consolidated financial
statements.
(C$ in millions)
Income tax expense
Add tax effect of normalizing items:
Operational Efficiency program
Normalized income tax expense
Q4 2021
Q4 2020
2021
2020
$
184.3 $
196.8 $
441.2 $
309.5
1.7
8.7
10.8
14.4
$
186.0 $
205.5 $
452.0 $
323.9
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 45
MANAGEMENT'S DISCUSSION AND ANALYSIS
Normalized Net Income, Normalized Net Income Attributable to Shareholders, Normalized
Diluted Earnings per Share, and Long-term Dividend Payout Ratio
Normalized net income, normalized net income attributable to shareholders, and normalized diluted earnings per
share are used as additional measures when assessing the Company’s underlying operating performance. The
following table reconciles normalized net income, normalized net income attributable to shareholders and
normalized diluted earnings per share to net income, a GAAP measure reported in the consolidated financial
statements.
Long-term dividend payout ratio is calculated by dividing total dividends by normalized net income.
(C$ in millions)
Net income
Q4 2021
Q4 2020
2021
2020
2019
$
535.7 $
521.8 $
1,260.7 $
862.6 $
894.8
Net income attributable to shareholders
508.5
488.8
1,127.6
751.8
778.4
Add normalizing items:
Operational Efficiency program
Party City:
Acquisition-related costs
Fair value adjustment for inventories acquired
4.8
26.6
30.1
42.3
25.1
—
—
—
—
—
—
—
—
Normalized net income
$
540.5 $
548.4 $
1,290.8 $
904.9 $
Normalized net income attributable to shareholders $
513.3 $
515.4 $
1,157.7 $
794.1 $
Normalized diluted EPS
$
8.42 $
8.40 $
18.91 $
13.00 $
1.6
1.8
923.3
806.9
13.04
Operating Capital Expenditures
Operating capital expenditures is used to assess the resources used to maintain capital assets at their productive
capacity. Operating capital expenditures is most directly comparable to the total additions, a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Total additions1
Add: Accrued additions
Less:
Business combinations, intellectual properties and tenant allowances
CT REIT acquisitions and developments excluding vend-ins from CTC
Operating capital expenditures
1 This line appears on the Consolidated Statement of Cash Flows under Investing activities
2021
2020
$
778.8 $
436.5
25.1
17.3
—
134.1
$
669.8 $
1.4
141.4
311.0
Retail Return on Invested Capital
Retail ROIC is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing
annual Retail after-tax earnings excluding interest expense, lease related depreciation expense, inter-segment
earnings, and any normalizing items. Retail invested capital is defined as Retail segment total assets, less Retail
segment trade payables and accrued liabilities and inter-segment balances based on an average of the trailing
four quarters. Retail return and Retail invested capital are non-GAAP financial measures, which the Company
does not consider useful in isolation. The Company believes that Retail ROIC is useful in assessing the Retail
segment’s performance relative to shareholder investment.
46 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
In 2021, Management revised its methodology for calculating ROIC. Management had previously committed to
achieving a ROIC aspiration for 2018 to 2020 based on a methodology that was established prior to the
implementation of the IFRS 16 lease standard. Since the timeframe of the Company’s previous aspiration had
lapsed, Management took the opportunity to reset the ROIC methodology to better incorporate the new lease
standard for IFRS 16. The Company has updated its calculation to include right-of-use assets in the invested
capital base in place of operating leases capitalized at a factor of eight under the previous definition.
Management has restated the previously disclosed metric for comparability of Retail ROIC to conform with the
current year calculation.
(C$ in millions)
Income before income taxes
Less:
Financial Services income before income taxes
CT REIT income before income taxes
Eliminations and adjustments
Retail income before income taxes
Add normalizing items:
Operational Efficiency program
Retail normalized income before income taxes
Less:
Retail intercompany adjustments1
Add:
Retail interest expense2
Retail depreciation of right-of-use assets
Retail effective tax rate
Add: Retail taxes
Retail return
Average total assets
Less:
Average Financial Services assets
Average CT REIT assets
Average Eliminations and adjustments
Average Retail assets
Less:
Average Retail intercompany adjustments1
Average Retail trade payables and accrued liabilities3
Average Franchise Trust assets
Average Retail excess cash
Average Retail invested capital
Retail ROIC
2021
2020
$ 1,701.9 $ 1,172.1
432.4
456.9
(363.1)
327.3
183.3
(76.8)
$ 1,175.7 $
738.3
40.9
56.7
$ 1,216.6 $
795.0
196.5
192.8
251.8
541.5
283.4
520.0
27.1 %
28.3 %
(491.4)
(397.7)
$ 1,322.0 $ 1,007.9
$ 21,364.1 $ 19,983.4
7,653.0
6,343.1
7,000.0
6,124.4
(8,970.1)
(8,814.0)
$ 16,338.1 $ 15,673.0
3,421.2
2,519.8
507.6
167.4
3,389.0
2,347.1
576.6
14.0
$ 9,722.1 $ 9,346.3
13.6 %
10.8 %
1
Intercompany adjustments include intercompany income received from CT REIT which is included in the Retail segment, and intercompany investments made
by the Retail segment in CT REIT and CTFS.
2 Excludes Franchise Trust.
3 Trade payables and accrued liabilities include trade and other payables, short-term derivative liabilities, short-term provisions and income tax payables.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 47
MANAGEMENT'S DISCUSSION AND ANALYSIS
Helly Hansen Revenue on a Constant Currency Basis
Helly Hansen revenue on a constant currency basis is used to assess revenue variations by removing the effect
of changes to foreign exchange rates. This will be accomplished by applying the same foreign exchange rate to
current and comparative periods. This measure is most directly comparable to revenue, a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Revenue
Less:
Financial Services revenue
CT REIT revenue
Retail revenue excluding Helly Hansen
Adjustments and eliminations
Helly Hansen Revenue (CAD)
NOK/CAD average FX rate
Helly Hansen Revenue (Kroner)
NOK/CAD constant FX rate
Q4 2021
Q4 2020
2021
2020
$
5,137.6 $
4,874.5 $ 16,292.1 $ 14,871.0
312.4
129.5
295.3
1,213.3
1,248.4
126.8
514.5
502.3
4,579.6
4,386.1
14,438.2
13,078.1
(134.3)
(129.8)
(518.8)
(499.7)
250.4
6.91
196.1
6.97
644.9
6.87
541.9
6.96
1,729.9
1,366.2
4,428.9
3,772.0
6.97
6.97
6.96
6.96
Helly Hansen Revenue (constant currency)
$
248.3 $
196.1 $
636.3 $
541.9
Adjusted Net Debt
The following tables present the components of adjusted net debt. The Company believes that adjusted net debt
is relevant in assessing the amount of financial leverage employed.
As at January 1, 2022
(C$ in millions)
Consolidated net debt
Short-term deposits
Long-term deposits
Short-term borrowings
Long-term debt
Total debt
Cash and cash equivalents
Short-term investments
Long-term investments1
Net debt
Intercompany debt
Adjusted net debt
1
Includes regulatory reserves.
Consolidated
Retail
Financial
Services
$
1,908.4 $
1,985.3
108.2
4,278.5
8,280.4
— $
—
58.0
951.9
1,009.9
1,908.4 $
1,985.3
50.2
2,179.6
6,123.5
(1,751.7)
(707.6)
(1,040.5)
(606.2)
(175.1)
—
—
(606.2)
(175.1)
5,747.4
302.3
4,301.7
—
(1,614.3)
83.4
$
5,747.4 $
(1,312.0) $
4,385.1 $
REIT
—
—
—
1,147.0
1,147.0
(3.6)
—
—
1,143.4
1,530.9
2,674.3
48 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
As at January 2, 2021
(C$ in millions)
Consolidated net debt
Short-term deposits
Long-term deposits
Short-term borrowings
Long-term debt
Total debt
Cash and cash equivalents1
Short-term investments2
Long-term investments1,2
Net debt
Intercompany debt
Adjusted net debt
Consolidated
Retail
Financial
Services
$
1,228.0 $
2,281.7
165.4
4,266.2
7,941.3
(1,327.2)
(643.0)
(146.2)
— $
—
51.1
950.9
1,002.0
1,228.0 $
2,281.7
114.3
2,177.6
5,801.6
(306.2)
(1,016.5)
—
—
(643.0)
(146.2)
5,824.9
695.8
3,995.9
—
(1,568.5)
53.7
$
5,824.9 $
(872.7) $
4,049.6 $
REIT
—
—
—
1,137.7
1,137.7
(4.5)
—
—
1,133.2
1,514.8
2,648.0
1 Includes regulatory reserves.
2 The prior period figures have been restated to align with current year presentation.
Past due credit card receivables rate
Past due credit card receivables rate (“PD2+ rate”) is calculated by dividing gross credit card receivables that are
two cycles or more overdue (30+ days past due) by total gross credit card receivables. Both components exclude
allowances and discounts. Gross past due credit card receivables, total gross credit card receivables and PD2+
are non-GAAP financial measures and a non-GAAP ratio, respectively.
The ratio of past due credit card receivables provides management and investors an additional measure to
assess the quality and health of credit card loan assets. Past due gross credit card receivables and total gross
credit card receivables provide insight into the book value of cardholder balances of our existing portfolio at the
reporting date, however, observed in isolation do not provide meaningful information.
(C$ in millions)
Current portion of loans receivable
Add:
ECL allowance
Less:
Other discounts or adjustments
Line of credit and current portion of dealer loans
Total gross credit card receivables
Less: Loans no more than 30 days past due
Past due gross credit card receivables
2021
2020
$ 5,613.2 $ 5,031.8
841.5
864.0
120.4
65.5
6,268.8
6,142.8
109.3
50.0
5,736.5
5,623.5
$
126.0 $
113.0
CT REIT Net Operating Income
NOI is defined as property revenue less property expense adjusted further for straight-line rent. The most directly
comparable primary financial statement measure is revenue. Management believes that NOI is a useful key
indicator of performance as it represents a measure of property operations over which management has control.
NOI is also a key input in determining the value of the portfolio. NOI should not be considered as an alternative to
property revenue or net income and comprehensive income, both of which are determined in accordance with
GAAP.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 49
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following table shows the relationship of NOI to GAAP revenue and property expense in CT REIT’s
Consolidated Statements of Income and Comprehensive Income:
(C$ in millions)
Revenue
Less:
Retail revenue
Financial Services revenue
Adjustments and eliminations
CT REIT property revenue
Less:
CT REIT property expense
CT REIT property straight-line rent revenue
Q4 2021
Q4 2020
2021
2020
$
5,137.6 $
4,874.5 $ 16,292.1 $ 14,871.0
4,830.0
4,582.2
15,083.1
13,620.0
312.4
295.3
1,213.3
1,248.4
(134.3)
(129.8)
(518.8)
(499.7)
129.5
126.8
514.5
502.3
27.1
1.5
27.8
2.2
107.3
6.1
110.8
10.0
CT REIT net operating income
$
100.9 $
96.8 $
401.1 $
381.5
CT REIT Funds from Operations and Adjusted Funds from Operations
Funds from Operations
FFO is a non-GAAP financial measure of operating performance used by the real estate industry, particularly by
those publicly traded entities that own and operate income-producing properties. The most directly comparable
primary financial statement measure is net income and comprehensive income. FFO should not be considered as
an alternative to net income or cash flow provided by operating activities determined in accordance with IFRS.
CT REIT calculates its FFO in accordance with Real Property Association of Canada’s (“REALPAC”) “White Paper
on Funds From Operations & Adjusted Funds From Operations for IFRS” (“White Paper on FFO & AFFO”) issued
February 2019. The use of FFO, together with the required IFRS presentations, have been included for the
purpose of improving the understanding of the operating results of CT REIT.
Management believes that FFO is a useful measure of operating performance that, when compared period-over-
period, reflects the impact on operations of trends in occupancy levels, rental rates, operating costs and property
taxes, acquisition activities and interest costs, and provides a perspective of the financial performance that is not
immediately apparent from net income determined in accordance with IFRS.
FFO adds back items to net income that do not arise from operating activities, such as fair-value adjustments.
FFO, however, still includes non-cash revenues relating to accounting for straight-line rent and makes no
deduction for the recurring capital expenditures necessary to sustain the existing earnings stream.
Adjusted Funds from Operations
AFFO is a non-GAAP financial measure of recurring economic earnings used in the real estate industry to assess
an entity’s distribution capacity. The most directly comparable primary financial statement measure is net income
and comprehensive income. AFFO should not be considered as an alternative to net income or cash flows
provided by operating activities determined in accordance with IFRS. CT REIT calculates its AFFO in accordance
with REALPAC’s White Paper on FFO & AFFO.
CT REIT calculates AFFO by adjusting FFO for non-cash income and expense items such as amortization of
straight-line rents. FFO is also adjusted for a reserve for maintaining productive capacity required for sustaining
property infrastructure and revenue from real estate properties and direct leasing costs. As property capital
expenditures do not occur evenly during the fiscal year or from year to year the capital expenditure reserve in the
AFFO calculation, which is used as an input in assessing the REIT’s distribution payout ratio, is intended to reflect
an average annual spending level. The reserve is primarily based on average expenditures as determined by
building condition reports prepared by independent consultants.
Management believes that AFFO is a useful measure of operating performance similar to FFO as described
above, adjusted for the impact of non-cash income and expense items.
50 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
FFO per unit and AFFO per unit
FFO per unit and AFFO per unit are calculated by dividing FFO or AFFO by the weighted average number of units
outstanding on a diluted basis. Management believes that these measures are useful to investors to assess the
effect of this measure as it relates to their holdings
The following table reconciles GAAP net income and comprehensive income to FFO and further reconciles FFO
to AFFO:
(C$ in millions)
Income before income taxes
Less:
Retail income before income taxes
Financial Services income before income taxes
Eliminations and adjustments
CT REIT income before income taxes
Add:
Q4 2021
Q4 2020
2021
2020
$
720.0 $
718.6 $
1,701.9 $
1,172.1
638.1
63.0
(106.5)
577.9
1,175.7
115.6
432.4
738.3
327.3
11.1
(363.1)
(76.8)
$
125.4 $
14.0 $
456.9 $
183.3
CT REIT fair value (gain) loss adjustment
(53.2)
53.9
(169.9)
CT REIT deferred taxes
CT REIT lease principal payments on right-of-use assets
CT REIT fair value of equity awards
CT REIT internal leasing expense
CT REIT funds from operations
Add:
(0.5)
(0.2)
0.2
0.2
(0.6)
(0.3)
0.8
0.3
(0.1)
(1.1)
1.0
0.8
87.4
—
(0.8)
0.1
0.8
$
71.9 $
68.1 $
287.6 $
270.8
CT REIT properties straight-line rent adjustment
CT REIT capital expenditure reserve
CT REIT adjusted funds from operations
(1.5)
(6.3)
(2.2)
(6.1)
(6.1)
(24.9)
(10.0)
(24.3)
$
64.1 $
59.8 $
256.6 $
236.5
9.3 Supplementary Financial Measures
Average Account Balance
Average account balance measures average aggregate account balances for the credit card portfolio, excluding
lines of credit and personal loans, divided by the average number of credit card accounts, for the applicable
period.
Borrowings Outstanding
Borrowings outstanding represent drawdowns from committed bank lines of credit.
Credit Card Sales and Credit Card Sales Growth
Credit card sales is a measure of the net sales charged to credit cards. Credit card sales growth excludes balance
transfers, and represents year-over-year percentage change.
Comparable Sales
Comparable sales is commonly used in the retail industry to identify sales growth generated by a Company’s
existing store network and removes the effect of opening and closing stores in the period. The calculation includes
sales from all stores that have been open for a minimum of one year and one week, as well as eCommerce sales.
For the current year, Comparable sales growth and comparable store gasoline volume growth have been
calculated by aligning the 2020 fiscal calendar with the 2021 fiscal calendar (i.e., sales from the first week in 2021
are compared with the sales from the second week of 2020) and include the sales of stores which were
temporarily closed. Comparable sales do not form part of the Company’s consolidated financial statements.
Management applies this measure to Consolidated results (including and excluding Petroleum), the Retail
segment (including and excluding Petroleum), and all banners under the Retail segment (including but not limited
to Canadian Tire, SportChek and Mark’s).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 51
MANAGEMENT'S DISCUSSION AND ANALYSIS
Cost of Debt
Cost of debt represents the weighted average finance costs as a percentage of total short-term and long-term
debt during the period.
eCommerce Sales
eCommerce sales refers to sales generated by the Company’s online presence. Only eCommerce sales from
corporate stores are included in the Company’s consolidated financial statements. Management applies this
measure to Consolidated results, the Retail segment, and banners under the Retail segment.
eCommerce Penetration Rate
eCommerce penetration rate is calculated by dividing eCommerce sales by Retail sales.
ECL Allowance Rate
This measure is the total allowance for expected credit losses as a percentage of total gross loans receivable for
the Financial Services segment.
Effective Tax Rate
Effective tax rate is the tax expense for the period divided by the income before income taxes for the same period.
Gross Average Accounts Receivable
GAAR is the average accounts receivable from credit cards, personal loans and lines of credit, before allowances
for expected credit losses. Measures using GAAR apply only to the Financial Services segment.
Gross Margin Rate
Gross margin rate is gross margin divided by revenue.
Gross Margin excluding Petroleum and Gross Margin Rate excluding Petroleum
Gross margin excluding Petroleum captures gross margin in the consolidated entity or Retail segment, as
measured according to the Company’s IFRS accounting policy, while excluding gross margin from Petroleum
sales. Gross margin rate excluding Petroleum is calculated by dividing gross margin excluding Petroleum by
revenue excluding Petroleum.
Interest Expense
Interest expense represents the finance cost of short-term and long-term debt, which includes lines of credit,
medium-term notes, debentures, and senior and subordinated term notes. This metric excludes deposits held by
CTB, Franchise Trust indebtedness, and lease liability interest.
Net Credit Card Write-off Rate
Net credit card write-off rate measures write-offs of credit card balances only, net of recoveries for the past twelve
months, as a percentage of the credit card GAAR.
Operating Expenses as % of GAAR
Operating expenses as % of GAAR for the Financial Services segment is calculated using rolling 12-month
operating expenses divided by gross average receivables accounts receivable.
Owned Brands Penetration
Owned brands penetration is calculated by dividing sales of owned brands by Retail sales.
Property Revenue
Property revenue includes all amounts earned from tenants pursuant to lease agreements including property
taxes, operating costs and other recoveries.
Property Expense
Property expense consists primarily of property taxes, operating costs and property management costs (including
any outsourcing of property management services).
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Retail Sales
Retail sales refers to the point-of-sale value of all goods and services sold to retail customers at stores operated
by Dealers, Mark’s and SportChek franchisees, and Petroleum retailers, at corporately-owned stores across all
banners under the Retail segment, services provided as part of the Home Services offering, and of goods sold
through the Company’s online sales channels, and in aggregate do not form part of the Company’s consolidated
financial statements. Management applies this measure to Consolidated results (including and excluding
Petroleum), the Retail segment (including and excluding Petroleum), and all banners under the Retail segment
(including but not limited to Canadian Tire, SportChek, Mark’s, Helly Hansen, Gas+, and Owned Brands).
Retail SG&A Rate and Retail SG&A as a Percentage of Revenue excluding Petroleum
Retail SG&A rate is calculated by dividing Retail SG&A by Retail revenue. Retail SG&A as a percentage of
revenue excluding Petroleum is calculated by dividing Retail SG&A by Retail revenue excluding Petroleum.
Return on Receivables
Return on receivables (“ROR”) assesses the profitability of the Financial Services’ total portfolio of receivables.
ROR is calculated by dividing Financial Services’ income before income tax and gains/losses on disposal of
property and equipment by the average of Financial Services’ total-managed portfolio over a rolling 12-month
period.
Revenue as % of GAAR
Revenue as % of GAAR for the Financial Services segment is the rolling 12-month revenue divided by gross
average accounts receivable.
Revenue Excluding Petroleum
Revenue excluding Petroleum captures revenue in the consolidated entity and Retail segment, as measured
according to the Company’s IFRS accounting policy, while excluding revenues from petroleum sales.
Sales per Square Foot
Comparisons of sales per square foot metrics over several periods help identify whether existing assets are being
made more productive by the Company’s introduction of new store layouts and merchandising strategies. Sales
per square foot is calculated on a rolling 12-month basis for the Retail segment. This calculation includes the
period in which stores were temporarily closed. For Canadian Tire, retail space does not include seasonal outdoor
garden centres, auto service bays, warehouses, and administrative space. For SportChek and Mark’s, it includes
both corporate and franchise stores and warehouse and administrative space.
10.0 Key Risks and Risk Management
Overview
In the normal course of its business activities, CTC is regularly faced with risks and opportunities. The effective
management of risk is a key priority for the Company to support CTC in achieving its strategies and business
objectives. Accordingly, CTC has adopted an Enterprise Risk Management Framework (“ERM Framework”) for
identifying, assessing, monitoring, mitigating and reporting risks and opportunities facing CTC. Refer to section
2.6 in the 2021 AIF for further details of CTC’s ERM Framework.
10.1 Key Risks
The Company regularly assesses its businesses to identify and assess key risks that alone, or in combination with
other interrelated risks, could have a significant adverse impact on the Company’s brand, financial performance,
and/or ability to achieve its strategic objectives. CTC’s risks are generally categorized as strategic, financial or
operational; however, certain risks can have impacts across categories. The following section provides a high-
level view of CTC’s risks that have the most potential to impact its businesses and CTC’s approach to mitigating
such risks.
The mitigation and management of risk is approached holistically with a view to ensuring all risk exposures are
considered. Although the Company believes the measures taken to mitigate risks are reasonable, there can be
no assurance that they will effectively mitigate risks that may have a negative impact on the Company’s financial
performance, brand, and/or ability to achieve its strategic objectives. In addition, there are numerous other
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external risk factors, such as macroeconomic, geopolitical, cyber and ransomware attacks, changing consumer
preferences, climate change, commodity pricing, supply chain disruption, pandemics, changing laws and
regulations, or new technologies that are difficult to predict and could adversely impact financial performance,
plans, and objectives.
The ongoing COVID-19 pandemic has had a significant impact on global economic activity since March 2020.
The duration and long-term adverse effects of the pandemic on CTC remain uncertain. The Company has
implemented comprehensive and evolving operational and risk management strategies to support its businesses
and protect the health and well-being of its employees and customers through the pandemic.
10.1.1 Strategic Risks
CTC manages strategic risks, including strategy, key business relationships, and reputation, which are described
below.
Strategy
CTC operates in a number of industries which are highly competitive and constantly evolving. The Company
selects strategies intended to address opportunities and risks, and positively differentiate its performance in the
marketplace. Should the Company be unable to appropriately respond to fluctuations in the external business
environment as a result of inaction, ineffective strategies, or poor implementation of strategies, there could be
adverse impacts on CTC’s financial performance, brand, and/or ability to achieve its strategic objectives. Factors
affecting these risks may include, but are not limited to:
•
•
•
•
•
•
•
changes in the competitive landscape in the retail, banking, and/or real estate sectors, impacting the
attractiveness of shopping at CTC’s businesses and the value of its real estate holdings;
economic recession, depression, or high inflation, impacting consumer spending;
changes in the domestic or international political environments, impacting the cost and availability of
products and services and CTC’s ability to do business;
shifts in the buying behaviour of consumers, demographics, or weather patterns, impacting the relevance
of the products and services offered by CTC;
transition and integration of significant acquisitions into the CTC business model and CTC’s ability to
achieve expected performance and growth plans;
introduction of new technologies and trends impacting the relevance of the products, channels, or
services offered by CTC; and
health events, such as the COVID-19 pandemic, impacting the Company’s operations, customer
behaviours and financial performance.
Risk management strategy:
The Company regularly assesses strategies to enable the achievement of its financial aspirations. These
strategies take the form of a number of strategic objectives. On at least a quarterly basis, the Company identifies
and assesses the external and internal risks that may impede the achievement of its strategic objectives. This
includes the regular monitoring of economic, political, health, demographic, geographic and competitive
developments in Canada and other countries where CTC conducts business, as well as the capabilities, strategic
fit, and other benefits of key initiatives and acquisitions. The goal of this approach is to provide early warning and
escalation within the Company regarding significant risks and engage in appropriate Management activities to
mitigate these risks. In addition to supporting strategy execution, this approach enables Management to assess
the effectiveness of its strategies considering external and internal conditions and propose changes to strategic
objectives as appropriate.
Key Business Relationships
CTC’s business model relies on certain significant business relationships. Such relationships include, but are not
limited to, relationships with its Dealers, agents, franchisees, suppliers and service providers.
The scope, complexity, materiality, and/or criticality of these key business relationships can affect customer
service, procurement, product and service delivery, information security and expense management. Failure to
effectively manage these relationships may have a negative impact on CTC’s financial performance, brand and/or
ability to achieve its strategic objectives.
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Risk management strategy:
The Company regularly assesses the capabilities, strategic fit, and other realized benefits of key business
relationships in the context of supporting its strategies. Governance structures, including policies, processes,
contracts, service agreements, and other management activities, are in place to maintain and strengthen the
relationships that are critical to the success of the Company’s performance and aligned with its overall strategic
needs.
A key relationship for the Company is with its Dealers. Management of the Canadian Tire Dealer relationship is
led by Senior Management with oversight by the Chief Executive Officer (“CEO”) and Board of Directors.
Throughout the pandemic, the Company worked closely with its Dealers, agents, franchisees, suppliers and
service providers to help maintain safe business operations and continue to provide Canadians and our
communities with the essential products and services they require.
Reputation
The strength of CTC’s brand significantly contributes to the success of the Company and is sustained through its
culture, policies, processes and ongoing investments that build trust and affinity with stakeholders. Maintaining
and enhancing brand equity enables the Company to grow and achieve its financial goals and strategic
aspirations. The Company recognizes that proper stewardship of environmental, social and governance (“ESG”)
matters that are relevant to its business contributes positively to the Company’s reputation. CTC’s reputation, and
consequently brand, may be negatively affected by various factors, some of which may be outside its control.
Should these factors materialize, stakeholders’ trust in the Company, the perception of what its brand stands for,
its connection with customers, and subsequently its brand equity, may significantly diminish. As a result, CTC’s
financial position, brand and/or ability to achieve its strategic objectives may be negatively affected.
Risk management strategy:
The Company’s strategies include plans and investments to protect and enhance its reputation. The Company
has identified the ESG matters that are most relevant to its stakeholders and invested in managing these areas of
focus to not just meet but exceed regulatory standards. All employees are expected to manage risks that could
impact the Company’s reputation and thereby its brand equity through a set of established risk frameworks.
Senior Management is accountable to ensure that employees identify and escalate matters that could create
reputational risk. The Company monitors a variety of sources to identify issues that could damage its reputation
and has established processes to respond to significant issues. The Company’s Codes of Conduct are the
foundation for ethical conduct at CTC, providing all employees, contractors, suppliers, and Directors with
guidance on ethical values and expected behaviours that enable it to sustain its culture of integrity.
10.1.2 Financial Risks
Macroeconomic conditions are highly cyclical, volatile and can have a material effect on the ability of the
Company to achieve strategic goals and aspirations. CTC manages a number of financial risks with respect to
financial instruments, liquidity, foreign currency exchange and interest rates, which are described below.
Financial Instrument Risk
The Company’s primary financial instrument risk exposures relate to the Bank’s credit card loans receivable and
the value of the Company’s financial instruments (including derivatives and investments) employed to manage
exposure to foreign currency risk, interest rate risk, and equity risk, all of which are subject to financial market
volatility. For further disclosure of the Company’s financial instruments, their classification, their impact on
financial statements, and determination of fair value refer to Note 33 to the consolidated financial statements.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to
managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under normal
circumstances, with the ability to react under some uncertainty.
For a comprehensive discussion of the Company’s liquidity risk, see Note 5 of the consolidated financial
statements.
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Foreign Currency Risk
CTC sources merchandise globally. In 2021, approximately 54 percent, 7 percent and 37 percent of the value of
inventory purchases of Canadian Tire, SportChek and Mark’s, respectively, were sourced directly from vendors
outside Canada and denominated in U.S. dollars. The majority of Helly Hansen’s purchases are from vendors in
Asia and are denominated in U.S. dollars and Euros. To mitigate the impact of fluctuating foreign exchange rates
on the cost of these purchases, the Company has an established foreign exchange risk management program
that governs the proportion of forecast U.S. dollar and Euro purchases that are hedged through foreign exchange
derivative contracts. The purpose of the program is to provide certainty with respect to a portion of the foreign
exchange component of future merchandise purchases.
As the Company has hedged a significant portion of the cost of its near-term U.S. dollar-denominated forecasted
purchases, a change in foreign currency rates will not materially impact that portion of the cost related to those
purchases. The Company operates its hedging program on a continual basis to ensure that any sustained
change in rates is reflected in the cost of the Company’s U.S. dollar purchases over the entirety of its hedging
horizon. This ensures that the cost of U.S. dollar purchases is smoothed relative to the foreign exchange market
allowing the Company to defer the impact of sudden exchange rate movements on margins and allow it time to
develop strategies to mitigate the impact of a sustained change in foreign exchange rates. Some vendors have
an underlying exposure to U.S. currency fluctuations which may affect the price they charge the Company for
merchandise, and the Company’s hedging program does not mitigate that risk. While the Company may be able
to pass on changes in foreign currency exchange rates through retail pricing, any decision to do so would be
subject to competitive, market and economic conditions.
Interest Rate Risk
The Company may use interest rate derivatives to manage interest rate risk. The Company has a policy in place
whereby, on a consolidated basis (excluding Franchise Trust), a minimum of 75 percent of its consolidated debt
(short-term and long-term) will be at fixed versus floating interest rates.
Failure to develop, implement, and execute effective strategies to manage these financial risks may result in
insufficient capital to absorb unexpected losses and/or decreases in margin and/or changes in asset value,
negatively affecting CTC’s financial position, brand, and/or ability to achieve its strategic objectives.
Risk management strategy:
The Company has a Board-approved Financial Risk Management Policy in place which governs financial
instruments, liquidity, foreign currency, interest rate and other financial risks. The Treasurer and Chief Financial
Officer (“CFO”) provide assurances with respect to policy compliance. Refer to section 5.3 in this MD&A for
further details.
In particular, the Company’s hedging activities, are governed by this policy. Hedge transactions are executed with
highly rated financial institutions and are monitored against policy limits.
10.1.3 Operational Risks
CTC manages a number of operational risks, that are described below: talent; technology functionality, resiliency
and security; cyber; data and information; operations; financial reporting; credit; and legal, regulatory and
litigation.
Talent
To support its strategies, objectives and normal business operations, CTC needs to maintain a sufficient,
appropriately-skilled, focused and committed workforce. CTC’s financial position, brand, and/or ability to achieve
its strategic objectives may be negatively affected by its failure to manage its talent risk.
Risk management strategy:
The Company manages its talent risk through its organizational design, employee recruitment programs,
succession planning, compensation structures, ongoing training, professional development programs, diversity,
inclusion and belonging programs, change management, Code of Conduct, and performance management. The
Company also continues to adopt strategies to attract and retain talent, to support areas of the business where
labour shortages and high competition for talent are prevalent.
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Technology Functionality, Resiliency and Security
CTC’s business is affected by its technologies, which may positively or adversely impact CTC’s products,
channels, and services. CTC’s choices of investments in technology may support its ability to achieve its strategic
objectives, or may negatively affect its financial position, brand, and/or ability to achieve its strategic objectives.
The COVID-19 pandemic continues to accelerate the shift in consumer behaviour to online shopping and the risk
to the Company’s digital platforms and IT systems.
Risk management strategy:
The Company manages its risks through its investments in people, processes, systems, and tools to meet
operational and security requirements, and leverage technological advances in the marketplace.
The Company maintains policies, processes, and controls to address capabilities, performance, security, and
availability, including disaster recovery for systems, infrastructure, and data.
The Company regularly monitors and analyzes its technology needs and performance to determine the
effectiveness of its investments and its investment priorities. CTC continues to enhance its digital platforms to
effectively meet increased online customer demand and improve both the customer and Dealer eCommerce
experiences. IT improvements pertaining to network infrastructure, devices, security and incident management
are effectively supporting the work from home model.
Cyber
CTC relies on IT systems in all areas of operations. The Company’s information systems are subject to the
increasing frequency and sophistication of global cyber threats, including ransomware attacks. The methods
used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving. A
breach of sensitive information or disruption to its systems may negatively impact CTC’s financial position, brand,
and/or ability to achieve its strategic objectives.
Risk management strategy:
The Company maintains policies, processes, and controls to address capabilities, performance, security, and
availability including disaster recovery for systems, infrastructure, and data. Security protocols, along with
information security policies, address compliance with information security standards, including those relating to
information belonging to the Company’s customers and employees. The Company actively monitors, manages,
and continues to enhance its ability to mitigate cyber risk through enterprise-wide programs. As a result of
heightened risks, CTC has implemented additional security measures with respect to employee training,
monitoring and testing, systems protection, and business continuity and contingency planning.
Data and Information
In the normal course of business, the Company collects and stores sensitive data, including the personal
information of its customers and employees, information of its business partners, and internal information. The
integrity, reliability and security of information are critical to its business operations and strategy. The work-from-
home model has heightened the importance of data and information security and privacy.
The lack of integrity and reliability of information for decision-making, loss or inappropriate disclosure or
misappropriation of sensitive information could negatively affect CTC’s financial position, brand, and/or ability to
achieve its strategic objectives.
Risk management strategy:
The Company has policies, processes, and controls designed to manage and safeguard the information of its
customers, employees, and internal information throughout its lifecycle. The Company continues to enhance its
ability to mitigate information risk in conjunction with its cyber risk management programs. The Company
monitors and enforces its practices supporting the security, privacy and confidentiality of sensitive data and
information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Operations
CTC has complex and diverse operations across its business units and functional areas. Sources of operational
risk include, but are not limited to, merchandising, supply chain, store networks, property management and
development, financial services, business disruptions, regulatory requirements, and reliance on technology.
Operations risk is the risk of potential loss resulting from inadequate or failed internal processes or systems,
human interactions, or external events (such as health and weather events). Should this risk materialize, CTC’s
financial position, brand, and/or ability to achieve its strategic objectives could be negatively affected.
Government-issued guidelines and restrictions in response to the COVID-19 pandemic have resulted in the
implementation of several operational measures that have impacted the Company’s offices, call centres, store
and distribution networks, including the temporary closures of facilities, reduced store hours and capacity,
enhanced cleaning protocols, and actions to promote physical distancing. Further government-response actions
could have additional adverse impacts on the Company’s operations and financial performance.
Risk management strategy:
Management in charge of each banner and corporate function is accountable for providing assurances that
policies, processes, and procedures are adequately designed and operating effectively to support the strategic
and performance objectives, availability of business services, and regulatory compliance of the banner that they
operate or support. To ensure continuity of business activities and services, the Company has identified critical
processes and developed robust business continuity plans to mitigate and respond to significant disruptions.
Throughout the COVID-19 pandemic, the Company has remained focused on maintaining safe and resilient
business operations to support Canadians and communities by providing essential products and services for the
jobs and joys of life in Canada. CTC continues to take the necessary measures and precautions to protect the
health and well-being of its employees and customers, including the implementation of physical distancing
protocols, enhanced cleaning activities and protective equipment, all reflecting best guidance from public health
authorities.
Further information regarding the Company’s exposure to this risk for each business segment is provided in
section 10.2.
Financial Reporting
Public companies such as CTC are subject to risks relating to the restatement and reissuance of financial
statements, which may be due to:
•
•
•
failure to adhere to financial accounting and presentation standards and securities regulations relevant to
financial reporting;
fraudulent activity and/or failure to maintain an effective system of internal controls; and/or
inadequate explanation of a Company’s operating performance, financial condition, and prospects.
The realization of one or more of these risks may result in regulatory-related issues or may negatively impact
CTC’s financial position, brand and/or ability to achieve its strategic objectives.
Risk management strategy:
Internal controls, which include policies, processes and procedures, provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements and other disclosure documents. This
includes monitoring and responding to changing regulations and standards governing accounting and financial
presentation. Further details are set out in section 11.0.
Credit
CTC’s credit risk, which may result if a customer or counterparty fails to meet its contractual obligations, arises
principally from operations of the Bank’s credit card loan portfolio, CTC’s interaction with its Dealer and franchisee
networks, and financial instruments, which are discussed in more detail below.
Consumer Credit Risk
Through the granting of credit cards, the Company assumes certain risks with respect to the ability and
willingness of the Bank’s customers to repay loans owing to it. Upon cessation of measures put in place by
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government authorities in response to the COVID-19 pandemic, CTC could see an increase in cardholder
delinquencies or impairments, which could negatively impact its financial performance and strategic objectives.
Dealer, Franchise and Other Wholesale Customer Credit Risk
Accounts receivable credit risk is primarily from Dealers, franchisees, and wholesale customers. In addition, the
Company is required to provide credit enhancement to Franchise Trust in the form of standby letters of credit
issued by highly-rated financial institutions and guaranteed by the Company (the “LCs”) to achieve the required
“AAA” equivalent credit rating of the funding of the Dealer loan portfolio and may also provide guarantees of third-
party bank debt agreements or inventory buy-back agreements, with respect to the bank financing of certain
Dealers and franchisees.
Financial Instrument Counterparty Risk
The Company's Financial Risk Management Policy manages counterparty credit risk relating to cash balances,
investment activity, and the use of financial derivatives. The Company limits its exposure to counterparty credit
risk by transacting only with highly-rated financial institutions and other counterparties and by managing within
specific limits for credit exposure and term-to-maturity. The Company’s financial instrument portfolio is spread
across financial institutions, provincial and federal governments, and, to a lesser extent, corporate issuers that are
at least dual rated and have a lowest (if dual rated) or median (if three or more ratings) credit rating in the “A(low)”
equivalent category or better and asset-backed issuers that are at least dual rated and have credit ratings in the
“AAA” equivalent category.
Failure to effectively manage this risk may negatively impact CTC’s financial position, brand, and/or ability to
achieve its strategic objectives.
Risk management strategy:
Various Board-approved policies, processes and controls are employed to manage and mitigate the Company’s
credit risk exposure and are monitored for compliance with policy limits.
Further information regarding the Company’s exposure to consumer lending risk and the Bank’s mitigation
strategies is provided in section 10.2.2.
For further disclosure of the Company’s maximum exposure to credit risk, over and above amounts recognized in
the Consolidated Balance Sheets, refer to Note 5.3.2 to the consolidated financial statements.
For further disclosure of the Company’s allowance for impairment on loans receivable, refer to Note 9 to the
consolidated financial statements.
Legal, Regulatory and Litigation
The Company is or may become subject to claims, disputes, legal proceedings, and regulatory compliance issues
arising in the ordinary course of business. The outcome of litigation cannot be predicted or guaranteed.
Unfavourable rulings may have a material adverse effect on CTC’s financial position, brand, and/or ability to
achieve its strategic objectives. Additional legislation and regulations (including climate change initiatives) may
be adopted or instituted that impose additional constraints on CTC’s operations, which may adversely impact its
financial performance.
Regulatory risk may have a negative impact on business activities, earnings or capital, regulatory relationships,
Company’s brand or reputation as a result of failure to comply with or failure to adapt to current and changing
regulations or regulatory expectations.
Risk management strategy:
Various Board-approved policies, processes and controls address requirements for compliance with applicable
laws, regulations, and regulatory policies. A team of legal professionals assists employees with mitigating and
managing risks relating to claims or potential claims, disputes, and legal proceedings. The Company’s Legislative
Compliance department provides compliance oversight and guidance to the organization, including the
development and maintenance of a regulatory compliance management system. Specific activities that assist the
Company in adhering to regulatory standards include communication of regulatory requirements, advice, training,
testing, monitoring, reporting, and escalation of control deficiencies to Senior Management.
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10.2 Business Segment Risks
10.2.1 Retail Segment Business Risks
The Retail segment is exposed to a number of risks in the normal course of its business that have the potential to
affect its operating performance. Certain risks continue to be compounded by the ongoing COVID-19 pandemic.
The following are the business risks most relevant to the Retail segment’s operations. Refer to section 10.1 in
this MD&A for further details of the Company’s risk management strategies.
Seasonality Risk
Canadian Tire derives a significant amount of its revenue from the sale of seasonal merchandise and, accordingly,
derives a degree of sales volatility from abnormal weather patterns. Canadian Tire mitigates this risk, to the
extent possible, through the breadth of its product mix and proactive assortment management, effective
procurement and inventory management practices, as well as the development of products and offers to stimulate
customer demand for ‘non-seasonal’ and year-round products not directly affected by weather patterns.
Mark’s business remains seasonal, with the fourth quarter typically producing the largest share of sales and
annual earnings. Detailed sales reporting and merchandise-planning modules assist Mark’s in mitigating the risks
and uncertainties associated with unseasonable weather and consumer behaviour during the important winter
selling season but cannot eliminate such risks completely because inventory orders, especially for a significant
portion of merchandise purchased offshore, must be placed well ahead of the season.
SportChek is affected by general seasonal trends that are characteristic of the apparel, footwear and hard goods
industries. SportChek strives to minimize the impact of the seasonality of the business by altering its
merchandise mix at certain times of the year to reflect consumer demand.
Evolving Consumer Behaviour and Shopping Habits
Since the onset of the COVID-19 pandemic, the Company has seen a further shift in consumer behaviour with an
unprecedented increase in online shopping demand. Failure to provide attractive, user-friendly, and secure digital
platforms that meet the changing expectations of online shoppers could negatively impact the Company’s
reputation, place the Company at a competitive disadvantage and/or have a negative impact on business
operations. In order to mitigate this risk, the Company monitors the competitive landscape, digital evolutions and
eCommerce trends to ensure its strategic initiatives are designed to maintain competitive positioning and continue
to be relevant.
Supply Chain Risk
A substantial portion of the Company’s product assortment is sourced from foreign suppliers, lengthening the
supply chain and extending the time between order and delivery. Canadian Tire, Mark’s, and SportChek use
internal resources and third-party logistics providers to manage the movement of foreign-sourced goods from
suppliers to the Company’s distribution centres and retail stores. Accordingly, the Company is exposed to
potential supply chain disruptions due to foreign supplier failures, pandemics, extreme weather events,
geopolitical risk, raw material and component shortages, labour disruption or insufficient capacity at ports, and
risks of delays or loss of inventory in transit. The Company mitigates these risks by using advanced tracking
systems and visibility tools, effective supplier selection and procurement practices and through strong
relationships with transportation companies and port and other shipping authorities, supplemented by marine
insurance coverage. Key strategic relationships with vendors as well as the capability to utilize inventory across
retail banners have aided the Company’s ability to address customer demand.
Ethical Sourcing Risk
Products that are sourced from factories in less developed countries for which there is a high level of public
scrutiny pertaining to working conditions and labour regulations, introduces a heightened level of reputational and
brand risk to CTC. In order to mitigate these risks, CTC works with its suppliers to ensure that products are
sourced, manufactured, and transported according to the standards outlined in its Supplier Code of Business
Conduct. The Company also works with the Business Social Compliance Initiative (BSCI) factory audit
methodology to assess the hiring and employment practices, as well as the health and safety standards of its
foreign suppliers.
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Environmental Risk
Environmental risks relating to the global transition to a net-zero economy and the physical impacts of climate
change affect CTC. The Company monitors those risks and continues to develop strategies and plans in relation
thereto. Environmental risk within CTC also involves the storage, handling, and recycling of certain materials. The
Company has established and follows environmental policies and practices to avoid a negative impact on the
environment, to comply with environmental laws, and protect its reputation. It addresses applicable environmental
stewardship requirements and takes the necessary steps to manage the end-of-first life of product in accordance
with these requirements. CTC’s regulatory compliance program includes environmental reviews and the
remediation of contaminated sites as required, supplemented by environmental insurance coverage.
Commodity Price and Disruption Risk
The operating performance of Petroleum can be affected by fluctuations in the commodity cost of oil. The
wholesale price of gasoline is subject to global oil supply and demand conditions, domestic and foreign political
policy, commodity speculation, global economic conditions, and potential supply chain disruptions from natural
and human-caused disasters or health events such as pandemics. To mitigate this risk to profitability, Petroleum
maintains tight controls over its operational costs and enters into long-term gasoline purchase arrangements with
integrated gasoline wholesalers. Petroleum also enhances profitability through a comprehensive cross-marketing
strategy with other retail banners and higher-margin, ancillary businesses such as convenience store and car
wash sales.
Market Obsolescence Risk
Clothing and apparel retailers are exposed to ever-changing consumers’ fashion preferences. The risk has
increased due to the impact of the pandemic on consumer behaviour. SportChek and Mark’s mitigate this risk
through brand positioning, consumer preference monitoring, demand forecasting and merchandise selection
efforts; as well as the product development process at Mark’s. SportChek offers a comprehensive assortment of
brand-name products under its various banners and partners with strong, national-branded suppliers that
continually evolve their assortments to reflect customer preferences. In addition, SportChek employs a number of
inventory management practices, including certain agreements with vendors to manage unsold product or offer
markdown dollars to offset margin deterioration in liquidating aged inventory. Mark’s specifically targets
consumers of durable everyday casual wear and is less exposed to changing fashions than apparel retailers
offering high-fashion apparel and accessories. Mark’s industrial wear category is exposed to fluctuations in the
resource and construction industry.
10.2.2 Financial Services Segment Business Risks
Financial Services is exposed to risks in the normal course of its business that have the potential to affect its
operating performance. Certain risks have been further compounded by the COVID-19 pandemic. Following are
the business risks most relevant to Financial Services’ operations. Refer to section 10.1 in this MD&A for further
details of the Company’s risk management strategies.
Consumer Credit Risk
Financial Services grants credit to its customers on its credit cards, which may include various payment options.
With the granting of credit, Financial Services assumes certain risks with respect to the ability and willingness of
its customers to repay debt. Financial Services manages credit risk to optimize profitability, within the scope of
internal risk policy, by:
•
•
employing sophisticated credit-scoring models to constantly monitor the creditworthiness of customers;
using the latest technology to make informed credit decisions for each customer account to limit credit risk
exposure;
adopting technology to improve the effectiveness of the collection process; and
•
• monitoring the macroeconomic environment, especially with respect to consumer debt levels, interest
rates, employment levels, and income levels.
During the height of the pandemic, Financial Services experienced a reduction in consumer credit card spending
and supported its cardholders with various relief programs that catered to individual cardholders’ needs during this
economic uncertainty. Although government and lender support for consumers and businesses has evolved to
become more targeted over the pandemic, some measures remain in place. Financial Services expects to see an
increase in cardholder delinquencies or impairments once the various government assistance programs come to
an end.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 61
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Funding Risk
Liquidity and funding risk is the risk that Financial Services will be unable to meet its funding obligations or obtain
funding at a reasonable cost. Financial Services mitigates its liquidity and funding risk by maintaining diversified
funding sources that include securitization of receivables, broker GIC deposits, retail deposits, and committed
bank lines of credit. Further mitigation is provided by maintaining a pool of high-quality marketable securities that
can be used as a source of liquidity under a short-term stress scenario. Scotiabank has provided CTB with a
$500.0 million unsecured revolving committed credit facility and $1.75 billion in note purchase facilities for the
purchase of senior and subordinated notes issued by GCCT, both of which are committed to October 2024. A
number of regulatory metrics are monitored including the Liquidity Coverage Ratio and Net Cumulative Cash
Flow. Further details on financing sources for Financial Services are included in section 5.5.
Interest Rate Risk
The Financial Services segment is exposed to interest-rate risk to the extent that changes in interest rates impact
net interest income and net economic value. A significant portion of the funding liabilities for Financial Services
are fixed rate, which reduces interest-rate risk. A one percent change in interest rates does not materially affect
net interest income or net economic value. Financial Services also utilizes interest rate hedges to manage its
exposure to future increases in interest rates.
Regulatory Risk
Regulatory risk is the risk of negative impact to business activities, earnings or capital, regulatory relationships, or
reputation as a result of failure to comply with or failure to adapt to current and changing regulations or regulatory
expectations. The Bank’s Compliance department is responsible for the development and maintenance of a
regulatory compliance management system. Specific activities that assist the Financial Services segment in
adhering to regulatory standards include communication of regulatory requirements, advice, training, testing,
monitoring, reporting and escalation of control deficiencies.
10.2.3 CT REIT Segment Business Risks
CT REIT is exposed to a number of risks in the normal course of its business that have the potential to affect its
operating performance. The following are the key risks specific to the operations of CT REIT. Please refer to
Section 4 in CT REIT’s Annual Information Form and Section 12.0 Enterprise Risk Management in CT REIT’s
Management’s Discussion and Analysis for the period ended December 31, 2021, which are not incorporated
herein by reference, for a discussion of risks that affect CT REIT’s operations and also to section 10.1 in this
MD&A for further details of the Company’s risk management strategies.
External Economic Environment
CT REIT is subject to risks resulting from fluctuations or fundamental changes in the external business
environment, which could include changes in the current and future economic environment, the economic stability
of local markets, geographic and industry concentrations, retail shopping behaviours and habits of consumers,
and increased competition amongst investors, developers, owners, and operators of similar properties.
In response to the COVID-19 pandemic, government authorities implemented significant assistance programs to
provide economic support to individuals and businesses. While in the short term these measures mitigated some
effects of the pandemic, over the long term they may not be sufficient to fully offset its negative impact or adverse
recessionary conditions.
Key Business Relationship
CT REIT’s relationship with its majority unitholder, CTC, is integral to its business strategy. Key factors inherent in
this relationship include situations where the interests of CTC and CT REIT are in conflict, including dependence
of CT REIT’s revenues on the ability of CTC to meet its rent obligations and renew its tenancies, tenant
concentration, reliance on the services of key personnel including certain CTC personnel, and CTC lease
renewals and rental increases.
Financial
Risks associated with macroeconomic conditions which are highly cyclical and volatile could have a material
effect on CT REIT. Such risks include changes in interest rates, the availability of capital, unit price risks, and CT
REIT’s degree of financial leverage.
62 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Legal and Regulatory Compliance
Failure to adhere to laws and regulations and changes to laws and regulations applicable to CT REIT’s operations
may have adverse effects, including tax-related risks, regulatory risks, and environmental risks.
Operations
CT REIT is subject to the risk that a direct or indirect loss of operating capabilities may occur due to property,
development, redevelopment and renovation risks, disasters, health events such as pandemics, cyber incidents,
climate change, ineffective business continuity and contingency planning, and talent shortages.
Further government actions in response to COVID-19 could have additional adverse impact on the REIT’s
operations and financial performance.
The health and well-being of CT REIT’s employees, tenants, tenants’ employees and customers, has remained a
top priority throughout the pandemic and the REIT has continued to take necessary measures and precautions to
help protect and support them, reflecting best guidance by government and public health authorities.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 63
MANAGEMENT'S DISCUSSION AND ANALYSIS
11.0 Internal Controls and Procedures
11.1 Disclosure Controls and Procedures
Management is responsible for establishing and maintaining a system of controls and procedures over the public
disclosure of financial and non-financial information regarding the Company. Such controls and procedures are
designed to provide reasonable assurance that all relevant information is gathered and reported to Senior
Management on a timely basis, including the CEO and the CFO, so that they can make appropriate decisions
regarding public disclosure.
The Company’s system of disclosure controls and procedures include, but is not limited to, its Disclosure
Corporate Operating Directive, its Codes of Conduct, the effective functioning of its Disclosure Committee,
procedures in place to systematically identify matters warranting consideration of disclosure by the Disclosure
Committee, verification processes for individual financial and non-financial metrics, and information contained in
annual and interim filings, including the consolidated financial statements, MD&A, Annual Information Form, and
other documents and external communications.
As required by CSA National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings
(“NI 52-109”), an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of the
Company’s disclosure controls and procedures was conducted under the supervision of Management, including
the CEO and the CFO, as at January 1, 2022. The evaluation included documentation review, enquiries and
other procedures considered by Management to be appropriate in the circumstances. Based on that evaluation,
the CEO and the CFO have concluded that the design and operation of the system of disclosure controls and
procedures were effective as at January 1, 2022.
11.2 Internal Control over Financial Reporting
Management is also responsible for establishing and maintaining appropriate internal control over financial
reporting. The Company’s internal control over financial reporting includes, but is not limited to, detailed policies
and procedures relating to financial accounting, reporting, and controls over systems that process and summarize
transactions. The Company’s procedures for financial reporting also include the active involvement of qualified
financial professionals, Senior Management, and its Audit Committee.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation.
As also required by NI 52-109, Management, including the CEO and the CFO, evaluated the adequacy of the
design (quarterly) and the effective operation (annually) of the Company’s internal control over financial reporting
as defined in NI 52-109, as at January 1, 2022. In making this assessment, Management, including the CEO and
the CFO, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
in Internal Control – Integrated Framework (2013). This evaluation included review of the documentation of
controls, evaluation of the design and testing the operating effectiveness of controls, and a conclusion about this
evaluation. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the
internal control over financial reporting were effective as at January 1, 2022 in providing reasonable assurance
regarding the reliability of financial reporting and the preparation of consolidated financial statements for external
purposes in accordance with IFRS.
11.3 Changes in Internal Control over Financial Reporting
During the quarter and year ended January 1, 2022, there were no changes in the Company’s internal control
over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
64 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
12.0 Environmental Sustainability
The Company executes environmental sustainability initiatives that reduce both energy consumption and waste.
In line with global and Canadian efforts to combat climate change, the Company has also set targets to reduce its
Greenhouse Gas (“GHG”) emissions. The environmental benefits realized from our sustainability initiatives are
presented in the table below. For further detail on our environmental sustainability initiatives and sustainability
performance, please refer to our website at http://corp.canadiantire.ca/sustainability/environmental-sustainability,
which is not incorporated herein by reference, and section 2.8 Corporate Responsibility of the Company’s Annual
Information Form available at http://www.sedar.com.
Energy Use
Avoidance1
(GJ)
Low-Carbon
Energy
Generation2
(GJ)
Greenhouse
Gas Emissions
Avoidance1
(tonnes CO2e)
Waste
Avoidance1 Waste Diversion3
(%)
(tonnes)
(tonnes)
Product and Packaging4
Product Transport5
Business and Retail6
Total
24,494
4,204
41,386
70,084
—
—
36,951
36,951
3,234
296
2,642
6,172
17,618
84
—
—
4,391 28,022
78.9 %
22,093 28,022
78.9 %
1 Avoidance refers to savings in comparison to the baseline scenario, where the baseline scenario is defined as “what would have most likely occurred in the
absence of the sustainability initiative”. Improvements are related to the specific initiatives reported and do not represent total improvements to the value-chain
segment.
2 Refers to energy generated from on-site solar installations. To be considered “low-carbon”, the GHG emissions associated with the energy generated must be
lower than traditional power generation. This energy is fed into the Ontario electrical grid for general consumption in the province.
3 Materials diverted from landfill through reuse, recycling, or composting.
4 Realized reductions in energy use resulting from the transportation of optimized product and packaging, realized reductions in customer energy use resulting
from the sale of energy efficient products, and waste reductions stemming from reduced packaging, damages, product waste at end-of-life, and as of 2019,
paper-saving initiatives such as flyer reductions which were previously classified under Business and Retail Operations.
5 Realized reductions in energy use from increased fuel efficiency in transportation modes and vehicles (e.g. use of long-combination vehicles).
6 Realized reductions in energy use in buildings and their operations through energy efficiency initiatives (e.g. new construction, retrofits), renewable energy
generated from rooftop solar installations, and percentage of waste diverted from landfill as a result of waste management initiatives at stores and distribution
centres.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 65
MANAGEMENT'S DISCUSSION AND ANALYSIS
13.0 Forward-Looking Information and Other Investor Communication
Caution Regarding Forward-Looking Information
This document contains forward-looking information that reflects Management’s current expectations relating to
matters such as future financial performance and operating results of the Company. Specific forward-looking
information included or incorporated by reference in this document include, but are not limited to, information with
respect to:
•
the Company’s Operational Efficiency program, including the target annualized savings in section 3.1.1;
and
the Company’s intention with respect to the purchase of its Class A Non-Voting Shares in section 5.1.
•
Forward-looking information provides insights regarding Management’s current expectations and plans, and
allows investors and others to better understand the Company’s anticipated financial position, results of
operations and operating environment. Readers are cautioned that such information may not be appropriate for
other purposes. Certain information, other than historical information, may constitute forward-looking information,
including, but not limited to, information concerning Management’s current expectations relating to possible or
assumed prospects and results, the Company’s strategic goals and priorities, its actions and the results of those
actions, and the economic and business outlook for the Company. Often, but not always, forward-looking
information can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”,
“believe”, “estimate”, “plan”, “can”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “aspire”, “foresee”,
“continue”, “ongoing” or the negative of these terms or variations of them or similar terminology. Forward-looking
information is 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 information is
disclosed.
By its very nature, forward-looking information requires Management to make assumptions and is subject to
inherent risk factors and uncertainties, which give rise to the possibility that Management’s assumptions,
estimates, analyses, beliefs and opinions may not be correct and that the Company’s expectations and plans will
not be achieved. Examples of material assumptions and Management’s beliefs, which may prove to be incorrect,
include, but are not limited to, the duration and impact of COVID-19, including measures adopted by
governmental or public authorities in response to the pandemic, the effectiveness of certain performance
measures, current and future competitive conditions and the Company’s position in the competitive environment,
the Company’s core capabilities, and expectations around the availability of sufficient liquidity to meet the
Company’s contractual obligations. Management’s expectations with respect to the Operational Efficiency
program are based on assumptions relating to anticipated cost savings and operational efficiencies. Although the
Company believes that the forward-looking information in this document is based on information, assumptions
and beliefs that are current, reasonable, and complete, such information is necessarily subject to risk factors that
could cause actual results to differ materially from Management’s expectations and plans as set forth in such
forward-looking information. Some of the risk factors, many of which are beyond the Company’s control and the
effects of which can be difficult to predict, but may cause actual results to differ from the results expressed by the
forward-looking information, include: (a) credit, market, currency, operational, liquidity and funding risks, including
changes in economic conditions, interest rates or tax rates; (b) the ability of the Company to attract and retain
high-quality executives and employees for all of its businesses, Dealers, Petroleum retailers, and Mark’s and
SportChek franchisees, as well as the Company’s financial arrangements with such parties; (c) the growth of
certain business categories and market segments and the willingness of customers to shop at its stores or acquire
the Company’s Owned Brands or its financial products and services; (d) the Company’s margins and sales and
those of its competitors; (e) the changing consumer preferences and expectations relating to eCommerce, online
retailing and the introduction of new technologies; (f) the possible effects on the Company’s business from
international conflicts, political conditions, and other developments including changes relating to or affecting
economic or trade matters as well as the outbreak of contagions or pandemic diseases; (g) risks and uncertainties
relating to information management, technology, cyber threats, property management and development,
environmental liabilities, supply-chain management, product safety, competition, seasonality, weather patterns,
climate change, commodity prices and business continuity; (h) the Company’s relationships with its Dealers,
franchisees, suppliers, manufacturers, partners and other third parties; (i) changes in laws, rules, regulations and
66 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS
policies applicable to the Company’s business; (j) the risk of damage to the Company’s reputation and brand; (k)
the cost of store network expansion and retrofits; (l) the Company’s capital structure, funding strategy, cost
management program, and share price; (m) the Company’s ability to obtain all necessary regulatory approvals;
(n) the Company’s ability to complete any proposed acquisition; and (o) the Company’s ability to realize the
anticipated benefits or synergies from its acquisitions. With respect to the information concerning the Company’s
Operational Efficiency program, such risk factors also include: (a) the possibility that the Company does not
achieve the targeted annualized savings; (b) the possibility that the Company does not achieve the targeted
annualized savings within the disclosed timeframe; (c) the possibility that the program results in unforeseen
impacts to overall performance; and (d) the possibility that the one-time costs and capital investments associated
with the program are more significant than expected. The Company cautions that the foregoing list of important
risk factors and assumptions is not exhaustive and other factors could also adversely affect the Company’s
results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and
assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance
on such forward-looking information.
For more information on the material risk factors, uncertainties and assumptions 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) in this MD&A and all subsections thereunder, as well as the
Company’s other public filings, available on the SEDAR (System for Electronic Document Analysis and Retrieval)
website at http://www.sedar.com and at https://investors.canadiantire.ca.
The forward-looking information contained herein is based on certain factors and assumptions as of the date
hereof and does not consider the effect that transactions or non-recurring or other special items announced or
occurring after the information has been disclosed have on the Company’s business. 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.
Information contained in or otherwise accessible through the websites referenced in this MD&A does not form part
of this MD&A and is not incorporated by reference into this MD&A. All references to such websites are inactive
textual references and are for information only.
This document contains trade names, trademarks and service marks of CTC and other organizations, all of which
are the property of their respective owners. Solely for convenience, the trade names, trademarks, and service
marks referred to herein appear without the ® or ™ symbol.
Commitment to Disclosure and Investor Communication
The Company strives to maintain a high standard of disclosure and investor communication and has been
recognized as a leader in financial reporting practices. Reflecting the Company’s commitment to full and
the Company’s website at: https://
transparent disclosure,
investors.canadiantire.ca, includes the following documents and information of interest to investors:
Investor Relations section of
the
Annual and Quarterly Report to Shareholders;
•
• Quarterly earnings news releases, fact sheets, and other materials including conference call transcripts
and webcasts (archived for one year);
Supplementary information including investor presentations and videos;
the Annual Information Form;
the Management Information Circular;
Information for Debtholders; and
The Company’s Approach to Corporate Governance.
•
•
•
•
•
The Company’s Report to Shareholders, Annual Information Form, Management Information Circular and
quarterly financial statements and MD&A are also available at http://www.sedar.com.
If you would like to contact the Investor Relations department directly, email investor.relations@cantire.com.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 67
MANAGEMENT'S DISCUSSION AND ANALYSIS
14.0 Related Parties
Martha Billes and Owen Billes, in aggregate, beneficially own, or control or direct approximately 61.4 percent of
the Common Shares of the Company through two privately held companies, Tire ‘N’ Me Pty. Ltd. and Albikin
Management Inc.
Transactions with Dealer members of the Company’s Board of Directors represented less than one percent of the
Company’s total revenue and were in accordance with established Company policy applicable to all Dealers.
Other transactions with related parties, as defined by IFRS, were not significant during the year.
15.0 Subsequent Event
On February 3, 2022, CT REIT issued a total aggregate of $250 million 3.029 percent Series H Senior Unsecured
Debentures due February 5, 2029.
On February 11, 2022, CT REIT completed an early redemption of its $150 million 2.852 percent Series A Senior
Unsecured Debentures due June 9, 2022.
February 16, 2022
68 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Index to the Consolidated Financial Statements and Notes
MANAGEMENT’S RESPONSIBILITY FOR
Note 13. Property and Equipment
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
The Company and its Operations
Note 2.
Basis of Preparation
Note 3.
Significant Accounting Policies
Note 4. Capital Management
Note 5.
Financial Risk Management
Note 6. Operating Segments
Note 7. Cash and Cash Equivalents
Note 8.
Trade and Other Receivables
Note 9.
Loans Receivable
Note 10. Long-Term Receivables and Other Assets
Note 11. Goodwill and Intangible Assets
Note 12.
Investment Property
70
71
75
76
77
78
79
80
80
84
97
99
102
104
104
105
108
109
111
Note 14. Leases
Note 15. Subsidiaries
Note 16.
Income Taxes
Note 17. Deposits
Note 18. Trade and Other Payables
Note 19. Provisions
Note 20. Contingencies
Note 21. Short-Term Borrowings
Note 22. Loans
Note 23. Long-Term Debt
Note 24. Other Long-Term Liabilities
Note 25. Employment Benefits
Note 26. Share Capital
Note 27. Share-Based Payments
Note 28. Revenue
Note 29. Cost of Producing Revenue
112
113
115
117
119
119
120
120
120
121
121
122
123
124
126
128
128
Note 30. Selling, General and Administrative Expenses 129
Note 31. Net Finance Costs
Note 32. Notes to the Consolidated Statements of
Cash Flows
Note 33. Financial Instruments
Note 34. Guarantees and Commitments
Note 35. Related Parties
Note 36 Subsequent Event
129
130
131
134
136
136
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 69
Management’s Responsibility for Financial Statements
The Management of Canadian Tire Corporation, Limited (the "Company") is responsible for the integrity and
reliability of the accompanying consolidated financial statements. These consolidated financial statements have
been prepared by Management in accordance with International Financial Reporting Standards and include
amounts based on judgments and estimates. All financial information in our Management's Discussion and
Analysis is consistent with these consolidated financial statements.
Management is responsible for establishing and maintaining adequate systems of internal control over financial
reporting. These systems are designed to provide reasonable assurance that the financial records are reliable
and form a proper basis for the timely and accurate preparation of financial statements. Management has
assessed the effectiveness of the Company’s internal controls over financial reporting based on the framework in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) and concluded that the Company's internal controls over financial reporting were
effective as at the date of these consolidated statements.
The Board of Directors oversees Management’s responsibilities for the consolidated financial statements
primarily through the activities of its Audit Committee, which is comprised solely of directors who are neither
officers nor employees of the Company. This Committee meets with Management and the Company’s
independent auditors, Deloitte LLP, to review the consolidated financial statements and recommend approval by
the Board of Directors. The Audit Committee is responsible for making recommendations to the Board of
Directors with respect to the appointment of and, subject to the approval of the shareholders authorizing the
Board of Directors to do so, approving the remuneration and terms of engagement of the Company’s auditors.
The Audit Committee also meets with the auditors, without the presence of Management, to discuss the results
of their audit.
The consolidated financial statements have been audited by Deloitte LLP, in accordance with Canadian generally
accepted auditing standards. Their report is presented on the following page.
Greg Hicks
President and Executive Vice-President
Chief Executive Officer
and Chief Financial Officer
Gregory Craig
February 16, 2022
70 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Independent Auditor’s Report
To the Shareholders of Canadian Tire Corporation, Limited
Opinion
We have audited the consolidated financial statements of Canadian Tire Corporation, Limited (the “Company”)
and its subsidiaries, which comprise the consolidated balance sheets as at January 1, 2022 and January 2, 2021,
and the consolidated statements of income, consolidated statements of comprehensive income, consolidated
statements of cash flows and consolidated statements of changes in equity for the years ended January 1, 2022
and January 2, 2021, and notes to the consolidated financial statements, including a summary of significant
accounting policies (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of the Company as at January 1, 2022 and January 2, 2021, and its financial performance and its cash flows for
the years then ended in accordance with International Financial Reporting Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements for the year ended January 1, 2022. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Key Audit Matter description - Allowance on credit card loans receivable
The Company’s estimate of allowance on credit card loans receivable is measured using an expected credit loss
(“ECL”) model. As disclosed in Note 2 and Note 9 to the consolidated financial statements, the Company recorded
$841.5 million in allowances on credit card receivables on its consolidated balance sheet using an ECL. The
allowance on credit card loans receivable represents a complex accounting estimate based on an assessment of
the probability of default (“PD”), exposure at default (“EAD”) and loss given default (“LGD”) of each cardholder.
The Company’s ECL model employs an analysis of historical data, economic indicators and experience of
delinquency and default, to estimate the amount of credit card loans receivable that may default as a result of past
or future events, with certain adjustments for other relevant circumstances influencing the recoverability of these
credit card loans. ECL allowances are measured at amounts equal to either (i) 12-month ECL; or (ii) lifetime ECL
for those credit card loans that have experienced a significant increase in credit risk (“SICR”) since initial
recognition or when there is objective evidence of impairment.
The allowance on credit card loans receivable was identified as a key audit matter given the inherent complexity
of the models, assumptions, judgments and the interrelationship of these variables in measuring the ECL.
Although many estimates and assumptions are required, those with the highest degree of subjectivity and impact
on the allowance are related to the PD, EAD, LGD, SICR, lifetime credit losses, effective interest rate, forward
looking scenarios including the weighting of those scenarios and the application of expert credit judgment,
including the impact of COVID-19. These matters required a high degree of auditor judgment and increased audit
effort, including the involvement of financial modelling specialists.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 71
Independent Auditor’s Report
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to testing the models, assumptions and judgments used by management to estimate
the ECL included the following, among others:
• Evaluated the effectiveness of management’s internal controls related to the credit card portfolio data, the
governance and oversight over the modelled results and the use of expert credit judgment.
• Evaluated the completeness and accuracy of the data used in the estimate of ECL.
• With the assistance of financial modelling specialists:
◦ Evaluated the Company’s ECL methodology and key assumptions used for compliance with IFRS.
◦ Evaluated the appropriateness of the methodology and inputs used in the models to estimate PD, EAD,
LGD, SICR, lifetime credit losses, effective interest rate and the design of the forward-looking scenarios
including the weighting of those scenarios.
◦ Evaluated the quantitative assessments of the ECL by comparing management’s estimate of PD to actual
default rates and comparing management’s estimates of EAD and LGD to actual loss experience.
◦ On a sample basis, independently recalculated the ECL.
◦ Evaluated the qualitative assessments included in the ECL by comparing management’s expert credit
judgments against macroeconomic trends and evaluating those judgments to ensure they are reflective of
the credit quality of the credit card portfolio, including the impacts of COVID-19.
Other Information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and will not express
any form of assurance conclusion thereon. In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the
work we have performed on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the
work we will perform on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with IFRS, and for such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
72 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Independent Auditor’s Report
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements. As part of
an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 73
Independent Auditor’s Report
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Adam Charles Burke.
Chartered Professional Accountants
Licensed Public Accountants
February 16, 2022
Toronto, Ontario
74 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Consolidated Balance Sheets
As at
(C$ in millions)
ASSETS
Cash and cash equivalents (Note 7)
Short-term investments
Trade and other receivables (Note 8)
Loans receivable (Note 9)
Merchandise inventories
Income taxes recoverable
Prepaid expenses and deposits
Assets classified as held for sale
Total current assets
Long-term receivables and other assets (Note 10)
Long-term investments
Goodwill and intangible assets (Note 11)
Investment property (Note 12)
Property and equipment (Note 13)
Right-of-use assets (Note 14)
Deferred income taxes (Note 16)
Total assets
LIABILITIES
Deposits (Note 17)
Trade and other payables (Note 18)
Provisions (Note 19)
Short-term borrowings (Note 21)
Loans (Note 22)
Current portion of lease liabilities (Note 14)
Income taxes payable
Current portion of long-term debt (Note 23)
Total current liabilities
Long-term provisions (Note 19)
Long-term debt (Note 23)
Long-term deposits (Note 17)
Long-term lease liabilities (Note 14)
Deferred income taxes (Note 16)
Other long-term liabilities (Note 24)
Total liabilities
EQUITY
Share capital (Note 26)
Contributed surplus
Accumulated other comprehensive (loss)
Retained earnings
Equity attributable to shareholders of Canadian Tire Corporation
Non-controlling interests (Note 15)
Total equity
Total liabilities and equity
January 1, 2022
January 2, 2021
1,751.7 $
606.2
970.4
5,613.2
2,480.6
1.7
216.1
6.7
11,646.6
593.5
175.1
2,372.2
460.7
4,549.3
1,786.1
218.7
21,802.2 $
1,908.4
2,914.3
195.2
108.2
427.5
359.0
157.6
719.8
6,790.0
64.1
3,558.7
1,985.3
1,916.8
125.9
850.6
15,291.4
593.6
2.9
(169.2)
4,696.5
5,123.8
1,387.0
6,510.8
21,802.2 $
1,327.2
643.0
973.6
5,031.8
2,312.9
21.9
193.8
42.6
10,546.8
631.9
146.2
2,372.8
385.8
4,298.2
1,696.7
298.7
20,377.1
1,228.0
2,508.3
196.7
165.4
506.6
329.9
120.4
150.5
5,205.8
70.3
4,115.7
2,281.7
1,896.6
122.0
850.3
14,542.4
597.0
2.9
(237.7)
4,136.9
4,499.1
1,335.6
5,834.7
20,377.1
$
$
$
The related notes form an integral part of these consolidated financial statements.
Maureen J. Sabia
Director
Diana L. Chant
Director
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 75
Consolidated Statements of Income
For the years ended
(C$ in millions, except share and per share amounts)
January 1, 2022
January 2, 2021
Revenue (Note 28)
Cost of producing revenue (Note 29)
Gross margin
Other (income) expense
Selling, general and administrative expenses (Note 30)
Net finance costs (Note 31)
Income before income taxes
Income taxes (Note 16)
Net income
Net income attributable to:
Shareholders of Canadian Tire Corporation
Non-controlling interests (Note 15)
Basic earnings per share
Diluted earnings per share
$
16,292.1 $
14,871.0
10,456.9
5,835.2
(23.5)
3,934.3
222.5
1,701.9
441.2
1,260.7 $
1,127.6 $
133.1
1,260.7 $
18.56 $
18.38 $
$
$
$
$
$
9,794.4
5,076.6
48.7
3,599.3
256.5
1,172.1
309.5
862.6
751.8
110.8
862.6
12.35
12.31
Weighted average number of Common and Class A Non-Voting Shares
outstanding:
Basic
Diluted
60,744,440
61,345,072
60,896,809
61,090,111
The related notes form an integral part of these consolidated financial statements.
76 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Consolidated Statements of Comprehensive Income
For the years ended
(C$ in millions)
Net income
Other comprehensive (loss), net of taxes
Items that may be reclassified subsequently to net income:
January 1, 2022
January 2, 2021
$
1,260.7 $
862.6
Net fair value gains (losses) on hedging instruments entered into for cash flow
hedges not subject to basis adjustment
5.4
(34.7)
Deferred cost of hedging not subject to basis adjustment – Changes in fair
value of the time value of an option in relation to time-period related hedged
items
Reclassification of losses to income
Currency translation adjustment
Items that will not be reclassified subsequently to net income:
Actuarial losses
Net fair value gains (losses) on hedging instruments entered into for cash flow
hedges subject to basis adjustment
Other comprehensive (loss)
Other comprehensive (loss) income attributable to:
Shareholders of Canadian Tire Corporation
Non-controlling interests
Comprehensive income
Comprehensive income attributable to:
Shareholders of Canadian Tire Corporation
Non-controlling interests
1.4
14.1
(34.7)
(0.7)
5.7
(8.8) $
(12.9) $
4.1
(8.8) $
1,251.9 $
1,114.7 $
137.2
1,251.9 $
$
$
$
$
$
$
(12.0)
2.8
(13.0)
(10.7)
(29.9)
(97.5)
(88.4)
(9.1)
(97.5)
765.1
663.4
101.7
765.1
The related notes form an integral part of these consolidated financial statements.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 77
Consolidated Statements of Cash Flows
For the years ended
(C$ in millions)
Cash (used for) generated from:
Operating activities
Net income
Adjustments for:
Depreciation of property and equipment, investment property and right-of-use assets
(Notes 29 and 30)
Impairment on property and equipment, investment property and right-of-use assets
Income taxes (Note 16)
Net finance costs (Note 31)
Amortization of intangible assets (Note 30)
Gain on disposal of property and equipment, investment property, assets held for sale
and right-of-use assets
Total except as noted below
Interest paid
Interest received
Income taxes paid
Change in loans receivable
Change in operating working capital and other
Cash generated from operating activities
Investing activities
Additions to property and equipment and investment property
Additions to intangible assets
Total additions
Acquisition of short-term investments
Proceeds from maturity and disposition of short-term investments
Proceeds on disposition of property and equipment, investment property and assets
held for sale
Lease payments received for finance subleases (principal portion)
Acquisition of long-term investments and other
Cash used for investing activities
Financing activities
Dividends paid
Distributions paid to non-controlling interests
Total dividends and distributions paid
Net repayment of short-term borrowings
Issuance of loans
Repayment of loans
Issuance of long-term debt
Repayment of long-term debt
Payment of lease liabilities (principal portion)
Payment of transaction costs related to long-term debt
Purchase of Class A Non-Voting Shares
Payments on financial instruments
Change in deposits
Cash used for financing activities
Cash generated in the period
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period (Note 7)
The related notes form an integral part of these consolidated financial statements.
January 1, 2022
January 2, 2021
$
1,260.7 $
862.6
581.9
5.3
441.2
222.5
119.6
(18.6)
2,612.6
(233.0)
13.9
(333.9)
(486.8)
241.6
1,814.4
(630.6)
(148.2)
(778.8)
(1,185.4)
1,290.2
61.7
23.8
(148.0)
(736.5)
(271.1)
(103.5)
(374.6)
(57.2)
292.3
(371.4)
159.6
(150.4)
(365.3)
(1.0)
(131.1)
(33.7)
379.4
(653.4)
424.5
1,327.2
1,751.7 $
$
582.6
46.9
309.5
256.5
112.7
(12.1)
2,158.7
(272.6)
15.8
(200.5)
925.1
(183.7)
2,442.8
(307.2)
(129.3)
(436.5)
(710.0)
328.8
13.3
16.8
(60.4)
(848.0)
(262.9)
(96.2)
(359.1)
(284.6)
248.9
(363.6)
1,198.6
(1,450.8)
(367.9)
(2.8)
(111.5)
(30.9)
1,061.0
(462.7)
1,132.1
195.1
1,327.2
78 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Consolidated Statements of Changes in Equity
Total accumulated other comprehensive
income (loss)
(C$ in millions)
Share
capital
Contributed
surplus
Cash flow
hedges
Currency
translation
adjustment
Total
accumulated
other
comprehensive
income (loss)
Retained
earnings
Equity
attributable to
shareholders
of Canadian
Tire
Corporation
Equity
attributable
to non-
controlling
interests
Total
equity
Balance at January 2, 2021
$597.0
$2.9
$(123.1)
$(114.6)
$(237.7)
$4,136.9
$4,499.1
$1,335.6
$5,834.7
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
Transfers of cash flow hedge losses to non-financial
assets
Contributions and distributions to shareholders of
Canadian Tire Corporation
—
—
—
—
Issuance of Class A Non-Voting Shares (Note 26)
14.7
Purchase of Class A Non-Voting Shares (Note 26)
(131.1)
Accrued liability for automatic share purchase plan
commitment (Note 26)
(10.2)
Excess of purchase price over average cost (Note 26)
123.2
Dividends
Contributions and distributions to non-controlling
interests
Issuance of trust units to non-controlling interests, net
of transaction costs
Distributions and dividends to non-controlling interests
—
—
—
Total contributions and distributions
(3.4)
—
—
—
—
—
—
—
—
—
—
—
—
—
22.4
22.4
80.8
—
—
—
—
—
—
—
80.8
—
—
1,127.6
1,127.6
133.1
1,260.7
(34.7)
(12.3)
(0.6)
(12.9)
4.1
(8.8)
(34.7)
(12.3) 1,127.0
1,114.7
137.2
1,251.9
—
—
—
—
—
—
—
—
—
80.8
—
80.8
—
80.8
—
—
—
—
—
—
—
—
—
(153.0)
(123.2)
(291.2)
14.7
(131.1)
(163.2)
—
(291.2)
—
—
—
—
—
14.7
(131.1)
(163.2)
—
(291.2)
—
—
—
—
17.7
17.7
(103.5)
(103.5)
80.8
(567.4)
(490.0)
(85.8)
(575.8)
Balance at January 1, 2022
$ 593.6 $
2.9 $
(19.9) $
(149.3) $
(169.2) $ 4,696.5 $
5,123.8 $
1,387.0 $ 6,510.8
Total accumulated other comprehensive
income (loss)
(C$ in millions)
Share
capital
Contributed
surplus
Cash flow
hedges
Currency
translation
adjustment
Total
accumulated
other
comprehensive
income (loss)
Retained
earnings
Equity
attributable to
shareholders
of Canadian
Tire
Corporation
Equity
attributable
to non-
controlling
interests
Total
equity
Balance at December 28, 2019
$ 588.0 $
2.9 $
(28.3) $
(101.6) $
(129.9) $ 3,729.6 $
4,190.6 $
1,314.1 $ 5,504.7
Net income
Other comprehensive (loss)
Total comprehensive income (loss)
Transfers of cash flow hedge (gains) to non-financial
assets
Contributions and distributions to shareholders of
Canadian Tire Corporation
—
—
—
—
Issuance of Class A Non-Voting Shares (Note 26)
14.3
Purchase of Class A Non-Voting Shares (Note 26)
(110.7)
Reversal of accrued liability for automatic share
purchase plan commitment (Note 26)
3.0
Excess of purchase price over average cost (Note 26)
102.4
Dividends
Contributions and distributions to non-controlling
interests
Issuance of trust units to non-controlling interests, net
of transaction costs
Distributions and dividends to non-controlling interests
Total contributions and distributions
—
—
—
9.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
751.8
751.8
110.8
862.6
(65.1)
(13.0)
(78.1)
(10.3)
(88.4)
(9.1)
(97.5)
(65.1)
(13.0)
(78.1)
741.5
663.4
101.7
765.1
(29.7)
—
(29.7)
—
(29.7)
—
(29.7)
—
—
—
—
—
—
(29.7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
46.1
(102.4)
(277.9)
14.3
(110.7)
49.1
—
(277.9)
—
—
—
—
14.3
(110.7)
49.1
—
(277.9)
—
—
—
—
16.2
16.2
(96.4)
(96.4)
(29.7)
(334.2)
(354.9)
(80.2)
(435.1)
Balance at January 2, 2021
$ 597.0 $
2.9 $
(123.1) $
(114.6) $
(237.7) $ 4,136.9 $
4,499.1 $
1,335.6 $ 5,834.7
The related notes form an integral part of these consolidated financial statements.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. The Company and its Operations
Canadian Tire Corporation, Limited is a Canadian public company primarily domiciled in Canada. Its registered
office is located at 2180 Yonge Street, Toronto, Ontario, M4P 2V8, Canada. It is listed on the Toronto Stock
Exchange (TSX – CTC, CTC.A). Canadian Tire Corporation, Limited and entities it controls are together referred
to in these consolidated financial statements as the “Company”, “CTC” or “Canadian Tire Corporation”. Refer to
Note 15 for the Company’s major subsidiaries.
The Company comprises three main business operations, which offer a wide range of retail goods and services,
including general merchandise, apparel, sporting goods, petroleum, Financial Services including a bank, and real
estate operations. Details of the Company’s three reportable operating segments are provided in Note 6.
This document contains trade names, trademarks and service marks of CTC and other organizations, all of which
are the property of their respective owners. Solely for convenience, the trade names, trademarks and service
marks referred to herein appear without the ® or TM symbol.
2. Basis of Preparation
Fiscal Year
The fiscal year of the Company consists of a 52 or 53-week period ending on the Saturday closest to December
31. The fiscal years for the consolidated financial statements and notes presented for 2021 and 2020 are the 52-
week and 53-week periods ended January 1, 2022 and January 2, 2021, respectively.
Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) using the accounting policies described herein.
These consolidated financial statements were authorized for issuance by the Company’s Board of Directors on
February 16, 2022.
Basis of Presentation
These consolidated financial statements have been prepared on the historical cost basis, except for the following
items, which are measured at fair value:
• financial instruments at fair value through profit or loss (“FVTPL”);
• derivative financial instruments;
• liabilities for share-based payment plans; and
• initial recognition of assets acquired and liabilities assumed in a business combination.
In addition, the post-employment defined benefit obligation is recorded at its discounted present value.
Functional and Presentation Currency
These consolidated financial statements are presented in Canadian dollars (“$” or “C$”), the Company’s functional
currency.
Judgments and Estimates
The preparation of these consolidated financial statements in accordance with IFRS requires Management to
make judgments and estimates that affect:
• the application of accounting policies;
• the reported amounts of assets and liabilities;
• disclosures of contingent assets and liabilities; and
• the reported amounts of revenue and expenses during the reporting periods.
Actual results may differ from estimates made in these consolidated financial statements.
80 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Judgments are made in the selection and assessment of the Company’s accounting policies. Estimates are used
mainly in determining the measurement of recognized transactions and balances. Estimates are based on
historical experience and other factors, including expectations of future events believed to be reasonable.
Judgments and estimates are often interrelated. The Company’s judgments and estimates are continually re-
evaluated to ensure they remain appropriate. Revisions to accounting estimates are recognized in the period in
which they are revised and in future periods affected.
On March 12, 2020, the World Health Organization declared the outbreak of Coronavirus (“COVID-19”), a
pandemic. There was significant uncertainty regarding the extent and duration of the impact that the COVID-19
pandemic would have on the Company’s operations in 2020. The extent to which the impacts of the COVID-19
pandemic affected the judgments and estimates described in this note depended on future developments, which
were highly uncertain and could not be predicted. Management continues to monitor and assess the impact of
the pandemic on its judgments, estimates, accounting policies and amounts recognized in these consolidated
financial statements.
The following are the accounting policies that are subject to judgments and estimates that the Company believes
could have the most significant impact on the amounts recognized in these consolidated financial statements.
Impairment of Assets
Judgment – The Company uses judgment in determining the grouping of assets to identify its Cash Generating
Units (“CGUs”) for purposes of testing for impairment of property and equipment and goodwill and intangible
assets. The Company has determined that its Retail CGUs comprise individual stores or groups of stores. In
testing for impairment, goodwill acquired in a business combination is allocated to the CGUs that are expected to
benefit from the synergies of the business combination. In testing for impairment of intangibles with indefinite
lives, these assets are allocated to the CGUs to which they relate. Furthermore, on a quarterly basis, judgment is
used in determining whether there has been an indication of impairment, which would require the completion of a
quarterly impairment test, in addition to the annual requirement.
Estimation – The Company’s estimate of a CGU’s or group of CGUs’ recoverable amount is based on value in use
(“VIU”) and involves estimating future cash flows before taxes. Future cash flows are estimated based on multi-
year extrapolation of the most recent historical actual results or budgets and a terminal value calculated by
discounting the final year in perpetuity. The growth rate applied to the terminal value is based on the Bank of
Canada’s target inflation rate or Management’s estimate of the growth rate specific to the individual item being
tested. The future cash flow estimates are then discounted to their present value using an appropriate discount
rate that incorporates a risk premium specific to each business.
The Company’s determination of a CGU’s or group of CGUs’ recoverable amount based on fair value less cost to
sell (“FVLCS”) uses factors such as royalty rates or market rental rates for comparable assets or estimated using
discounted cash flows based on an after-tax discount rate, consistent with the assumptions that a market
participant would make. When using discounted cash flows based on an after-tax discount rate, the values
assigned to the key assumptions represent Management’s assessment of future trends in the relevant industry
and are based on historical data from both external and internal sources, including review of historical and
forecast growth rates, long-term inflationary and nominal Gross Domestic Product growth estimates for the
primary countries in which a CGU or group of CGUs operates, consistent with the assumptions that a market
participant would make.
Fair Value Measurement of Redeemable Financial Instrument
Judgment – The Company uses judgment in determining the fair value measurement of the redeemable financial
instrument issued in conjunction with the sale of a 20 percent equity interest in the Company’s Financial Services
business. In calculating the fair value, judgment is used when determining the discount and growth rates applied
to the forecast earnings in the discounted cash flow valuation. Refer to Note 33 for further information regarding
this financial instrument.
Estimation – The inputs to determine the fair value are taken from observable markets where possible but, where
they are unavailable, assumptions are required in establishing fair value. The fair value of the redeemable
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
financial instrument is determined based on the Company’s best estimate of forecast earnings attributable to the
Financial Services business, adjusted for any undistributed earnings.
Merchandise Inventories
Estimation – Merchandise inventories are carried at the lower of cost and net realizable value. The estimation of
net realizable value is based on the most reliable evidence available of the amount the merchandise inventories
are expected to realize. Additionally, estimation is required for inventory provisions due to shrinkage.
Income and Other Taxes
Judgment – In calculating current and deferred income and other taxes, the Company uses judgment when
interpreting the tax rules in jurisdictions where the Company operates. The Company also uses judgment in
classifying transactions and assessing probable outcomes of claimed deductions, which considers expectations of
future operating results, the timing and reversal of temporary differences and possible audits of income tax and
other tax filings by tax authorities.
Consolidation
Judgment – The Company uses judgment in determining the entities that it controls and consolidates accordingly.
An entity is controlled when the Company has power over an entity, exposure or rights to variable returns from its
involvement with the entity, and is able to use its power over the entity to affect its return from the entity. The
Company has power over an entity when it has existing rights that give it the current ability to direct the relevant
activities, which are the activities that significantly affect the investee’s returns. Since power comes from rights,
power can result from contractual arrangements. However, certain contractual arrangements contain rights that
are designed to protect the Company’s interest, without giving it power over the entity.
Allowance on Loans Receivable
Estimation – The Company’s estimate of allowances on credit card loans receivable is based on an expected
credit loss (“ECL”) approach that employs an analysis of historical data, economic indicators and experience of
delinquency and default to estimate the amount of loans that may default as a result of past or future events, with
certain adjustments for other relevant circumstances influencing the recoverability of these loans receivable.
Impairment of loans is assessed based on whether there has been a significant increase in credit risk since
origination and incorporation of forward-looking information in the measurement of expected credit losses.
Default rates, loss rates and the expected timing of future recoveries are periodically benchmarked against actual
outcomes to ensure that they remain appropriate. Future customer behaviour may be affected by a number of
factors, including changes in interest and unemployment rates and program design changes.
Post-Employment Benefits
Estimation – The accounting for the Company’s post-employment benefit plan requires the use of assumptions.
The accrued benefit liability is calculated using actuarial data and the Company’s best estimates of future salary
escalations, retirement ages of employees, employee turnover, mortality rates, market discount rates and
expected health and dental care costs.
Lease Liabilities
Estimation – For the measurement of lease liabilities, Management considers all factors that create an economic
incentive to exercise extension options, or not exercise termination options available in its leasing arrangements.
Extension options, or periods subject to termination options, are only included in the lease term if Management
determines it is reasonably certain to be extended or not terminated. The assessment is reviewed if a significant
event or a significant change in circumstances occurs which affects this assessment and that is within the control
of the lessee.
Estimation – The Company generally uses the lessee’s incremental borrowing rate when initially recording
property leases. For property leases, the implicit rates are not readily available as information from the lessor
regarding the fair value of underlying assets and initial direct costs incurred by the lessor related to the leased
assets are not available. The Company determines the incremental borrowing rate as the rate of interest that the
lessee would pay to borrow over a similar term and with a similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use-asset in a similar economic environment.
82 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other
Other estimates include determining the useful lives and depreciation methods applied to investment property and
intangible assets for the purposes of depreciation and amortization; in accounting for and measuring items such
as deferred revenue, provisions and purchase price adjustments on business combinations; and in measuring
certain fair values, including those related to the valuation of business combinations, share-based payments and
financial instruments.
Standards, Amendments and Interpretations Issued and Adopted
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16)
Effective in the first quarter 2021, the Company adopted Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16), issued in August 2020. These amendments
address issues that arise from the implementation of interest rate benchmarks (e.g., interbank offered rates
[“IBORs”]) reform, where IBORs will be replaced with alternative benchmark rates.
For financial instruments carried at amortized cost, the amendments introduce a practical expedient such that, if a
change in the contractual cash flow occurs as a direct consequence of IBOR reform and on an economically
equivalent basis, the change will be accounted for by updating the effective interest rate prospectively with no
immediate gain or loss recognized. As at January 1, 2022, except for short and long-term investments of $243.4
million that specify a three-month tenor of the Canadian Dollar Offered Rate (“CDOR”), the Company’s exposure
to non-derivative financial assets and financial liabilities to IBORs subject to reform is not significant.
The amendments also provide temporary relief that allow for hedging relationships to continue upon the
replacement of an existing interest rate benchmark with an alternative benchmark rate under certain qualifying
conditions, including the amendment of the hedge designation and documentation to reflect the new rate, and
permit new hedging relationships that are in the scope of the Phase 2 amendments.
The Company enters into interest rate swap contracts to hedge the exposure against interest rate risk on the
future interest payments of certain debt issuances and deposits. The Company also enters into “swaption”
derivative financial instruments that provide an option to enter into an interest rate swap as part of the Company’s
strategy to manage its interest rate exposure risk on the future interest payments of certain debt issuances and
deposits. Where hedge accounting can be applied, the Company accounts for these derivatives as cash flow
hedges.
Under IBOR reform, CDOR is expected to be subject to discontinuance, changes in methodology, or become
unavailable. The Company’s hedging relationships have significant exposure to the CDOR benchmark.
Since the first quarter of 2021, the Company adhered to the International Swaps and Derivatives Association
Fallbacks Protocol (“ISDA Protocol”). The ISDA Protocol provides specific fallbacks depending on whether the
relevant IBOR has been permanently discontinued or is temporarily unavailable. It provides an efficient
amendment mechanism for mutually adhering counterparties to incorporate these fallback provisions into legacy
derivative contract agreements.
Management is closely monitoring the impacted hedging relationships for possible changes to CDOR and its
replacement with a new interest rate benchmark. Effective May 17, 2021, Refinitiv Benchmark Services (UK)
Limited, the administrator of CDOR, ceased publication of the six and 12 month tenors of CDOR. The one, two
and three-month tenors of CDOR will continue to be published but are expected to cease in 2024. As of the date
of these consolidated financial statements, the Company’s hedging instruments do not specify six and 12 month
tenors of CDOR. The practical expedients available under these amendments will be applied once the IBOR
reform begins to impact the hedge accounting requirements.
Standards, Amendments and Interpretations Issued but not yet Adopted
The following new standards, amendments and interpretations have been issued but are not effective for the fiscal
year ending January 1, 2022 and, accordingly, have not been applied in preparing these consolidated financial
statements.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Insurance Contracts
In May 2017, the International Accounting Standards Board (“IASB”) issued IFRS 17 – Insurance Contracts
(“IFRS 17”), which replaces IFRS 4 – Insurance Contracts and establishes a new model for recognizing insurance
policy obligations, premium revenue, and claims-related expenses. In June 2020, the IASB issued ‘Amendments
to IFRS 17’ to address concerns and implementation challenges identified after IFRS 17 was published in 2017.
The amendments also deferred the effective date for two years to January 1, 2023. Early adoption is permitted.
The Company is assessing the potential impact of this standard.
Improving accounting policy disclosures and clarifying distinction between accounting policies
and accounting estimates (Amendments to IAS 1 and IAS 8)
In February 2021, the IASB issued narrow-scope amendments to IAS 1 – Presentation of Financial Statements
(“IAS 1”), IFRS Practice Statement 2 – Making Materiality Judgments (“IFRS Practice Statement 2”) and IAS 8 –
Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”).
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than
their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to
apply the concept of materiality to accounting policy disclosures.
The amendments to IAS 8 clarify how companies distinguish changes in accounting policies from changes in
accounting estimates. That distinction is important because changes in accounting estimates are applied
prospectively only to future transactions and other future events, but changes in accounting policies are generally
also applied retrospectively to past transactions and other past events.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023. Earlier
application is permitted. The Company is assessing the potential impact of these amendments.
Deferred Tax related to assets and liabilities arising from a single transaction (Amendments to
IAS 12)
In May 2021, the IASB issued targeted amendments to IAS 12 – Income Taxes to specify how companies account
for deferred tax on transactions such as leases and decommissioning obligations. In specific circumstances,
companies are exempt from recognizing deferred tax when they recognize assets or liabilities for the first time.
Previously, there had been some uncertainty about whether the exemption applied to transactions such as leases
and decommissioning obligations transactions for which companies recognize both an asset and a liability. The
amendments clarify that the exemption does not apply and that companies are required to recognize deferred tax
on such transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases
and decommissioning obligations. The amendments are effective for annual reporting periods beginning on or
after January 1, 2023, with early application permitted. The Company has assessed there to be no impact on
deferred taxes as a result of the amendment.
3. Significant Accounting Policies
The following accounting policies have been applied consistently to all periods presented in these consolidated
financial statements, except as noted and have been applied consistently throughout the Company.
Basis of Consolidation
These consolidated financial statements include the accounts of Canadian Tire Corporation and entities it
controls. An entity is controlled when the Company has the ability to direct the relevant activities of the entity, has
exposure or rights to variable returns from its involvement with the entity, and is able to use its power over the
entity to affect its returns from the entity. Refer to Note 15.1 for details of the Company’s significant controlled
entities.
The results of certain subsidiaries that have different year ends have been included in these consolidated financial
statements for the 52-week periods ended January 1, 2022 and 53-week periods ended January 2, 2021. The
year end of CT Real Estate Investment Trust (“CT REIT”), Helly Hansen Group AS, Franchise Trust and CTFS
Holdings Limited and their subsidiaries is December 31.
84 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Income or loss and each component of other comprehensive income (“OCI”) are attributed to the shareholders of
the Company and to the non-controlling interests. Total comprehensive income is attributed to the shareholders
of the Company and to the non-controlling interests even if this results in the non-controlling interests having a
deficit balance on consolidation.
Business Combinations
The Company applies the acquisition method in accounting for business combinations.
The Company measures goodwill as the difference between the fair value of the consideration transferred,
including the recognized amount of any non-controlling interests in the acquiree, and the net recognized amount
(fair value) of the identifiable assets acquired and liabilities assumed, all measured as at the acquisition date.
Consideration transferred includes the fair value of the assets transferred (including cash), liabilities incurred by
the Company on behalf of the acquiree, the fair value of any contingent consideration and equity interests issued
by the Company.
Where a business combination is achieved in stages, previously held interests in the acquired entity are
remeasured to fair value at the acquisition date, which is the date control is obtained and the resulting gain or
loss, if any, is recognized in net income. Amounts arising from interests in the acquiree prior to the acquisition
date that have previously been recognized in OCI are reclassified to net income.
The fair values of property and equipment recognized as a result of a business combination is based on either the
cost approach or market approach, as applicable. The market value of property is the estimated amount for which
a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s
length transaction after proper marketing wherein the parties each act knowledgeably and willingly. For the cost
approach, the current replacement cost or reproduction cost for each major asset is calculated.
The fair values of banners and trademarks acquired in a business combination are determined using an income
approach. The “relief from royalty” method has been applied to forecast revenue using an appropriate royalty
rate. This results in an estimate of the value of the intangible assets acquired by the Company.
The fair values of franchise agreements and other intangibles, such as customer relationships, are determined
using an income approach or a multi-period excess earnings approach. This method is based on the discounted
cash flows expected to be derived from ownership of the assets. The present value of the cash flows represents
the value of the intangible asset. The fair value of off-market leases acquired in a business combination is
determined based on the present value of the difference between market rates and rates in the existing leases.
The fair values of inventories acquired in a business combination are determined based on the estimated selling
price in the ordinary course of business less the estimated costs of sale and a reasonable profit margin based on
the effort required to complete and sell the inventories.
Transaction costs that the Company incurs in connection with a business combination are expensed immediately.
Lease liabilities and corresponding right-of-use assets are recognized for leases in which the acquiree is a lessee.
The lease liability is measured at the present value of the remaining lease payments as if the acquired lease were
a new lease at the acquisition date. The right-of-use asset is equal to the lease liability, adjusted to reflect
favourable or unfavourable market terms.
Joint Arrangement
A joint arrangement is an arrangement in which two or more parties have joint control. Joint control is the
contractually agreed sharing of control whereby decisions about relevant activities require unanimous consent of
the parties sharing control. A joint arrangement is classified as a joint operation when the parties that have joint
control have rights to the assets and obligations for the liabilities related to the arrangement. The Company
records its share of a joint operation’s assets, liabilities, revenues, and expenses.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Investments in Joint Ventures and Associates (under the Equity Method)
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. An associate is an entity in which the Company has significant influence,
which is the power to participate in the financial and operating policy decisions of the investee, but is not control or
joint control of those policies.
The Company accounts for its interest in associates and joint ventures using the equity method and presents its
interests in Long-term receivables and other assets. Under the equity method, the investment is initially
recognized at cost and adjusted thereafter for the post-acquisition change in the investors’ share of the investee’s
net assets; through profit and loss and other comprehensive income respectively. The investment is reviewed at
the end of each reporting period to determine whether there are any indicators of impairment. If such evidence
exists, the Company recognizes an impairment loss to the extent the carrying value exceeds the recoverable
amount of the investment. Impairment losses are recorded in Other Income (expense) in the Consolidated
Statement of Income.
Functional and Presentation Currency
Each of the Company’s foreign subsidiaries determines its own functional currency and items included in the
consolidated financial statements of each foreign subsidiary are measured using that functional currency. Assets
and liabilities of foreign operations having a functional currency other than the Canadian dollar are translated at
the rate of exchange prevailing at the reporting date and revenues and expenses at average rates during the
period. Gains or losses on translation are accumulated as a component of equity. On the disposal of a foreign
operation, or the loss of control, the component of accumulated other comprehensive income (“AOCI”) relating to
that foreign operation is reclassified to net income.
Foreign Currency Transactions and Balances
Transactions in foreign currencies are translated into the entity’s functional currency at rates in effect at the date
of the transaction. Monetary assets and liabilities in foreign currencies are translated into the entity’s functional
currency at the closing exchange rate at the balance sheet date. Non-monetary items that are measured in terms
of historical cost are translated into the entity’s functional currency at the exchange rate at the date of the original
transaction. Exchange gains or losses arising from translation are recorded in Other (income) expense of
producing revenue as applicable in the Consolidated Statements of Income.
Financial Instruments
Recognition and Initial Measurement
Financial assets and financial liabilities, including derivatives, are recognized in the Consolidated Balance Sheets
when the Company becomes a party to the contractual provisions of a financial instrument or non-financial
derivative contract. All financial instruments are measured at fair value on initial recognition.
Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial
liabilities, other than financial assets and financial liabilities classified as FVTPL, are added to or deducted from
the fair value on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities classified as FVTPL are recognized immediately in net income.
Classification and Subsequent Measurement
The Company classifies financial assets, at the time of initial recognition, according to the Company’s business
model for managing the financial assets and the contractual terms of the cash flows. Financial assets are
classified in the following measurement categories: a) amortized cost and b) fair value through profit or loss.
Financial Instruments at Amortized Cost
Financial assets are subsequently measured at amortized cost if both the following conditions are met and they
are not designated as FVTPL:
• the financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
86 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
These assets are subsequently measured at amortized cost using the effective interest method and are subject to
impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or
impaired.
Financial liabilities are subsequently measured at amortized cost using the effective interest rate method with
gains and losses recognized in net income in the period that the liability is derecognized, except for financial
liabilities classified as FVTPL. These financial liabilities, including derivative liabilities and the redeemable
financial instrument, are subsequently measured at fair value with changes in fair value recorded in net income in
the period in which they arise to the extent they are not part of a designated hedging relationship. Subsequent to
initial recognition, other financial liabilities are measured at amortized cost using the effective interest method,
with gains and losses recognized in net income in the period that the liability is derecognized.
Financial Instruments at Fair Value Through Profit or Loss
Financial instruments are classified as FVTPL when the financial instrument is either held for trading or
designated as such upon initial recognition. Financial instruments are classified as held for trading if acquired
principally for the purpose of selling in the near future or if part of an identified portfolio of financial instruments
that the Company manages together and has a recent actual pattern of short-term profit-making. All financial
assets not classified as amortized cost are measured at FVTPL. This includes derivative financial assets that are
not part of a designated hedging relationship.
Financial instruments classified as FVTPL are measured at fair value, with changes in fair value recorded in net
income in the period in which they arise.
Impairment of Financial Instruments
The Company recognizes a loss allowance on a forward-looking basis at an amount equal to the lifetime ECL on
its financial assets measured at amortized cost, except for the following, which are measured at 12-month ECL:
• debt investments that are determined to have low credit risk at the reporting date with a credit risk rating
equivalent to investment grade; and
• other financial assets, such as loans receivable, for which credit risk has not increased significantly since
initial recognition.
Lifetime ECL represents the expected credit losses that will result from all probable default events over the
expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is
expected to result from default events that are possible within 12 months after the reporting date.
Losses for impaired credit card loans are recognized when credit is granted. Twelve-month ECL is recognized on
loans except when credit risk has increased significantly since initial recognition, in which case lifetime ECL is
applied. A significant increase in credit risk is assessed based on changes in the probability of default since initial
recognition along with borrower specific qualitative information, or when the loan is more than 30 days past due.
Credit card loans are considered impaired and in default when they are 90 days past due or there is sufficient
doubt regarding the ultimate collectability of principal and/or interest. The estimate of credit card loans receivable
for accounts wherein the customer has initiated the consumer proposal insolvency process is based on the
present value of expected future cash flows based on the terms of consumer proposal agreements received
during the year. Credit card loans that are over 180 days past due are written down to the present value of the
expected future cash flows.
ECL is calculated as the product of the probability of default, exposure at default and loss given default over the
remaining expected life of the loans and discounted to the reporting date. The ECL model also incorporates
forward-looking information, which increases the degree of judgment required as to how changes in macro-
economic factors will affect ECLs. Macro-economic factors taken into consideration include, but are not limited to,
unemployment rate and require an evaluation of both the current and forecast direction of the macro-economic
cycle. The methodologies and assumptions, including any forecasts of future economic conditions, are reviewed
regularly.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
All loans receivable are assessed for impairment. All loans receivable found not to be specifically impaired are
collectively assessed for impairment. Loans receivables are collectively assessed for impairment by grouping
together loans receivable with similar risk characteristics.
Derecognition of Financial Instruments
A financial asset is derecognized when the contractual rights to the cash flows from the asset expire or when the
Company transfers the financial asset to another party without retaining control or substantially all the risks and
rewards of ownership of the asset. Any interest in transferred financial assets created or retained by the
Company is recognized as a separate asset or liability.
A financial liability is derecognized when its contractual obligations are discharged, cancelled, or expire.
Derivative Financial Instruments
The Company enters into various derivative financial instruments as part of the Company’s strategy to manage its
foreign currency and interest rate exposures. The Company also enters into equity derivative contracts to hedge
certain future share-based payment expenses. The Company does not hold or issue derivative financial
instruments for trading purposes.
All derivative financial instruments, including derivatives embedded in financial or non-financial contracts not
closely related to the host contracts, are measured at fair value. The gain or loss that results from
remeasurement at each reporting period is recognized immediately in net income unless the derivative is
designated and effective as a hedging instrument, in which case the timing of the recognition in net income
depends on the nature of the hedge relationship.
Hedge Accounting
Where hedge accounting can be applied, certain criteria are documented at the inception of the hedge and
updated at each reporting date.
Cash Flow Hedges
For cash flow hedges, the effective portion of the changes in the fair value of the hedging derivative, net of taxes,
is recognized in OCI, while the ineffective and unhedged portions are recognized immediately in net income.
Amounts recorded in AOCI are reclassified to net income in the periods when the hedged item affects net income.
However, when a forecasted transaction that is hedged results in the recognition of a non-financial asset or
liability, the gains and losses previously recognized in AOCI are directly transferred from AOCI and included in the
initial measurement of the cost of the non-financial asset or liability without affecting other comprehensive income.
When hedge accounting is discontinued, the amounts previously recognized in AOCI are reclassified to net
income during the periods when the variability in the cash flows of the hedged item affects net income. If hedge
accounting is discontinued due to the hedged item no longer being expected to occur, the amount previously
recognized in AOCI is reclassified immediately to net income.
The Company enters into foreign currency derivative contracts to hedge the exposure against foreign currency
risk on the future payment of certain foreign-currency-denominated inventory purchases and certain expenses.
The Company’s policy is for the critical terms of the foreign currency derivative contracts to align with the hedged
item and applies a hedge ratio of 1:1. The changes in fair value of these derivative contracts are included in OCI
to the extent the hedges continue to be effective. Hedge ineffectiveness may arise if the timing of the hedged
transactions changes from the original estimate. Once the inventory is received, the Company transfers the
related AOCI amount to merchandise inventories and subsequent changes in the fair value of the foreign currency
derivative contracts are recorded in net income as they occur. When the expenses are incurred, the Company
reclassifies the related AOCI amount to the expense.
The Company enters into interest rate swap contracts to hedge the exposure against interest rate risk on the
future interest payments of certain debt issuances and deposits. The Company also enters into “swaption”
derivative financial instruments that provide an option to enter into an interest rate swap as part of the Company’s
strategy to manage its interest rate exposure risk on the future interest payments of certain debt issuances and
deposits.
88 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company’s policy is for the critical terms of the interest rate swap and swaptions contracts to align with the
hedged item and applies a hedge ratio of 1:1. The changes in fair value of these derivative contracts are included
in OCI to the extent that the hedges continue to be effective. The Company designates only the change in fair
value of the intrinsic value of the instrument as the hedging instrument. The time value of the option relates to a
time period related to the hedged item. The change in time value is recognized in OCI and is subsequently
amortized on a systematic and rational basis over the period during which the hedge adjustment for the option’s
intrinsic value could affect profit or loss. Hedge ineffectiveness may arise if the timing of the hedged transactions
changes from the originally estimate. When the interest expense is incurred, the Company reclassifies the related
AOCI amount to finance costs.
Cash and Cash Equivalents
Cash and cash equivalents are defined as cash plus highly liquid and rated certificates of deposit or commercial
paper with an original term to maturity of three months or less.
Short-Term Investments
Short-term investments are investments in highly liquid and rated certificates of deposit, commercial paper or
other securities, primarily Canadian and United States government securities and notes of other creditworthy
parties, with an original term to maturity of more than three months and remaining term to maturity of less than
one year.
Trade and Other Receivables
The lifetime ECL allowance for impairment is recognized for trade and other receivables. It is estimated based on
the Company’s historical loss experience, adjusted for factors that are specific to the debtors and an assessment
of both the current and forecast direction of conditions at the reporting date. The carrying amount of the asset is
reduced through the use of an allowance account and the amount of the loss is recognized in Selling, general and
administrative expenses in the Consolidated Statements of Income. When a trade receivable is deemed
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are recognized as a recovery in Selling, general and administrative expenses in the Consolidated Statements
of Income.
Loans Receivable
Loans receivable consists of credit card and line of credit loans, as well as loans to certain Dealers, who are
independent third-party operators of Canadian Tire stores. Loans receivable are recognized when cash is
advanced to the borrower. They are derecognized when the borrower repays its obligations, the loans are sold or
written off, or substantially all of the risks and rewards of ownership are transferred.
Losses for impaired loans are recognized when the loan is originated. Impairment allowances are calculated on
individual loans and on groups of loans assessed collectively. Impairment losses are recorded in Cost of
producing revenue in the Consolidated Statements of Income. The carrying amount of loans receivable in the
Consolidated Balance Sheets is reduced through the use of impairment allowance accounts.
Merchandise Inventories
Merchandise inventories are carried at the lower of cost and net realizable value.
Cash consideration received from vendors is recognized as a reduction to the cost of related inventory, unless the
cash consideration received is either a reimbursement of incremental costs incurred by the Company or a
payment for assets or services delivered to the vendor.
The cost of merchandise inventories is determined based on weighted average cost and includes costs incurred
in bringing the merchandise inventories to their present location and condition. All inventories are finished goods.
Net realizable value is the estimated selling price of inventory during the normal course of business less estimated
selling expenses.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Long-Term Investments
Investments in highly liquid and rated securities with a remaining term to maturity of greater than one year are
classified as long-term investments. The Company’s exposure to credit, currency and interest rate risks related to
other investments is disclosed in Note 5.
Intangible Assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the
identifiable assets acquired and liabilities assumed in a business combination. Goodwill is measured at cost less
any accumulated impairment and is not amortized.
Finite Life and Indefinite Life Intangible Assets
Intangible assets with finite useful lives are measured at cost and are amortized on a straight-line basis over their
estimated useful lives, generally for a period of two to ten years. The estimated useful lives and amortization
methods are reviewed annually with the effect of any changes in estimate being accounted for on a prospective
basis.
Intangible assets with indefinite useful lives are measured at cost, less any accumulated impairment and are not
amortized.
Expenditures on research activities are expensed as incurred.
Investment Property
Investment property is property held to earn rental income or for appreciation of capital or both. The Company
has determined that properties it provides to its Dealers, franchisees and agents are not investment property as
these relate to the Company’s operating activities. This was determined based on certain criteria such as whether
the Company provides significant ancillary services to the lessees of the property. The Company includes
property that it leases to third parties (other than Dealers, franchisees, or agents) in investment property.
Investment property is measured and depreciated in the same manner as property and equipment.
Property and Equipment
Property and equipment is measured at cost less accumulated depreciation and any accumulated impairment.
Land is measured at cost less any accumulated impairment. Properties in the course of construction are
measured at cost less any accumulated impairment. The cost of an item of property or equipment comprises
costs that are directly attributed to its acquisition and initial estimates of the cost of dismantling and removing the
item and restoring the site on which it is located.
Buildings, fixtures and equipment are depreciated on a straight-line basis over their estimated useful lives. The
estimated useful lives, depreciation method and residual values are reviewed annually with the effect of any
changes in estimate being accounted for on a prospective basis.
Leasehold improvements are amortized on a straight-line basis over the terms of the respective leases or useful
life, if shorter.
Estimated useful lives are as follows:
Asset Category
Buildings
Fixtures and equipment (including software intangible assets)
Estimated Useful Lives
10 – 45 years
3 – 25 years
Leasehold improvements
Shorter of term of lease or estimated useful life
90 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Leased Assets
Lessee
The Company assesses whether a contract is or contains a lease at inception of a contract. Leases are
recognized as a right-of-use asset and corresponding liability at the commencement date. Each lease payment
included in the lease liability is apportioned between the repayment of the liability and a finance cost. The finance
cost is recognized in net finance costs in the Consolidated Statements of Income over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. Lease
liabilities include the net present value of fixed payments (including in-substance fixed payments), variable lease
payments that are based on an index or a rate or subject to a fair market value renewal, amounts expected to be
payable by the lessee under residual value guarantees, the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option. The Company allocates the consideration in the contract to each lease
component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone
price of the non-lease components. The lease liability is net of lease incentives receivable. The lease payments
are discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the lessee’s
incremental borrowing rate. The period over which the lease payments are discounted is the reasonably certain
lease term, including renewal options that the Company is reasonably certain to exercise. Renewal options are
included in a number of leases across the Company.
Payments associated with short-term leases and leases of low-value assets are recognized as an expense on a
straight-line basis in Selling, general and administrative expenses in the Consolidated Statements of Income.
Short-term leases are leases with a lease term of 12 months or less. Variable lease payments that do not depend
on an index or a rate or subject to a fair market value renewal are expensed as incurred and recognized in
Selling, general and administrative expenses in the Consolidated Statements of Income.
Right-of-use assets are measured at cost which is calculated as the amount of the initial measurement of lease
liability plus any lease payments made at or before the commencement date, any initial direct costs and related
restoration costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease
term and the useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost
of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use
asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement
date of the lease.
Lessor
When the Company is the lessor in an operating lease, rental income is recognized in net income on a straight-
line basis over the term of the lease.
Subleases
When the Company enters into sublease arrangements as an intermediate lessor, it determines whether the
sublease is a finance sublease or operating sublease by reference to the right-of-use asset arising from the head
lease. A sublease is a finance sublease if substantially all the risks and rewards of the related head lease right-of-
use asset have been transferred to the sub-lessee. When the Company is an intermediate lessor, it accounts for
the head lease and the sublease as two separate contracts.
For finance subleases, the Company derecognizes the corresponding right-of-use asset and records a net
investment in the finance sublease and corresponding interest income is recognized in net finance costs. The net
investment in the sublease is recognized in trade and other receivables and long-term receivables and other
assets.
Sale and Leaseback
The accounting treatment of a sale and leaseback transaction is assessed based upon the substance of the
transaction and whether the transfer of an asset is considered as a sale when the control of the asset has been
transferred to the purchaser.
If the transfer of the asset by the Company as seller-lessee is considered a sale, the Company measures the
right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
relates to the right of use retained by it. Accordingly, the amount of any gain or loss that relates to the rights
transferred to the buyer-lessor are recognized in other income in the Consolidated Statements of Income.
If the transfer of an asset is not considered a sale, the asset continues to be recognized and a financial liability
equal to the transfer proceeds is recorded.
Impairment of Assets
The carrying amounts of property and equipment, investment property, right-of-use assets and intangible assets
with finite useful lives are reviewed at the end of each reporting period to determine whether there are any
indicators of impairment. Indicators of impairment may include a significant decline in asset market value,
material adverse changes in the external operating environment which affect the manner in which the asset is
used or is expected to be used, obsolescence, physical damage of the asset, or expected permanent closing of
the store related to a property lease. If any such indicators exist, then the recoverable amount of the asset is
estimated. Goodwill and intangible assets with indefinite useful lives and intangible assets not yet available for
use are not amortized but are tested for impairment at least annually or whenever there is an indicator that the
asset may be impaired.
Cash Generating Units
When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the CGU to which the asset belongs. The CGUs correspond to the smallest identifiable
group of assets whose continuing use generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets.
Goodwill acquired in a business combination is allocated to each of the CGUs (or groups of CGUs) expected to
benefit from the synergies of the combination. Intangible assets with indefinite useful lives are allocated to the
CGU to which they relate.
Determining the Recoverable Amount
An impairment loss is recognized when the carrying amount of an asset, or of the CGU to which it belongs,
exceeds the recoverable amount. The recoverable amount of an asset or CGU is defined as the higher of its
FVLCS and its VIU.
In assessing VIU, the estimated future cash flows are discounted to their present value. Cash flows are
discounted using a discount rate that includes a risk premium specific to each line of business. The Company
estimates cash flows before taxes based on the most recent actual results or budgets. Cash flows are then
extrapolated over a period of up to five years, taking into account a terminal value calculated by discounting the
final year in perpetuity. The growth rate applied to the terminal values is based on the Bank of Canada’s target
inflation rate or a growth rate specific to the individual item being tested based on Management’s estimate.
Recording Impairments and Reversals of Impairments
Impairments and reversals of impairments are recognized in other expense (income) in the Consolidated
Statements of Income. Any impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the CGU and then to the other assets of the CGU. Impairments of goodwill cannot be reversed.
Impairments of other assets recognized in prior periods are assessed at the end of each reporting period to
determine if the indicators of impairment have reversed or no longer exist. An impairment loss is reversed if the
estimated recoverable amount exceeds the carrying amount. The increased carrying amount of an asset
attributable to a reversal of impairment may not exceed the carrying amount that would have been determined
had no impairment been recognized in prior periods.
Assets Classified as Held for Sale
Non-current assets and disposal groups are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction rather than through continued use. This condition is regarded as
met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its
present condition. Management must be committed to the sale and it should be expected to qualify for
recognition as a completed sale within one year from the date of classification. Assets (and disposal groups)
classified as held for sale are measured at the lower of the carrying amount or FVLCS and are not depreciated.
92 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value measurement of assets held for sale is categorized within Level 2 of fair value hierarchy (refer to
Note 33.2 for definition of fair value hierarchy levels).
Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalized.
Qualifying assets are those that require a minimum of three months to prepare for their intended use. All other
borrowing costs are recognized in Cost of producing revenue or in Net finance costs in the Consolidated
Statements of Income in the period in which they are incurred.
Employee Benefits
Short-Term Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
The Company recognizes a liability and an expense for short-term benefits such as bonuses, profit-sharing and
employee stock purchases if the Company has a present legal obligation or constructive obligation to pay these
amounts as a result of past service provided by the employees and the obligation can be reasonably estimated.
Post-Employment Benefits
The Company provides certain health care, dental care, life insurance and other benefits, but not pensions, for
certain retired employees pursuant to Company policy. The Company accrues the cost of these employee
benefits over the periods in which the employees earn the benefits. The cost of employee benefits earned is
actuarially determined using the projected benefit method pro-rated on length of service and Management’s best
estimate of salary escalation, retirement ages of employees, employee turnover, life expectancy, and expected
health and dental care costs. The costs are discounted at a rate that is based on market rates as at the
measurement date. Actuarial gains and losses are immediately recorded in OCI.
The Company also provides post-employment benefits with respect to contributions to a Deferred Profit Sharing
Plan (“DPSP”).
Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement
date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company
recognizes a provision for termination benefits when it is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan, without possibility of withdrawal, or
providing termination benefits as a result of an offer made to encourage voluntary redundancy.
Share-Based Payments
Stock options with tandem stock appreciation rights (“stock options”) are granted which enable the employee to
exercise the stock option or receive a cash payment equal to the difference between the market price of the
Company’s Class A Non-Voting Shares as at the exercise date and the exercise price of the stock option. These
stock options are considered to be compound instruments. The fair value of compound instruments is measured
at each reporting date, taking into account the terms and conditions on which the rights to cash or equity
instruments are granted. As the fair value of the settlement in cash is the same as the fair value of the settlement
as a traditional stock option, the fair value of the stock option is the same as the fair value of the debt component.
The corresponding expense and liability are recognized over the respective vesting period.
The fair value of the amount payable to employees with respect to share unit plans and trust unit plans, that are
settled in cash, is recorded as the services are provided over the vesting period. The fair value of the liability is
remeasured at each reporting date with the change in the liability being recognized in Selling, general and
administrative expenses in the Consolidated Statements of Income.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Insurance Reserve
Included in Trade and other payables is an insurance reserve that consists of an amount determined from loss
reports and individual cases and an amount, based on past experience, for losses incurred but not reported.
These estimates are continually reviewed and are subject to the impact of future changes in such factors as claim
severity and frequency. While Management believes the amount is adequate, the ultimate liability may be in
excess of or less than the amounts provided and any adjustment will be reflected in net income during the periods
in which they become known.
The Company uses actuarial valuations in determining its reserve for outstanding losses and loss-related
expenses using an appropriate reserving methodology for each line of business. The Company does not discount
its liabilities for unpaid claims.
Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation
that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the
obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the
present obligation at the end of the reporting period, taking into account risks and uncertainty of cash flows.
Where the effect of discounting is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability.
Sales and Warranty Returns
The provision for sales and warranty returns relates to the Company’s obligation for defective goods in current
store inventories and defective goods sold to customers that have yet to be returned, after-sales service for
replacement parts and future corporate store sales returns. Accruals for sales and warranty returns are estimated
on the basis of historical returns and are recorded as a reduction to revenue. These accruals are reviewed
regularly and updated to reflect Management’s best estimate based on a most likely amount at each reporting
date.
Site Restoration and Decommissioning
Legal or constructive obligations associated with the removal of underground fuel storage tanks and site
remediation costs on the retirement of certain property and equipment and with the termination of certain lease
agreements are recognized in the period in which they are incurred, when it is probable that an outflow of
resources embodying economic benefits will be required and a reasonable estimate of the amount of the
obligation can be made. The obligations are initially measured at the Company’s best estimate, using an
expected value approach and are discounted to present value.
Onerous Contracts
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a
contract are lower than the unavoidable costs of meeting its obligations under the contract. The provision is
measured at the present value of the lower of the expected cost of terminating the contract or the expected net
cost of continuing with the contract.
Debt
Debt is classified as current when the Company expects to settle the liability in its normal operating cycle, it holds
the liability primarily for the purpose of trading, the liability is due to be settled within 12 months after the date of
the Consolidated Balance Sheets, or it does not have an unconditional right to defer settlement of the liability for
at least 12 months after the date of the Consolidated Balance Sheets.
Share Capital
Shares issued by the Company are recorded at the value of proceeds received. Repurchased shares are
removed from equity. No gain or loss is recognized in net income on the purchase, sale, issue, or cancellation of
the Company’s shares.
94 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Share purchases are charged to Share capital at the average cost per share outstanding and the excess between
the purchase price and the average cost is first allocated to the related contributed surplus, with any remainder
allocated to retained earnings.
Dividends
Dividends declared and payable to the Company’s shareholders are recognized as a liability in the Consolidated
Balance Sheets in the period in which the dividends are approved by the Company’s Board of Directors.
Distributions
Distributions to non-controlling interests are recognized as a liability in the Consolidated Balance Sheets in the
period in which the distributions are declared.
Revenue
Sale of Goods
Revenue from the sale of goods includes merchandise sold to Dealers, Mark’s and SportChek franchisees, the
sale of gasoline through agents, the sale of goods to the general public by Mark’s, PartSource, SportChek1, Helly
Hansen and Party City2 corporately-owned stores as well as the sale of goods through Helly Hansen’s wholesale
channels. This revenue is recognized when the goods are delivered, less an estimate for sales and warranty
returns. Revenue from the sale of goods is measured at the fair value of the consideration received less an
appropriate deduction for actual and expected returns, discounts, rebates and warranty and customer loyalty
program costs, net of sales taxes.
Customer Loyalty Programs
Loyalty reward credits issued as part of a sales transaction results in revenue being deferred until the loyalty
reward is redeemed. In addition, an obligation arises from the loyalty program when the Company sells
merchandise to the Dealers, for which reward credits may be issued as part of the subsequent sales transaction.
The obligation is measured at fair value by reference to the fair value of the rewards for which they could be
redeemed and based on the estimated probability of their redemption. The loyalty program costs are recorded as
a reduction to revenue in the Consolidated Statements of Income.
Interest Income on Loans Receivable
Interest income includes interest charged on loans receivable and fees that are an integral part of the effective
interest rate on financial instruments. Interest income on financial assets is determined using the effective interest
method.
Services Rendered
Service revenue includes Roadside Assistance Club membership revenue; merchant, interchange and processing
fees; cash advance fees; home services fees; foreign exchange fees; and service charges on the loans receivable
of the Financial Services operating segment. Service revenue is recognized according to the contractual
provisions of the arrangement, which is generally when the service is provided or over the contractual period.
Merchant, interchange and processing fees, cash advance fees and foreign exchange fees on credit card
transactions are recognized as revenue at the time transactions are completed.
Reinsurance Revenue
Reinsurance premiums are recorded on an accrual basis and are included in net income on a pro rata basis over
the life of the insurance contract, with the unearned portion deferred in the Consolidated Balance Sheets.
Premiums subject to adjustment are estimated based on available information. Any variances from the estimates
are recorded in the periods in which they become known.
1 “SportChek” refers to the retail business carried on by FGL Sports Ltd., including stores operated under the SportChek, Sports Experts, Atmosphere, National
Sports, Sports Rousseau and Hockey Experts names and trademarks.
2 “Party City” refers to the party supply business that operate under the Party City name and trademarks in Canada.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Royalties and Licence Fees
Royalties and licence fees include licence fees from Petroleum agents and Dealers and royalties from Mark’s and
SportChek franchisees. Royalties and licence fee revenues are recognized as they are earned in accordance
with the substance of the relevant agreement, which is generally based on percentage of occurred sales.
Rental Income
Rental income from operating leases where the Company is the lessor is recognized on a straight-line basis over
the terms of the respective leases.
Vendor Rebates
The Company records cash consideration received from vendors as a reduction in the price of vendors’ products
and recognizes it as a reduction to the cost of related inventory or, if the related inventory has been sold, to the
cost of producing revenue. Certain exceptions apply where the cash consideration received is either a
reimbursement of incremental selling costs incurred by the Company or a payment for assets or services
delivered to the vendor, in which case the cost is reflected as a reduction in Selling, general and administrative
expenses.
The Company recognizes rebates that are at the vendor’s discretion when the vendor either pays the rebates or
agrees to pay them and payment is considered probable and can be reasonably estimated.
Net Finance Costs
Finance income comprises interest income on funds invested and interest income on lease receivables for finance
subleases. Interest income is recognized as it accrues using the effective interest method.
Finance costs comprises interest expense on borrowings (including borrowings relating to the Dealer Loan
Program), unwinding of the discount on provisions, as well as finance cost on lease liabilities and is net of
borrowing costs that have been capitalized. Interest on deposits is recorded in cost of producing revenue in the
Consolidated Statements of Income.
Income Taxes
The income tax expense for the year comprises current and deferred income tax. Income tax expense is
recognized in net income except to the extent that it relates to items recognized either in OCI or directly in equity.
In this case, the income tax expense is recognized in OCI or in equity, respectively.
The income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the date of
the Consolidated Balance Sheets in the countries where the Company operates and generates taxable income.
Deferred income tax is recognized using the liability method for unused tax losses, unused tax benefits and
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in these
Consolidated Financial Statements. However, deferred income tax is not accounted for if it arises from the initial
recognition of goodwill or the initial recognition of an asset or liability in a transaction, other than a business
combination, that at the time of the transaction affects neither accounting nor taxable income. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the date of the
Consolidated Balance Sheets and are expected to apply when the related deferred income tax asset is realized or
the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be
available against which the temporary differences can be utilized. Deferred income tax liabilities are provided on
temporary differences arising on investments in subsidiaries and associates, except where the timing of the
reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference
will not reverse in the foreseeable future.
96 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Earnings per Share
Basic earnings per share (“Basic EPS”) is calculated by dividing the net income attributable to the shareholders of
the Company by the weighted average number of Common and Class A Non-Voting shares outstanding during
the reporting period. Diluted earnings per share (“Diluted EPS”) is calculated by adjusting the net income
attributable to the shareholders of the Company and the weighted average number of shares outstanding for the
effects of all potentially dilutive equity instruments, which comprise employee stock options. Net income
attributable to the shareholders of the Company is the same for both the Basic EPS and Diluted EPS calculations.
Non-controlling Interests
When the proportion of the equity held by non-controlling interests changes, the Company adjusts the carrying
amounts of the controlling and non-controlling interests to reflect the changes in their relative interest in the
subsidiary. The Company recognizes directly in equity any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received and attribute it to the
shareholders of the Company.
4. Capital Management
The Company’s objectives when managing capital are:
• ensuring sufficient liquidity to meet its financial obligations when due and to execute its operating and
strategic plans;
• maintaining healthy liquidity reserves and the ability to access additional capital from multiple sources, if
required; and
• minimizing its after-tax cost of capital while taking into consideration its key risks including current and future
industry, market and economic risks and conditions, and the uncertainty in the duration and severity of the
COVID-19 pandemic and its long-term impact on CTC.
The definition of capital varies from company to company, industry to industry and for different purposes. In the
process of managing the Company’s capital, Management includes the following items in its definition of capital,
which includes Glacier Credit Card Trust (“GCCT”) indebtedness but excludes Franchise Trust indebtedness:
(C$ in millions)
Capital components
Deposits
Short-term borrowings
Current portion of long-term debt
Long-term debt
Long-term deposits
Total debt
Redeemable financial instrument (Note 24)
Share capital
Contributed surplus
Retained earnings
2021
% of total
2020
% of total
$
1,908.4
13.5 % $
1,228.0
108.2
719.8
3,558.7
1,985.3
8,280.4
567.0
593.6
2.9
$
0.8 %
5.1 %
25.2 %
14.0 %
58.6 % $
4.0 %
4.2 %
— %
165.4
150.5
4,115.7
2,281.7
7,941.3
567.0
597.0
2.9
4,696.5
33.2 %
4,136.9
9.3 %
1.3 %
1.1 %
31.1 %
17.2 %
60.0 %
4.3 %
4.5 %
— %
31.2 %
100.0 %
Total capital under management
$
14,140.4
100.0 % $
13,245.1
The Company monitors its capital structure by measuring debt-to-earnings ratios and manages its debt service
and other fixed obligations by tracking its interest and other coverage ratios and forecasting corporate liquidity.
The Company manages its capital structure over the long term to optimize the balance among capital efficiency,
financial flexibility and risk mitigation. Management calculates ratios to approximate the methodologies of credit-
rating agencies and other market participants on a current and prospective basis. To assess its effectiveness in
managing capital, Management monitors these ratios against targeted ranges.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company has a policy in place to manage capital. As part of the overall management of capital,
Management and the Audit Committee of the Board of Directors review the Company’s compliance with and
performance against, the policy. In addition, periodic review of the policy is performed to ensure consistency with
risk tolerances.
In order to maintain or adjust the capital structure, the Company has the flexibility to adjust discretionary capital
spending, adjust the amount of credit card loans receivables outstanding, issue debt or equity, early redeem
outstanding debt, purchase the Company’s Class A Non-Voting Shares, adjust the amount of dividends paid to
shareholders, monetize various assets, and engage in additional sale and leaseback transactions of real estate
properties.
Financial covenants are reviewed by Management on an ongoing basis to monitor compliance.
The key financial covenant for Canadian Tire Corporation, Limited is a requirement for the Retail segment to
maintain a ratio of total indebtedness to total capitalization equal to or lower than a specified maximum
percentage (as defined in the Canadian Tire Corporation, Limited’s bank credit agreements, but which excludes
consideration of CTFS Holdings Limited, CT REIT, Franchise Trust and their respective subsidiaries). Canadian
Tire Corporation, Limited was in compliance with all financial covenants under its credit agreements as at
January 1, 2022 and January 2, 2021.
Helly Hansen is required to comply with covenants established under its bank credit agreements, and was in
compliance with all financial covenants thereunder as at December 31, 2021 and 2020.
CT REIT is required to comply with covenants established under its Declaration of Trust, Trust Indenture and bank
credit agreement and was in compliance with all financial covenants thereunder as at December 31, 2021 and
2020.
Canadian Tire Bank (“CTB” or “the Bank”), a federally chartered Schedule I bank, is required to comply with
regulatory requirements for capital, other regulatory requirements that have an impact on its business operations
and certain financial covenants established under its bank credit agreements.
CTB manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions
of Canada (“OSFI”). OSFI’s regulatory capital guidelines are based on the international Basel Committee on
Banking Supervision framework entitled Basel III: A Global Regulatory Framework for More Resilient Banks and
Banking Systems (“Basel III”), which came into effect in Canada on January 1, 2013, and measures capital in
relation to credit, market and operational risks. The Bank has various capital policies, procedures, and controls in
place, including an annual Internal Capital Adequacy Assessment Process (“ICAAP”), which it utilizes to achieve
its goals and objectives.
The Bank’s objectives include:
• maintaining strong capital ratios, as measured by regulatory guidelines and internal targets; and
• holding sufficient capital to maintain the confidence of investors and depositors.
OSFI’s regulatory capital guidelines under Basel III allow for two tiers of capital. Common Equity Tier 1 (“CET1”)
capital includes common shares, retained earnings, and accumulated other comprehensive income, less
regulatory adjustments which are deducted from capital. The Bank currently does not hold any additional Tier 1
capital instruments. Tier 2 capital consists of the eligible portion of general allowances. Risk-weighted assets
(“RWAs”) include a credit risk component for all on-balance sheet assets weighted for the risk inherent in each
type of asset, off-balance sheet financial instruments, an operational risk component based on a percentage of
average risk-weighted revenues and a market-risk component for assets held for trade. For the purposes of
calculating RWAs, securitization transactions are considered off-balance sheet transactions and, therefore, with
the exception of CTB’s retained exposures, are not included in the RWAs calculation.
The leverage ratio prescribed by OSFI’s Leverage Requirements Guideline provides an overall measure of the
adequacy of an institution’s capital and is defined as the all-in Tier 1 capital divided by the leverage ratio
98 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
exposure. The leverage ratio exposure is the sum of on-balance sheet exposures, derivative exposures,
securities financing transaction exposures and a portion of unused credit limits.
As at December 31, 2021 and 2020, CTB complied with all regulatory capital guidelines established by OSFI and
its internal targets as determined by its ICAAP.
5. Financial Risk Management
5.1 Overview
The Company has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk (including foreign currency and interest rate risk).
This note presents information about the Company’s exposure to each of the foregoing risks and the Company’s
objectives, policy and processes for measuring and managing risk. Further quantitative disclosures are included
throughout these consolidated financial statements and notes thereto.
5.2 Risk Management Framework
The Company’s Board-approved Financial Risk Management Policy serves to identify and analyze the risks faced
by the Company, to set acceptable risk tolerance limits and controls and to monitor risks and adherence to limits.
The financial risk management strategies and systems are reviewed regularly to ensure they remain consistent
with the objectives and risk tolerance acceptable to the Company and current market trends and conditions. The
Company, through its training and management standards and procedures, aims to uphold a disciplined and
constructive control environment in which all employees understand their roles and obligations.
5.3 Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual
obligations, arises principally from operations of the Bank’s credit card loan portfolio, CTC’s interaction with its
Dealer and franchisee networks, and financial instruments, which are discussed in more detail below.
5.3.1 Financial Instrument Counterparty Credit Risk
The Company's Financial Risk Management Policy manages counterparty credit risk relating to cash balances,
investment activity, and the use of financial derivatives. The Company limits its exposure to counterparty credit
risk by transacting only with highly-rated financial institutions and other counterparties and by managing within
specific limits for credit exposure and term-to-maturity. The Company’s financial instrument portfolio is spread
across financial institutions, provincial and federal governments, and, to a lesser extent, corporate issuers that are
at least dual rated and have a lowest (if dual rated) or median (if three or more ratings) credit rating in the “A(low)”
equivalent category or better and asset-backed issuers that are at least dual rated and have credit ratings in the
“AAA” equivalent category.
5.3.2 Consumer and Dealer/Franchisee Credit Risk
Through the granting of credit cards, the Company assumes certain risks with respect to the ability and
willingness of the Bank’s customers to repay loans owing to it. In addition, the Company is required to provide
credit enhancement to Franchise Trust in the form of standby letters of credit issued by highly-rated financial
institutions and guaranteed by the Company (the “LCs”) to achieve the required “AAA” equivalent credit rating of
the funding of the Dealer loan portfolio and may also provide guarantees of third-party bank debt agreements or
inventory buy-back agreements, with respect to the bank financing of certain Dealers and franchisees (Note 34).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company’s maximum exposure to credit risk, over and above amounts recognized in the Consolidated
Balance Sheets, include the following:
(C$ in millions)
Undrawn loan commitments
Guarantees
Total
$
$
2021
10,956.7 $
369.8
2020
9,993.9
377.0
11,326.5 $
10,370.9
Refer to Note 9 for information on the credit quality and performance of loans receivable.
5.4 Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to
managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due, under normal
circumstances, with the ability to react under some uncertainty. The Company’s Financial Risk Management
Policy serves to manage its exposure to liquidity risk. The Company uses a detailed consolidated cash flow
forecast model to regularly monitor its near-term and longer-term cash flow requirements, which assists in
optimizing its short-term cash and indebtedness position while evaluating longer-term funding and capital
allocation strategies.
In addition, CTB has in place an Asset Liability Management Policy. It is CTB’s objective to ensure the availability
of adequate funds by maintaining a strong liquidity management framework and to satisfy all applicable regulatory
and statutory requirements.
Provided by a syndicate of seven Canadian and three international financial institutions, $1.975 billion in an
unsecured committed bank line of credit is available to CTC for general corporate purposes. The expiry date for
$1,850.0 million of the commitment amount is July 2026. The remaining $125.0 million expires in August 2024.
During the second quarter of 2020, in response to COVID-19, the Company entered into a new unsecured
committed bank line of credit for $710.0 million with a syndicate of five Canadian financial institutions. This facility
expires in June 2022.
Provided by a syndicate of seven Canadian financial institutions, $300.0 million in an unsecured committed bank
line of credit is available to CT REIT for general business purposes, expiring in September 2026.
The Bank of Nova Scotia (“Scotiabank”) has provided CTB with a $500.0 million unsecured committed bank line
of credit and $1.75 billion in committed securitized note purchase facilities for the purchase of senior and
subordinated notes issued by GCCT, each of which expire in October 2024.
Provided by a syndicate of five Canadian financial institutions, $300.0 million in a committed liquidity facility
provides backstop protection to GCCT’s Series 1997-1 asset-backed commercial paper (“ABCP”) program,
expiring in July 2024.
In addition to the committed bank lines of credit outlined above, the Company has access to additional funding
sources including internal cash generation, access to public and private financial markets, and the monetization of
various assets. Assets of CTB are funded through internal cash generation, committed bank lines of credit
outlined above, the securitization of credit card loans receivable using GCCT, broker guaranteed investment
certificate (“GIC”) deposits and retail deposits (including GIC and high-interest savings accounts). CTB also holds
high quality liquid assets, as required by regulators, which are available to address any funding disruptions.
The Company has a U.S. dollar-denominated commercial paper (“US CP”) program that allows it to issue up to a
maximum aggregate principal amount of U.S. $1.0 billion of short-term promissory notes in the United States.
Funds can be borrowed under this program with terms to maturity ranging from one to 270 days. Any issuances
made under the program are issued at a discount and the notes rank equally in right of payment with all other
present and future unsecured and unsubordinated obligations to creditors of the Company.
100 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Due to the diversification of its funding sources, the Company is not overly exposed to concentration risk. The
following table summarizes the Company’s contractual maturities for its financial liabilities, including both principal
and interest payments:
(C$ in millions)
2022
2023
2024
2025
2026 Thereafter
Total
Non-derivative financial liabilities
Deposits1,2
Trade and other payables (Note 18)
Short-term borrowings
Loans
Long-term debt
Mortgages
Interest payments3
Total
$ 1,918.5 $
583.5 $
490.4 $
584.6 $
326.8 $
— $ 3,903.8
2,369.2
108.2
427.5
710.0
10.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,369.2
108.2
427.5
984.0
560.0
680.0
200.0
1,075.0
4,209.0
56.0
0.4
187.3
146.2
111.6
0.4
82.8
8.1
—
75.0
62.9
240.7
831.5
$ 5,730.8 $ 1,769.7 $ 1,162.4 $ 1,347.8 $
597.8 $ 1,315.7 $ 11,924.2
1 Deposits exclude the GIC broker fee discount of $10.1 million.
2 The average remaining term of the GIC deposits is 27 months as at January 1, 2022.
3
Includes interest payments on deposits, short-term borrowings, loans, and long-term debt.
It is not expected that the cash flows included in the maturity analysis would occur significantly earlier or at
significantly different amounts.
5.5 Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices, will affect the Company’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage market risk exposures within acceptable parameters while optimizing the
return. The Company’s Financial Risk Management Policy establishes guidelines on how the Company is to
manage the market risk inherent to the business and provides mechanisms to ensure business transactions are
executed in accordance with established limits, processes and procedures.
All such transactions are carried out within the established guidelines and, generally, the Company seeks to apply
hedge accounting in order to manage volatility in its net income.
5.5.1 Foreign Currency Risk
CTC sources merchandise globally. In 2021, approximately 54 percent, 7 percent and 37 percent of the value of
inventory purchases of Canadian Tire, SportChek and Mark’s, respectively, were sourced directly from vendors
outside Canada and denominated in U.S. dollars. The majority of Helly Hansen’s purchases are from vendors in
Asia and are denominated in U.S. dollars and Euros. To mitigate the impact of fluctuating foreign exchange rates
on the cost of these purchases, the Company has an established foreign exchange risk management program
that governs the proportion of forecast U.S. dollar and Euro purchases that are hedged through foreign exchange
derivative contracts. The purpose of the program is to provide certainty with respect to a portion of the foreign
exchange component of future merchandise purchases.
As the Company has hedged a significant portion of the cost of its near-term U.S. dollar-denominated forecasted
purchases, a change in foreign currency rates will not materially impact that portion of the cost related to those
purchases. The Company operates its hedging program on a continual basis to ensure that any sustained
change in rates is reflected in the cost of the Company’s U.S. dollar purchases over the entirety of its hedging
horizon. This ensures that the cost of U.S. dollar purchases is smoothed relative to the foreign exchange market
allowing the Company to defer the impact of sudden exchange rate movements on margins and allow it time to
develop strategies to mitigate the impact of a sustained change in foreign exchange rates. Some vendors have
an underlying exposure to U.S. currency fluctuations which may affect the price they charge the Company for
merchandise, and the Company’s hedging program does not mitigate that risk. While the Company may be able
to pass on changes in foreign currency exchange rates through retail pricing, any decision to do so would be
subject to competitive, market and economic conditions.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.5.2 Interest Rate Risk
The Company may use interest rate derivatives to manage interest rate risk. The Company has a policy in place
whereby, on a consolidated basis (excluding Franchise Trust), a minimum of 75 percent of its consolidated debt
(short-term and long-term) will be at fixed versus floating interest rates.
A one percent change in interest rates would therefore not materially affect the Company’s net income or equity
as the Company has minimal floating interest rate exposure given the indebtedness of the Company is
predominantly at fixed rates.
The Company’s exposure to interest rate changes is predominantly driven by short-term Retail borrowings (on the
bank lines of credit or in the U.S. commercial paper market) and the Financial Services business to the extent that
the interest rates on future issuances of GIC deposits, HIS account deposits, tax-free savings account (“TFSA”)
deposits and securitization transactions are market-dependent. Partially offsetting this could be interest rates
charged on credit cards and a significant portion of the current funding liabilities of Financial Services are at a
fixed rate, which reduces interest rate risk. In addition, CTB has entered into interest rate derivatives to hedge a
portion of its planned issuances of GCCT term debt and GIC deposits in 2022 to 2026. Furthermore, CTB holds
short-term interest-bearing investments held in reserve in support of its liquidity and regulatory requirements.
6. Operating Segments
The Company has three reportable operating segments: Retail, Financial Services, and CT REIT. The reportable
operating segments are strategic business units offering different products and services. They are separately
managed due to their distinct nature. The following summary describes the operations of each of the Company’s
reportable segments:
• The retail business is conducted under a number of banners including Canadian Tire, Canadian Tire Gas
(“Petroleum”), Mark’s, PartSource, Helly Hansen, Party City1 and various SportChek banners. Retail also
includes the Dealer Loan Program (the portion [silo] of Franchise Trust that issues loans to certain Dealers).
Non-CT REIT real estate is included in Retail.
• Financial Services issues Canadian Tire's Triangle branded credit cards, including Triangle Mastercard,
Triangle World Mastercard and Triangle World Elite Mastercard. Financial Services also offers Cash
Advantage Mastercard and Gas Advantage Mastercard products, markets insurance products, and provides
settlement services to the Company’s affiliates. Financial Services includes CTB, a federally regulated
Schedule I bank that manages and finances the Company’s consumer Mastercard portfolio, as well as an
existing block of Canadian Tire branded line of credit loans. CTB also offers high-interest savings (“HIS”)
account deposits, tax-free savings accounts (“TFSA”) and GIC deposits, both directly and through third-party
brokers. Financial Services includes GCCT, a structured entity established to purchase co-ownership
interests in the Company’s credit card loans receivable. GCCT issues debt to third-party investors to fund its
purchases.
• CT REIT is an unincorporated, closed-end real estate investment trust. CT REIT holds a geographically-
diversified portfolio of properties mainly comprising Canadian Tire banner stores, Canadian Tire anchored
retail developments, mixed-use commercial property, and industrial properties.
1
“Party City” refers to the party supply business that operates under the Party City name and trademarks in Canada.
102 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Performance is measured based on segment income before income taxes, as included in the internal
management reports. Management has determined that this measure is the most relevant in evaluating segment
results and allocating resources. Information regarding the results of each reportable operating segment is as
follows:
(C$ in millions)
External revenue
Retail
Financial
Services CT REIT
Eliminations
and
adjustments
Total
Retail
Financial
Services CT REIT
Eliminations
and
adjustments
2021
2020
Total
$ 15,080.4 $ 1,165.4 $
53.4 $
(7.1) $ 16,292.1 $ 13,617.2 $ 1,208.7 $
53.7 $
(8.6) $ 14,871.0
Intercompany revenue
2.7
47.9
461.1
(511.7)
—
2.8
39.7
448.6
(491.1)
—
Total revenue
15,083.1 1,213.3
514.5
(518.8) 16,292.1 13,620.0 1,248.4
502.3
(499.7) 14,871.0
Cost of producing revenue
10,098.3
422.4
—
(63.8) 10,456.9 9,261.3
602.7
—
(69.6) 9,794.4
Gross margin
4,984.8
790.9
514.5
(455.0) 5,835.2 4,358.7
645.7
502.3
(430.1) 5,076.6
Other (income) expense
(165.4)
2.5
—
139.4
(23.5)
(70.8)
0.6
—
118.9
48.7
Selling, general and
administrative expenses
3,787.1
359.3
121.8
(333.9) 3,934.3 3,471.0
319.3
123.7
(314.7) 3,599.3
Net finance costs (income)
187.4
(3.3)
105.7
(67.3)
222.5
220.2
(1.5)
107.9
(70.1)
256.5
Fair value loss (gain) on
investment properties
—
—
(169.9)
169.9
—
—
—
87.4
(87.4)
—
Income before income taxes $ 1,175.7 $ 432.4 $ 456.9 $
(363.1) $ 1,701.9 $ 738.3 $ 327.3 $ 183.3 $
(76.8) $ 1,172.1
Items included in the above:
Depreciation and
amortization
Interest income
Interest expense
$ 873.2 $
13.1 $
— $
(184.8) $ 701.5 $ 858.3 $
13.3 $
— $
(176.3) $ 695.3
77.8 1,013.8
—
(64.3) 1,027.3
87.9 1,059.0
0.1
(66.9) 1,080.1
258.0
154.4
105.7
(192.2)
325.9
295.3
147.2
108.0
(201.6)
348.9
The eliminations and adjustments include the following items:
• reclassifications of certain revenues and costs in the Financial Services segment to net finance (income)
costs;
• conversion from CT REIT’s fair value investment property valuation policy to the Company’s cost model,
including the recording of depreciation and impairment; and
• intersegment eliminations and adjustments including intercompany rent, property management fees, credit
card processing fees and the change in fair value of the redeemable financial instrument.
While the Company primarily operates in Canada, it also operates in foreign jurisdictions primarily through Helly
Hansen. Foreign revenue earned by Helly Hansen amounted to $592.2 million for the year ended January 1,
2022 (January 2, 2021 – $493.6 million). Property and equipment and intangible assets (brand and goodwill) and
right-of-use assets located outside of Canada was $929.2 million as at January 1, 2022 (January 2, 2021 –
$963.3 million).
Capital expenditures by reportable operating segment are as follows:
2021
2020
Financial
Services CT REIT
Financial
Services CT REIT
(C$ in millions)
Capital expenditures1
1 Capital expenditures are presented on an accrual basis and include software additions, but exclude right-of-use asset additions, acquisitions relating to
134.1 $
803.9 $
304.9 $
661.1 $
141.4 $
8.7 $
6.1 $
Retail
452.4
Retail
Total
Total
$
business combinations and intellectual property additions.
Right-of-use asset additions by reportable operating segment are as follows:
(C$ in millions)
Retail
Financial
Services CT REIT
Total
Retail
Financial
Services
CT REIT
Total
Right-of-use asset additions
$
406.9 $
— $
13.4 $
420.3 $
410.3 $
1.8 $
3.0 $
415.1
2021
2020
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Total assets by reportable operating segment are as follows:
(C$ in millions)
Retail
Financial Services
CT REIT
2021
$
16,741.9 $
7,731.4
6,503.1
2020
15,937.2
7,134.2
6,176.1
Eliminations and adjustments
Total assets1
1 The Company employs a shared-services model for several of its back-office functions, including finance, information technology, human resources and legal.
As a result, expenses relating to these functions are allocated on a systematic and rational basis to the reportable operating segments. The associated assets
and liabilities are not allocated among segments in the presented measures of segmented assets and liabilities.
21,802.2 $
(9,174.2)
(8,870.4)
20,377.1
$
Total liabilities by reportable operating segment are as follows:
(C$ in millions)
Retail
Financial Services
CT REIT
$
2021
9,876.4 $
6,555.2
2,825.0
2020
9,534.6
6,120.5
2,800.3
Eliminations and adjustments
Total liabilities1
1 The Company employs a shared-services model for several of its back-office functions, including finance, information technology, human resources and legal.
As a result, expenses relating to these functions are allocated on a systematic and rational basis to the reportable operating segments. The associated assets
and liabilities are not allocated among segments in the presented measures of segmented assets and liabilities.
15,291.4 $
(3,965.2)
(3,913.0)
14,542.4
$
The eliminations and adjustments include the following items:
• conversion from CT REIT’s fair value investment property valuation policy to the Company’s cost model,
including the recording of depreciation; and
• intersegment eliminations.
7. Cash and Cash Equivalents
Cash and cash equivalents comprise the following:
(C$ in millions)
Cash
2021
$
1,043.4 $
2020
750.7
Cash equivalents
Restricted cash and cash equivalents1
Total cash and cash equivalents2
1 Restricted cash and cash equivalents relates to GCCT and is restricted for the purpose of paying principal and interest to note holders and additional funding
1,751.7 $
1,327.2
691.6
16.7
540.3
36.2
$
costs of $11.5 million (January 2, 2021 – $29.7 million) and Helly Hansen’s other operational items $5.2 million (January 2, 2021 – $6.6 million).
2 Included in cash and cash equivalents are amounts held in reserve in support of CTB’s liquidity and regulatory requirements (refer to Note 32.1).
8. Trade and Other Receivables
Trade and other receivables include the following:
(C$ in millions)
Trade receivables
Other receivables
Net investment in subleases
Derivatives (Note 33.2)
104 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
$
$
2021
696.8 $
169.5
17.3
86.8
970.4 $
2020
697.4
190.3
15.9
70.0
973.6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables are primarily from Dealers, franchisees and Helly Hansen’s wholesale customers. This is a
large and geographically-dispersed group whose receivables, individually, generally comprise less than one
percent of the total balance outstanding. Other receivables are primarily receivables from vendors and tenants
and insurance receivables.
Receivables from Dealers are in the normal course of business and include cost and margin-sharing
arrangements. The credit range period on sale of goods is between one and 120 days.
9. Loans Receivable
Quantitative information about the Company’s loans receivable portfolio is as follows:
(C$ in millions)
Credit card loans2
Dealer and other loans3
Total loans receivable
Less: long-term portion4
Current portion of loans receivable
Total principal amount of receivables1
2020
2021
$
$
5,549.2 $
429.1
5,978.3
365.1
5,613.2 $
4,983.8
507.7
5,491.5
459.7
5,031.8
Includes line of credit loans and are expected to be recovered within one year of the reporting date.
1 Amounts shown are net of allowance for loans receivable.
2
3 Loans issued to certain Dealers by Franchise Trust (refer to Note 22).
4 The long-term portion of loans receivable is included in long-term receivables and other assets and includes Dealer loans of $363.4 million (January 2, 2021 –
$458.7 million).
For the year ended January 1, 2022, cash received from interest earned on credit cards and loans was $952.3
million (January 2, 2021 – $1,014.6 million).
The carrying amount of loans includes loans to certain Dealers that are secured by the Canadian Tire store assets
of the respective Dealers’ corporations. The Company’s exposure to loans receivable credit risk resides at
Franchise Trust and at the Bank. No allowances have been made for Dealer loans given the historical
performance and the nature of the collateral. Credit risk at the Bank is influenced mainly by the individual
characteristics of each credit card customer. The Bank uses sophisticated credit scoring models, monitoring
technology and collection modelling techniques to implement and manage strategies, policies, and limits that are
designed to control risk. Loans receivable are generated by a large and geographically-dispersed group of
customers. Current credit exposure is limited to the loss that would be incurred if all of the Bank’s counterparties
were to default at the same time.
The Company’s allowances for loans receivable decreased by $22.5 million from the year ended January 2, 2021
primarily due to the economic uncertainty as a result of COVID-19. This decrease in allowance was driven by
changes in Management’s assumptions on forward-looking economic indicators and from increased probability of
cardholder delinquency and default.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A continuity of the Company’s allowances for loans receivable is as follows:
(C$ in millions)
12-month ECL
(Stage 1)
Lifetime ECL –
not credit-impaired
(Stage 2)
Lifetime ECL –
credit-impaired
(Stage 3)
Balance at January 2, 2021
$
409.1 $
161.3 $
293.6 $
Increase (decrease) during the period
2021
Total
864.0
(15.9)
(314.0)
(337.6)
Write-offs
Recoveries
New loans originated
Transfers
to Stage 1
to Stage 2
to Stage 3
Net remeasurements
(7.7)
—
25.5
114.8
(15.4)
(21.0)
(69.4)
Balance at January 1, 2022
$
435.9 $
174.3 $
(C$ in millions)
12-month ECL
(Stage 1)
Lifetime ECL –
not credit-impaired
(Stage 2)
Lifetime ECL –
credit-impaired
(Stage 3)
Balance at December 28, 2019
$
300.5 $
192.1 $
304.2 $
Increase (decrease) during the period
(32.3)
(397.5)
(441.1)
—
—
(38.0)
23.7
(19.8)
63.0
—
—
(68.4)
21.2
(40.5)
89.2
91.3
—
(76.8)
(8.3)
40.8
204.7
231.3 $
91.3
25.5
—
—
—
198.3
841.5
2020
Total
796.8
85.5
—
(52.6)
(6.3)
71.1
289.2
293.6 $
85.5
13.6
—
—
—
409.2
864.0
Write-offs
Recoveries
New loans originated
Transfers
to Stage 1
to Stage 2
to Stage 3
Net remeasurements
(11.3)
—
13.6
121.0
(14.9)
(30.6)
30.8
Balance at January 2, 2021
$
409.1 $
161.3 $
Credit card loans are considered impaired when a payment is over 90 days past due or there is sufficient doubt
regarding the collectability of the outstanding balance. No collateral is held against loans receivable, except for
loans to Dealers, as discussed above. The Bank continues to seek recovery on amounts that were written-off
during the period, unless the Bank no longer has the right to collect, the receivable has been sold to a third party,
or all reasonable efforts to collect have been exhausted.
106 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table sets out information about the credit risk exposure of loans receivable:
(C$ in millions)
Low risk
Moderate risk
High risk
Total gross carrying amount
ECL allowance
Net carrying amount
(C$ in millions)
Low risk
Moderate risk
High risk
Total gross carrying amount
ECL allowance
Net carrying amount
Stage 1
Stage 2
Stage 3
$
2,830.3 $
57.5 $
1,961.8
779.1
5,571.2
435.9
100.5
170.0
328.0
174.3
— $
—
491.5
491.5
231.3
2021
Total
2,887.8
2,062.3
1,440.6
6,390.7
841.5
$
5,135.3 $
153.7 $
260.2 $
5,549.2
Stage 1
2,364.6 $
1,799.3
698.1
4,862.0
409.1
4,452.9 $
$
$
Stage 2
Stage 3
58.9 $
108.4
168.8
336.1
161.3
174.8 $
— $
—
649.7
649.7
293.6
356.1 $
2020
Total
2,423.5
1,907.7
1,516.6
5,847.8
864.0
4,983.8
Transfers of Financial Assets
Glacier Credit Card Trust
GCCT is a structured entity that was created to securitize the Bank’s credit card loans receivable. The Bank has
transferred co-ownership interest in credit card loans receivable to GCCT and has determined, for the purposes of
accounting, consolidation of GCCT is appropriate. The associated liabilities, as at January 1, 2022 and
January 2, 2021, secured by these assets, include the commercial paper notes and term notes on the
Consolidated Balance Sheets and are carried at amortized cost. The table below sets out the carrying amounts
and the fair values of the Bank’s transferred credit card loans receivable and the associated liabilities.
(C$ in millions)
Credit card loans receivable transferred1
Associated liabilities
Net position
2021
2020
Carrying amount
Fair value Carrying amount
Fair value
$
$
2,234.1 $
2,234.1 $
2,229.7
2,256.5
2,280.0 $
2,291.9
2,280.0
2,379.0
4.4 $
(22.4) $
(11.9) $
(99.0)
1 The fair value measurement of credit card loans receivable is categorized within Level 2 of the fair value hierarchy. For definitions of the levels refer to Note
33.2.
For legal purposes, the co-ownership interests in the Bank’s credit card loans receivable owned by GCCT have
been sold at law to GCCT and are not available to the creditors of the Bank. Furthermore, GCCT’s liabilities are
not legal liabilities of the Company.
The Bank has not identified any factors arising from current market circumstances that could lead to a need for
the Bank to extend liquidity and/or credit support to GCCT over and above the existing arrangements or that could
otherwise change the substance of the Bank’s relationship with GCCT. There have been no relevant changes in
the capital structure of GCCT since the Bank’s assessment for consolidation.
Franchise Trust
The consolidated financial statements include a portion (silo) of Franchise Trust, a legal entity sponsored by a
third-party bank that originates and services loans to certain Dealers for their purchases of inventory and fixed
assets (“Dealer loans”). The Company has arranged for several major Canadian banks to provide standby LCs to
Franchise Trust as credit support for the Dealer loans. Franchise Trust has sold all its rights in the LCs and
outstanding Dealer loans to other independent trusts set up by major Canadian banks (“Co-owner Trusts”) that
raise funds in the capital markets to finance their purchase of these undivided co-ownership interests. Due to the
retention of substantially all of the risks and rewards relating to these Dealer loans, the transfers are accounted for
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as secured financing transactions. Accordingly, the Company continues to recognize the current portion of these
assets in loans receivable and the long-term portion in long-term receivables and other assets and records the
associated liability secured by these assets as loans, being the loans that Franchise Trust has incurred to fund the
Dealer loans. The Dealer loans and Loans are initially recorded at fair value and subsequently carried at
amortized cost.
(C$ in millions)
Dealer loans1
Associated liabilities
Net position
2021
2020
Carrying amount
Fair value Carrying amount
Fair value
$
$
427.5 $
427.5
— $
427.5 $
427.5
— $
506.6 $
506.6
— $
506.6
506.6
—
1 The fair value measurement of Dealer loans is categorized within Level 2 of the fair value hierarchy. For definitions of the levels refer to Note 33.2
The Dealer loans have been sold at law and are not available to the creditors of the Company. Loans are not
legal liabilities of the Company.
In the event that a Dealer defaults on a loan, the Company has the right to purchase such loan from the Co-owner
Trusts, at which time the Co-owner Trusts will assign such Dealer’s debt instrument and related security
documentation to the Company. The assignment of this documentation provides the Company with first-priority
security rights over all of such Dealer’s assets, subject to certain prior ranking statutory claims.
In most cases, the Company would expect to recover any payments made to purchase a defaulted loan, including
any associated expenses. In the event the Company does not choose to purchase a defaulted Dealer loan, the
Co-owner Trusts may draw against the LCs.
The Co-owner Trusts may also draw against the LCs to cover any shortfalls in certain related fees owing to them.
In any case, where a draw is made against the LCs, the Company has agreed to reimburse the bank issuing the
LCs for the amount so drawn. Refer to Note 34 for further information.
10. Long-Term Receivables and Other Assets
Long-term receivables and other assets include the following:
(C$ in millions)
Loans receivable (Note 9)
Net investment in subleases
Derivatives (Note 33.2)
Mortgages receivable
Other receivables
Total long-term receivables
Other
$
$
2021
365.1 $
94.0
52.6
10.0
9.1
530.8
62.7
593.5 $
2020
459.7
103.9
42.6
10.0
8.5
624.7
7.2
631.9
Included in Other in Long-term receivables and other assets is the Company’s minority interest in Ashcroft
Terminal Ltd., a 320-acre inland transload and storage terminal strategically located at the intersection of both
Canadian Pacific Railways Limited and Canadian National Railways Company railway networks in British
Columbia. The interest was acquired on July 28, 2021 and comprises the Company’s initial investment of $40
million in addition to adjustments required under the equity method of accounting.
108 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Goodwill and Intangible Assets
The following table presents the changes in cost and accumulated amortization and impairment of the Company’s
goodwill and intangible assets:
Indefinite-life intangible assets and
goodwill
Finite-life intangible assets
Goodwill
Banners and
trademarks
Franchise
agreements
and other
intangibles
Software
Other
intangibles
Total
2021
(C$ in millions)
Cost
Balance, beginning of year
$
893.5 $
934.1 $
167.7 $
1,252.3 $
11.7 $
3,259.3
Additions
Disposals/retirements
—
—
—
—
Currency translation adjustment
(12.7)
(16.6)
—
—
—
148.4
(4.1)
—
—
—
—
148.4
(4.1)
(29.3)
Balance, end of year
Accumulated amortization and impairment
Balance, beginning of year
Amortization for the year
Disposals/retirements
Balance, end of year
Net carrying amount, end of year
$
$
$
$
880.8 $
917.5 $
167.7 $
1,396.6 $
11.7 $
3,374.3
(4.0) $
(16.6) $
— $
(854.2) $
(11.7) $
—
—
—
—
(4.0) $
876.8 $
(16.6) $
900.9 $
—
—
(119.6)
4.0
—
—
— $
(969.8) $
(11.7) $
(1,002.1)
167.7 $
426.8 $
— $
2,372.2
(886.5)
(119.6)
4.0
Indefinite-life intangible assets and
goodwill
Finite-life intangible assets
Goodwill
Banners and
trademarks
Franchise
agreements
and other
intangibles
Software
Other
intangibles
Total
2020
(C$ in millions)
Cost
Balance, beginning of year
$
893.0 $
932.9 $
167.7 $
1,167.1 $
11.7 $
3,172.4
Additions
Disposals/retirements
Reclassifications and transfers
Currency translation adjustment
Balance, end of year
Accumulated amortization and impairment
Balance, beginning of year
Amortization for the year
Impairment
Disposals/retirements
Balance, end of year
Net carrying amount, end of year
$
$
$
$
—
—
—
0.5
1.4
—
—
(0.2)
—
—
—
—
101.7
(5.9)
(10.6)
—
—
—
—
—
103.1
(5.9)
(10.6)
0.3
893.5 $
934.1 $
167.7 $
1,252.3 $
11.7 $
3,259.3
(1.9) $
—
(2.1)
—
(4.0) $
889.5 $
(0.6) $
—
(16.0)
—
(16.6) $
917.5 $
— $
(743.9) $
(11.7) $
—
—
—
(112.7)
—
2.4
—
—
—
(758.1)
(112.7)
(18.1)
2.4
— $
(854.2) $
(11.7) $
(886.5)
167.7 $
398.1 $
— $
2,372.8
The following table presents the details of the Company’s goodwill:
(C$ in millions)
Helly Hansen
SportChek
Canadian Tire
Mark’s
Total
$
$
2021
385.7 $
362.5
71.9
56.7
876.8 $
2020
398.4
362.5
71.9
56.7
889.5
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company’s banners and trademarks, which include SportChek, Mark’s, Helly Hansen and Party City and
acquired private-label brands, represent legal trademarks of the Company with expiry dates ranging from 2022 to
2038 with further renewals at the Company’s election and discretion dependent on use. As the Company
currently has no approved plans to change its store banners and intends to continue to use and renew its
trademarks and private-label brands at each expiry date for the foreseeable future, there is no foreseeable limit to
the period over which the assets are expected to generate net cash inflows. Therefore, these intangible assets
are considered to have indefinite useful lives.
Franchise agreements have expiry dates with options to renew, or have indefinite lives. As the Company intends
to renew these agreements at each renewal date for the foreseeable future, there is no foreseeable limit to the
period over which the franchise agreements and franchise locations will generate net cash inflows. Therefore,
these assets are considered to have indefinite useful lives.
Finite-life intangible assets are amortized over a term of two to 10 years.
Borrowing costs capitalized were $2.8 million (January 2, 2021 – $4.8 million). The capitalization rate used to
determine the amount of borrowing costs capitalized during the year was 4.9 percent (January 2, 2021 – 4.9
percent).
Amortization expense of software and other finite-life intangible assets is included in Selling, general and
administrative expenses in the Consolidated Statements of Income.
Impairment of Intangible Assets and Subsequent Reversal
The Company performed its annual impairment test on goodwill and indefinite-life intangible assets for all CGUs
based on VIU except as noted. The cash flow projections included specific estimates for up to five years and
terminal growth rates ranging to extrapolate cash flow projections beyond the period covered by the most recent
forecasts, except as noted below.
For all goodwill and intangible assets except as noted, the estimated recoverable amount is based on VIU
exceeding the carrying amount. A material change in any of the assumptions used in testing goodwill and
intangible assets could cause the carrying amount to exceed the estimated recoverable amount.
The Company recognized an impairment charge of nil (January 2, 2021 – $18.1million).
During 2021 and 2020, the recoverable amount of goodwill and intangibles assets of Helly Hansen was based on
fair value less costs of disposal, estimated using discounted cash flows based on an after-tax discount rate. The
fair value measurement was categorized as a Level 3 fair value based on the inputs in the valuation technique
used. The cash flow projections included specific estimates for eight years, taking into account a terminal value
calculated by discounting the final year in perpetuity. A material change in any of the assumptions used in testing
Helly Hansen goodwill and intangible assets could cause the carrying amount to exceed the estimated
recoverable amount.
The key assumptions used in the estimation of the recoverable amount for all CGUs are set out below.
Discount rate
Terminal growth rate
There was no reversal of impairment of intangible assets in 2021 or 2020.
2021
6.0 to 9.8 %
2.0 to 3.0 %
2020
6.0 to 9.0 %
2.0 to 3.0 %
110 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Investment Property
The following table presents changes in the cost and the accumulated depreciation and impairment on the
Company’s investment property:
(C$ in millions)
Cost
Balance, beginning of year
Additions
Other1
Balance, end of year
Accumulated depreciation and impairment
Balance, beginning of year
Depreciation for the year
Other1
Balance, end of year
Net carrying amount, end of year2
1 Other includes disposals, retirements, impairment, reclassifications and transfers.
2
2021
2020
447.0 $
91.4
(3.8)
534.6 $
(61.2) $
(7.6)
(5.1)
(73.9) $
460.7 $
445.4
15.6
(14.0)
447.0
(56.3)
(7.0)
2.1
(61.2)
385.8
$
$
$
$
$
Investment property includes $7.9 million (January 2, 2021 – 6.8 million) right-of-use assets related to operating subleases where the Company is an
intermediate lessor.
The investment properties generated rental income of $56.6 million (January 2, 2021 – $56.7 million). Direct
operating expenses (including repairs and maintenance) arising from investment property recognized in net
income were $20.5 million (January 2, 2021 – $22.8 million).
The estimated fair value of investment property was $579.9 million (January 2, 2021 – $542.7 million). This
recurring fair value measurement is categorized within Level 3 of the fair value hierarchy (refer to Note 33.2 for
definition of levels). The Company determines the fair value of investment property by applying a pre-tax discount
rate to the annual rental income for the current leases. The discount rate ranged from 4.25 percent to 8.21
percent (January 2, 2021 – 4.82 percent to 8.00 percent). The cash flows are for a term of five years, including a
terminal value. The Company has real estate management expertise that is used to perform the valuation of
investment property and has also completed independent appraisals on certain investment property owned by CT
REIT.
Impairment of Investment Property and Subsequent Reversal
Any impairment or reversals of impairment are reported in Other expense (income) in the Consolidated
Statements of Income.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Property and Equipment
The following table presents changes in the cost and the accumulated depreciation and impairment on the
Company’s property and equipment:
(C$ in millions)
Cost
Land
Buildings
Fixtures and
equipment
Leasehold
improvements
Construction
in progress
2021
Total
Balance, beginning of year
$
1,072.6 $
3,644.3 $
1,707.8 $
1,291.1 $
149.7 $
7,865.5
Additions
Disposals/retirements1
Currency translation adjustment
Other2
5.2
(1.9)
—
(4.0)
37.0
(3.5)
(0.1)
6.1
154.4
(46.5)
(0.6)
(7.1)
80.3
(12.4)
(0.2)
(16.1)
287.3
(2.2)
(0.3)
(9.9)
564.2
(66.5)
(1.2)
(31.0)
Balance, end of year
$
1,071.9 $
3,683.8 $
1,808.0 $
1,342.7 $
424.6 $
8,331.0
Accumulated depreciation and
impairment
Balance, beginning of year
$
(7.0) $
(1,793.6) $
(1,084.8) $
(681.9) $
Depreciation for the year
(Impairment loss)/Reversal of
impairment loss
Disposals/retirements1
Other2
Balance, end of year
Net carrying amount, end of year
(79.4)
(132.1)
(70.1)
—
—
—
—
—
3.3
6.0
(0.3)
45.2
0.5
$
$
(7.0) $
(1,863.7) $
(1,171.5) $
1,064.9 $
1,820.1 $
636.5 $
— $
—
—
—
—
(3,567.3)
(281.6)
0.2
60.6
6.4
— $
(3,781.7)
424.6 $
4,549.3
0.5
12.1
(0.1)
(739.5) $
603.2 $
1 Current year disposals includes $42.2 million of assets no longer in use with a net book value of nil.
2 Other includes reclassifications, transfers and tenant allowances.
(C$ in millions)
Cost
Land
Buildings
Fixtures and
equipment
Leasehold
improvements
Construction in
progress
2020
Total
Balance, beginning of year
$
1,054.3 $
3,543.6 $
1,680.4 $
1,238.6 $
118.0 $
7,634.9
Additions
Disposals/retirements1
Currency translation adjustment
Other2
18.2
—
—
0.1
148.0
(8.7)
—
(38.6)
80.4
(46.3)
(0.2)
(6.5)
56.6
(5.3)
0.2
1.0
31.9
—
0.2
(0.4)
335.1
(60.3)
0.2
(44.4)
Balance, end of year
$
1,072.6 $
3,644.3 $
1,707.8 $
1,291.1 $
149.7 $
7,865.5
Accumulated depreciation and
impairment
Balance, beginning of year
$
(7.0) $
(1,726.0) $
(999.0) $
(619.6) $
— $
(3,351.6)
Depreciation for the year
Impairment loss
Disposals/retirements1
Other2
Balance, end of year
Net carrying amount, end of year
—
—
—
—
(85.5)
(136.5)
(71.0)
(0.4)
7.3
11.0
(2.3)
44.7
8.3
(5.0)
5.2
8.5
—
—
—
—
(293.0)
(7.7)
57.2
27.8
$
$
(7.0) $
(1,793.6) $
(1,084.8) $
1,065.6 $
1,850.7 $
623.0 $
(681.9) $
609.2 $
— $
(3,567.3)
149.7 $
4,298.2
1 Disposals includes $40.1 million of assets no longer in use with a net book value of nil.
2 Other includes reclassifications, transfers and tenant allowances.
The Company capitalized borrowing costs of $9.4 million (January 2, 2021 – $4.8 million) on indebtedness
relating to property and equipment under construction. The rate used to determine the amount of borrowing costs
capitalized during the year was 4.8 percent (January 2, 2021 – 4.7 percent).
Impairment of Property and Equipment and Subsequent Reversal
There was a net impairment reversal of $0.2 million (January 2, 2021 – $7.7 million). Any impairment or reversal
of impairment is reported in Other income in the Consolidated Statements of Income.
112 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Leases
14.1 As a Lessee
Extension and termination options are included in a number of leases across the Company particularly for
property related leases. These terms are used to maximize the operational flexibility in terms of managing
contracts. The majority of the extension and termination options held are exercisable only by the Company and
not by the respective lessor.
14.1.1 Right-of-use Assets
The following table presents changes to the carrying amount of the Company’s right-of-use assets at the end of
the reporting period:
(C$ in millions)
Balance, beginning of year
Additions
Depreciation for the year
Reversal of impairment
Disposals/retirements and other
Balance, end of year
Property
Non-property1
$
1,659.2 $
380.5
(274.5)
1.2
(39.4)
37.5 $
39.8
(18.2)
—
—
2021
Total
1,696.7
420.3
(292.7)
1.2
(39.4)
$
1,727.0 $
59.1 $
1,786.1
1 Non-property leases consist of leased IT equipment, supply chain and transportation related assets.
(C$ in millions)
Balance, beginning of year
Additions
Depreciation for the year
Impairment
Disposals/retirements and other
Balance, end of year
Property
Non-property1
2020
Total
$
1,581.4 $
29.0 $
1,610.4
393.3
(269.5)
(19.9)
(26.1)
21.8
(13.1)
—
(0.2)
415.1
(282.6)
(19.9)
(26.3)
$
1,659.2 $
37.5 $
1,696.7
1 Non-property leases consist of leased IT equipment, supply chain and transportation related assets.
14.1.2 Undiscounted Cash Flows
The annual lease payments for property and non-property leases are as follows:
(C$ in millions)
Less than one year
One to five years
$
2021
419.0 $
1,474.2
More than five years
Total undiscounted lease obligation1
1 Excludes $66.2 million (January 2, 2021 – $82.8 million) commitment for lease agreements signed but not yet commenced.
$
937.7
2,830.9 $
2020
386.7
1,427.6
992.3
2,806.6
14.2 As a Lessor
The Company leases out a number of its investment properties (refer to Note 12), and has certain sublease
arrangements with the majority having an option to renew after the expiry date. The lessee does not have an
option to purchase the property at the expiry of the lease period.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14.2.1 Net Investment in Subleases
The table below summarizes the Company’s contractual cash flows from its net investment in subleases.
(C$ in millions)
Less than one year
One to two years
Two to three years
Three to four years
Four to five years1
More than five years1
Total undiscounted lease payments receivable
Unearned finance income
Net investment in subleases
$
$
2021
21.6 $
19.1
19.8
19.4
14.2
32.4
126.5
(15.2)
111.3 $
2020
21.9
21.2
18.8
19.5
19.0
38.2
138.6
(18.8)
119.8
1 The prior period figures have been restated to align with current year presentation.
14.2.2 Operating Leases
The table below summarizes the Company’s future undiscounted annual minimum lease payments receivable
from lessees under non-cancellable operating leases.
(C$ in millions)
Less than one year
One to two years
Two to three years
Three to four years
Four to five years1
More than five years1
Total
1 The prior period figures have been restated to align with current year presentation.
$
2021
32.7 $
28.3
25.4
23.0
19.9
73.2
2020
31.6
28.9
24.8
22.2
19.0
80.9
$
202.5 $
207.4
114 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. Subsidiaries
15.1 Control of Subsidiaries and Composition of the Company
These Consolidated Financial Statements include entities controlled by Canadian Tire Corporation. Control exists
when Canadian Tire Corporation has the ability to direct the relevant activities of the entity, has exposure or rights
to variable returns from its involvement with the entity, and is able to use its power over the entity to affect its
returns from the entity. The financial statements of these entities are included in these consolidated financial
statements from the date that control commences until the date that control ceases. Details of the Company’s
significant entities are as follows:
Name of subsidiary
CTFS Holdings Limited1
Principal activity
Marketing of insurance products, processing credit
card transactions at Canadian Tire Retail Banners,
banking and reinsurance
Canadian Tire Real Estate Limited
Real estate
CT Real Estate Investment Trust
Real estate
FGL Sports Ltd. (“SportChek”)2
Franchise Trust3
Glacier Credit Card Trust4
Retailer of sporting equipment, apparel and
footwear
Canadian Tire Dealer Loan Program
Financing program to purchase co-ownership
interests in the Bank’s credit card loans
Mark’s Work Wearhouse Ltd.
Retailer of clothing and footwear
Helly Hansen Group AS
Holding company for “Helly Hansen” branded
global wholesaler of sportswear and workwear
Country of
incorporation
and operation
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Norway
Ownership Interest
2021
80.0 %
2020
80.0 %
100.0 %
100.0 %
69.0 %
69.2 %
100.0 %
100.0 %
0.0 %
0.0 %
0.0 %
0.0 %
100.0 %
100.0 %
100.0 %
100.0 %
1 Legal entity CTFS Holdings Limited, incorporated in 2014, is the parent company of CTB and CTFS Bermuda Ltd. CTB's principal activity is banking, marketing
2
of insurance products and processing credit card transactions at the Company’s stores. CTFS Bermuda Ltd.’s principal activity is reinsurance.
“SportChek” refers to the retail business carried on by FGL Sports Ltd., including stores operated under the SportChek, Sports Experts, Atmosphere, National
Sports, Sports Rousseau and Hockey Experts names and trademarks.
3 Franchise Trust is a legal entity sponsored by a third-party bank that originates loans to certain Dealers under the Dealer Loan program. The Company does
not have any share ownership in Franchise Trust; however, the Company has determined that it has the ability to direct the relevant activities and returns on the
silo of assets and liabilities of Franchise Trust that relate to the Canadian Tire Dealer Loan Program. As the Company has control over this silo of assets and
liabilities, it is consolidated in these financial statements.
4 GCCT was formed to meet specific business needs of the Company, namely to buy co-ownership interests in the Company’s credit card loans receivable.
GCCT issues debt to third-party investors to fund such purchases. The Company does not have any share ownership in GCCT; however, the Company has
determined that it has the ability to direct the relevant activities and returns of GCCT. As the Company has control over GCCT, it is consolidated in these
financial statements.
15.2 Details of Non-wholly Owned Subsidiaries that have Non-Controlling Interests
The portion of net assets and income attributable to third parties is reported as non-controlling interests and net
income attributable to non-controlling interests in the Consolidated Balance Sheets and Consolidated Statements
of Income, respectively. The non-controlling interests of CT REIT and CTFS Holdings Limited were initially
measured at fair value on the date of acquisition.
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the information relating to non-controlling interests:
(C$ in millions)
Non-controlling interests
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Net income attributable to non-controlling interests
Equity attributable to non-controlling interests
Distributions to non-controlling interests
CTFS
Holdings
Limited1
20.0 %
CT REIT2
31.0 %
Other3
50.0 %
$
7,348.1
$
7.1
$
383.2
2,902.7
3,652.5
1,176.1
1,341.4
62.7
525.9
(41.6)
$
$
6,493.7
300.7
2,522.0
3,678.1
$
$
$
$
514.5
66.6
852.3
(59.1)
$
$
$
22.9
49.6
13.9
39.4
19.2
198.9
3.8
8.8
(2.8)
2021
Total
7,378.1
6,926.5
3,217.3
6,213.9
4,873.4
2,054.8
133.1
1,387.0
(103.5)
1 Net income attributable to non-controlling interests is based on the net income of CTFS Holdings Limited adjusted for contractual requirements as stipulated in
the Universal Shareholder Agreement.
2 Net income attributable interests is based on net income of CT REIT adjusted to convert to the Company’s cost method, including recording of depreciation.
3 Net income attributable to non-controlling interests is based on net income of the subsidiary adjusted for contractual requirements as stipulated in the ownership
agreement.
(C$ in millions)
Non-controlling interests
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Net income attributable to non-controlling interests
Equity attributable to non-controlling interests
Distributions to non-controlling interests
CTFS
Holdings
Limited1
20.0 %
CT REIT2
30.8 %
Other3
50.0 %
$
6,773.3
$
13.0
$
7.8
$
360.9
1,614.1
4,506.4
1,013.7
1,345.2
47.2
500.6
(38.9)
$
$
6,163.1
290.6
2,509.7
3,375.8
$
$
$
$
502.3
62.4
827.2
(56.0)
51.8
1.6
42.3
15.7
137.4
1.2
7.8
(1.5)
$
$
2020
Total
6,794.1
6,575.8
1,906.3
7,058.4
4,405.2
1,984.9
110.8
1,335.6
(96.4)
1 Net income attributable to non-controlling interests is based on the net income of CTFS Holdings Limited adjusted for contractual requirements as stipulated in
the Universal Shareholder agreement.
2 Net income attributable to non-controlling interests is based on net income of CT REIT adjusted to convert to the Company’s cost method, including recording of
depreciation.
3 Net income attributable to non-controlling interests is based on net income of the subsidiary adjusted for contractual requirements as stipulated in the ownership
agreement.
116 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. Income Taxes
16.1 Deferred Income Tax Assets and Liabilities
The amount of deferred tax assets or liabilities recognized in the Consolidated Balance Sheets and the
corresponding movement recognized in the Consolidated Statements of Income, Consolidated Statements of
Changes in Equity, or resulting from a business combination is as follows:
Balance,
beginning of
year
Recognized
in profit or
loss
Recognized in
other
comprehensive
income
Recognized
in equity
Other
adjustments
Balance,
end of year
2021
(C$ in millions)
Provisions, deferred revenue and
reserves
Property and equipment
Intangible assets
Employee benefits
Cash flow hedges
Right-of-use asset and lease liabilities
Non-capital losses carryforward
Other
Net deferred tax asset (liability)1
$
199.8 $
7.0 $
(54.1)
(275.1)
50.9
49.0
153.7
44.5
8.0
(22.7)
(10.4)
0.9
—
(11.3)
(4.0)
(7.7)
— $
—
—
0.2
(9.6)
—
—
—
— $
0.3
3.3
—
(28.8)
—
(1.0)
(0.1)
— $
—
—
—
—
—
—
—
$
176.7 $
(48.2) $
(9.4) $
(26.3) $
— $
1
Includes the net amount of deferred tax assets of $218.7 million and deferred tax liabilities of $125.9 million.
206.8
(76.5)
(282.2)
52.0
10.6
142.4
39.5
0.2
92.8
2020
(C$ in millions)
Provisions, deferred revenue and
reserves
Property and equipment
Intangible assets
Employee benefits
Cash flow hedges
Right-of-use asset and lease liabilities
Non-capital losses carryforward
Other
Net deferred tax asset (liability)1
Balance,
beginning of
year
Recognized in
profit or loss
Recognized in
other
comprehensive
income
Recognized in
equity
Other
adjustments
Balance,
end of year
$
247.8 $
(47.9) $
(52.7)
(267.3)
46.5
11.9
155.9
34.6
6.1
(1.4)
(7.7)
0.5
—
(2.2)
9.6
1.8
— $
—
—
3.9
26.4
—
—
—
(0.1) $
— $
—
(0.1)
—
10.7
—
0.3
0.1
—
—
—
—
—
—
—
$
182.8 $
(47.3) $
30.3 $
10.9 $
— $
199.8
(54.1)
(275.1)
50.9
49.0
153.7
44.5
8.0
176.7
1
Includes the net amount of deferred tax assets of $298.7 million and deferred tax liabilities of $122.0 million.
No deferred tax is recognized on the amount of temporary differences arising from the difference between the
carrying amount of the investment in subsidiaries, branches and associates and interests in joint arrangements
accounted for in these consolidated financial statements and the cost amount for tax purposes of the investment.
The Company is able to control the timing of the reversal of these temporary differences and believes it is
probable that they will not reverse in the foreseeable future. The amount of these taxable temporary differences
was approximately $2.5 billion at January 1, 2022 (January 2, 2021 – $2.5 billion).
No deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent
that it is not probable that future taxable profit will be available against which they can be utilized. The amount of
these deductible temporary differences was approximately $160.5 million at January 1, 2022 (January 2, 2021 –
156.5 million).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16.2 Income Tax Expense
The following are the major components of income tax expense:
(C$ in millions)
Current tax expense
Current period
Adjustments with respect to prior years
Deferred tax expense (benefit)
$
$
Deferred income tax expense relating to the origination and reversal of temporary
differences
$
Deferred income tax expense adjustments with respect to prior years
Deferred income tax expense resulting from change in tax rate
2021
2020
434.9 $
(41.9)
393.0 $
10.9 $
37.0
0.3
48.2
303.3
(41.1)
262.2
10.7
35.7
0.9
47.3
309.5
2020
(12.5)
(4.3)
1.0
(10.6)
(3.9)
(30.3)
Total income tax expense
$
441.2 $
Income tax expense (benefit) recognized in other comprehensive income was as follows:
(C$ in millions)
Net fair value gains (losses) on hedging instruments entered into for cash flow
hedges not subject to basis adjustment
$
Deferred cost of hedging not subject to basis adjustment – Changes in fair value
of the time value of an option in relation to time-period related hedged items
Reclassification of losses to income
Net fair value gains (losses) on hedging instruments entered into for cash flow
hedges subject to basis adjustment
Actuarial losses
Total income tax expense (benefit)
$
2021
1.9 $
0.5
5.1
2.1
(0.2)
9.4 $
Reconciliation of Income Tax Expense
Income taxes in the Consolidated Statements of Income vary from amounts that would be computed by applying
the statutory income tax rate for the following reasons:
(C$ in millions)
Income before income taxes
Income taxes based on the applicable statutory tax rate of 26.42% (January 2,
2021 – 26.49%)
Adjustment to income taxes resulting from:
Income attributable to non-controlling interests in flow-through entities
Prior years’ tax settlement
Non-taxable portion of capital gains
Non-deductible stock option expense
Other
Income tax expense
$
$
2021
1,701.9 $
2020
1,172.1
449.7 $
310.5
(18.4)
—
(1.5)
15.1
(3.7)
$
441.2 $
(16.8)
(0.2)
(0.2)
14.8
1.4
309.5
The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent
(January 2, 2021 – 15.0 percent) and the Canadian provincial income tax rate of 11.42 percent (January 2, 2021 –
11.49 percent).
In the ordinary course of business, the Company is subject to ongoing audits by tax authorities. While the
Company has determined that its tax filing positions are appropriate and supportable, from time to time certain
matters are reviewed and challenged by the tax authorities.
118 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company regularly reviews the potential for adverse outcomes with respect to tax matters. The Company
believes that the ultimate disposition of these will not have a material adverse effect on its liquidity, Consolidated
Balance Sheets, or net income because the Company has determined that it has adequate provision for these tax
matters. Should the ultimate tax liability materially differ from the provision, the Company’s effective tax rate and
its earnings could be affected positively or negatively in the period in which the matters are resolved.
17. Deposits
Total deposits of $3,893.7 million (January 2, 2021 - $3,509.7 million) consist of broker deposits and retail
deposits.
Cash from broker deposits is raised through sales of GICs through brokers rather than directly to retail customers.
Broker deposits are offered for varying terms ranging from 30 days to five years and issued broker GICs are non-
redeemable prior to maturity (except in certain rare circumstances). Total short-term and long-term broker
deposits outstanding at January 1, 2022, were $2,523.6 million (January 2, 2021 – $2,497.3 million).
Retail deposits consist of HIS deposits, retail GICs and TFSA deposits. Total retail deposits outstanding at
January 1, 2022, were $1,370.1 million (January 2, 2021 – $1,012.4 million).
For repayment requirements of deposits refer to Note 5.4. The following are the effective rates of interest:
GIC deposits
HIS account deposits
18. Trade and Other Payables
Trade and other payables include the following:
(C$ in millions)
Trade payables and accrued liabilities
Derivatives (Note 33.2)
Financial liabilities
Deferred revenue
Insurance reserve
Other
2021
2.72 %
1.52 %
2020
2.81 %
1.82 %
$
2021
2,369.2 $
15.5
2,384.7
291.2
6.2
232.2
2020
1,962.4
119.3
2,081.7
246.8
8.1
171.7
$
2,914.3 $
2,508.3
Deferred revenue consists mainly of unearned revenue relating to gift cards and customer loyalty program
rewards. Deferred revenue will be recognized as revenue as the customer utilizes gift cards and loyalty rewards
are redeemed. The majority of deferred revenue is expected to be redeemed within one year from issuance.
$222.4 million included in deferred revenue at the beginning of the period was recognized as revenue in 2021
(January 2, 2021 – $199.9 million).
Other consists primarily of the short-term portion of share based payment transactions and sales taxes payable.
The credit range period on trade payables is one to 180 days (January 2, 2021 – one to 150 days).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Provisions
The following table presents the changes to the Company’s provisions:
(C$ in millions)
Balance, beginning of year
Charges, net of reversals
Utilizations
Discount adjustments
Balance, end of year
Current provisions
Long-term provisions
20. Contingencies
Sales and
warranty
returns
Site restoration
and
decommissioning
Other
$
198.3 $
52.5 $
16.2 $
620.1
(624.9)
0.2
$
193.7 $
182.0
11.7
4.8
(7.9)
(4.3)
45.1 $
3.2
41.9
9.2
(4.9)
—
20.5 $
10.0
10.5
2021
Total
267.0
634.1
(637.7)
(4.1)
259.3
195.2
64.1
Legal Matters
The Company is party to a number of legal and regulatory proceedings, and has determined that each such
proceeding constitutes a routine matter incidental to the business it conducts, and that the ultimate disposition of
the proceedings will not have a material effect on its consolidated net income, cash flows, or financial position.
The Bank appealed commodity tax assessments for the years 2011 through 2017 to the Tax Court of Canada. On
June 29, 2021, the Tax Court issued a judgment allowing the Bank’s appeal on the basis that the service fees paid
by the Bank to the credit card networks are consideration for exempt supplies of financial services, pursuant to a
consent judgment. The Bank expects the Canada Revenue Agency to reassess in accordance with the Tax
Court’s judgment in the coming months, reversing the commodity tax assessments. No provision was made for
the assessed amounts that would have been payable in the event of an adverse outcome.
21. Short-Term Borrowings
Short-term borrowings include commercial paper notes issued by the Company and GCCT, note purchase facility
borrowings issued by GCCT, bank line of credit and factoring facility borrowings. Short-term borrowings may bear
interest payable monthly, at maturity or be sold at a discount and mature at face value.
The commercial paper notes are short-term notes issued with varying original maturities of one year or less for
GCCT’s ABCP and 270 days or less for the Company’s US CP at interest rates fixed at the time of each renewal
and are recorded at amortized cost. As at January 1, 2022, GCCT had $50.1 million (January 2, 2021 – $114.3
million) of ABCP outstanding and no borrowings were outstanding on CTB’s committed note purchase facilities,
other than a nominal balance on one to maintain GCCT’s co-ownership interest. CTB had no borrowings
outstanding under its unsecured committed bank line of credit (January 2, 2021 – nil).
As at January 1, 2022, the Company (excluding Helly Hansen) had no borrowings on its unsecured committed
bank lines of credit and no US CP outstanding. Helly Hansen had $58.0 million (January 2, 2021 – $50.9 million)
of C$ equivalent borrowings outstanding on its committed bank line of credit (Norwegian Krone (“NOK”) 180
million) and its factoring facility (NOK 224.5 million). CT REIT had no borrowings under its committed bank line of
credit (January 2, 2021 – nil).
120 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. Loans
Franchise Trust, a special purpose entity, is a legal entity sponsored by a third-party bank that originates loans to
certain Dealers. Loans are what Franchise Trust incurs to fund Dealer loans, which are secured by such Dealers’
store assets. These loans are not direct legal liabilities of the Company but have been consolidated in the
accounts of the Company as the Company effectively controls the silo of Franchise Trust containing the Canadian
Tire Dealer Loan Program (refer to note 15.1).
Loans, which are initially recognized at fair value and are subsequently measured at amortized cost, are due
within one year.
23. Long-Term Debt
Long-term debt includes the following:
(C$ in millions)
Medium-term notes (CTC)
3.167% due July 6, 2023
6.500% due April 13, 2028
6.570% due February 24, 2034
5.610% due September 4, 2035
Debentures (CT REIT)
Series C, 2.159% due June 1, 2021
Series A, 2.852% due June 9, 2022
Series B, 3.527% due June 9, 2025
Series D, 3.289% due June 1, 2026
Series E, 3.469% due June 16, 2027
Series F, 3.865% due December 7, 2027
Series G, 2.371%, January 6, 2031
Senior asset-backed term notes (GCCT)
Series 2017-1, 2.048%, September 20, 20221
Series 2018-1, 3.138%, September 20, 20231
Series 2019-1, 2.280%, June 6, 20241
Series 2020-1, 1.388%, September 22, 20251
Subordinated asset-backed term notes (GCCT)
Series 2017-1, 3.298%, September 20, 20221
Series 2018-1, 4.138%, September 20, 20231
Series 2019-1, 3.430%, June 6, 20241
Series 2020-1, 2.438%, September 22, 20251
Mortgages
Total debt
Current
Non-current
Face value
2021
Carrying
amount
Face value
2020
Carrying
amount
400.0
150.0
200.0
200.0
—
150.0
200.0
200.0
175.0
200.0
150.0
523.6
546.0
523.6
448.8
36.4
38.0
36.4
31.2
75.0
399.6
150.9
201.5
199.7
—
149.9
199.4
199.4
174.4
199.2
149.1
523.3
545.0
522.5
447.1
36.4
38.0
36.4
31.2
75.5
400.0
150.0
200.0
200.0
150.0
150.0
200.0
200.0
175.0
200.0
—
523.6
546.0
523.6
448.8
36.4
38.0
36.4
31.2
65.8
399.2
150.8
201.5
199.7
150.0
149.8
199.2
199.2
174.2
199.1
—
522.8
544.5
521.7
446.6
36.4
37.9
36.4
31.2
66.0
$
4,284.0 $
4,278.5 $
4,274.8 $
4,266.2
719.8
719.8
150.5
150.5
3,564.2
3,558.7
4,124.3
4,115.7
1 The expected repayment date as defined in the series supplemental indenture.
The carrying amount of long-term debt is net of debt issuance costs of $11.0 million (January 2, 2021 – $13.8
million).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Senior and Subordinated Asset-Backed Term Notes (GCCT)
The asset-backed senior and subordinated term notes issued by GCCT are securitized by a co-ownership interest
in a pool of loans receivable that are owing by selected credit card customer accounts of the Bank (“Securitized
Pool”). These notes are recorded at amortized cost using the effective interest method.
Subject to the payment of certain priority amounts, the senior asset-backed term notes of a series have recourse
on a priority basis to the allocable collections from such series’ co-ownership interest in the Securitized Pool. The
subordinated asset-backed term notes of such series have recourse to such series’ allocable collections on a
subordinated basis to the senior asset-backed term notes of such series in terms of the priority of payment of
principal and, in some circumstances, interest. The entitlement of noteholders and other parties to such assets is
governed by the priority and payment provisions set forth in GCCT’s Trust Indenture dated as of November 29,
1995, as amended, and the related series supplements under which the outstanding series of notes were issued
as well as the series purchase agreements which set forth the Bank’s overcollateralization credit enhancement.
Repayment of the principal of the series 2017-1, 2018-1, 2019-1 and 2020-1 asset-backed term notes is
scheduled for the expected repayment dates indicated in the preceding table. None of the GCCT’s asset-backed
term notes are otherwise early redeemable by GCCT or the Bank. During a contractual liquidation period prior to
the expected repayment date of a particular series’ notes, collections from the Securitized Pool allocable to GCCT
with respect to the liquidating series as well as all outstanding series in their revolving periods will be accumulated
by the custodian. If any amount remained owing subsequent to the expected repayment date, collections from the
Securitized Pool allocable to GCCT with respect to the liquidating series as well as any outstanding series in their
revolving periods will be applied to pay such amount until a specified termination date.
Principal repayments may commence earlier than a series’ expected repayment date (an amortization period) if
certain events occur including:
• the Bank failing to make required payments to GCCT or failing to meet covenant or other contractual terms;
• the performance of the Securitized Pool failing to achieve set criteria; and
• insufficient credit card loans receivable in the Securitized Pool.
None of these events occurred in the Bank’s year ended December 31, 2021.
Medium-Term Notes and Debentures
Medium-term notes and debentures are unsecured and those issued by the Company and CT REIT with initial
terms greater than two years are redeemable by the Company or CT REIT, as applicable, in whole or in part, at
any time, at the greater of par or a formula price based upon interest rates at the time of redemption.
Mortgages
Mortgages payable as at January 1, 2022 had a weighted average interest rate of 2.36% percent and maturity
dates of July 1, 2022 and March 1, 2026.
24. Other Long-Term Liabilities
Other long-term liabilities include the following:
(C$ in millions)
Redeemable financial instrument1
Employment Benefits (Note 25)
Derivatives (Note 33.2)
Other
$
$
2021
567.0 $
198.8
10.5
74.3
850.6 $
2020
567.0
194.7
10.4
78.2
850.3
1 A financial liability; refer to Note 33 for further information on the redeemable financial instrument.
Other primarily includes the long-term portion of share-based payment transactions.
122 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Employment Benefits
Profit-Sharing Program
The Company has a profit-sharing program for certain employees. The amount awarded to employees is
contingent on the Company’s profitability but shall be equal to at least one percent of the Company’s previous
year’s net profits after income tax. A portion of the award (“Base Award”) is contributed to a DPSP for the benefit
of the employees. The maximum amount of the Company’s Base Award contribution to the DPSP per employee
per year is subject to limits set by the Income Tax Act. Each participating employee is required to invest and
maintain 10 percent of the Base Award in a Company share fund of the DPSP. The share fund holds both
Common Shares and Class A Non-Voting Shares. The Company’s contributions to the DPSP, with respect to
each employee, vest 20 percent after one year of continuous service and 100 percent after two years of
continuous service.
In 2021, the Company contributed $27.7 million (January 2, 2021 – $25.4 million) under the terms of the DPSP.
Defined Benefit Plan
The Company provides certain health care, dental care, life insurance and other benefits for certain retired
employees pursuant to Company policy. The Company does not have a pension plan. Information about the
Company’s defined benefit plan is as follows:
(C$ in millions)
Change in the present value of defined benefit obligation
2021
2020
Defined benefit obligation, beginning of year
$
194.7 $
176.4
Current service cost
Interest cost
Actuarial loss arising from changes in demographic assumptions
Actuarial (gain) loss arising from changes in financial assumptions
Actuarial loss (gain) arising from changes in experience assumptions
Benefits paid
2.5
5.0
4.5
(10.4)
6.8
(4.3)
Defined benefit obligation, end of year1
1 The accrued benefit obligation is not funded because funding is provided when benefits are paid. Accordingly, there are no plan assets.
198.8 $
$
2.1
5.4
—
15.6
(1.0)
(3.8)
194.7
Significant actuarial assumptions used:
Defined benefit obligation, end of year:
Discount rate
Net benefit plan expense for the year:
Discount rate
2021
2020
3.00 %
2.60 %
2.60 %
3.10 %
For measurement purposes, a 3.38 percent weighted average health care cost trend rate is assumed for 2021
(January 2, 2021 – 3.85 percent). The rate is assumed to decrease gradually to 1.90 percent for 2040 and remain
at that level thereafter.
The most recent actuarial valuation of the obligation was performed as of January 1, 2022.
The cumulative amount of actuarial losses before tax recognized in equity at January 1, 2022, was $77.8 million
(January 2, 2021 – $76.9 million).
Sensitivity Analysis:
The Company’s defined benefit plan is exposed to actuarial risks such as the health care cost trend rate, the
discount rate and the life expectancy assumptions. The following table provides the sensitivity of the defined
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
benefit obligation to these assumptions. For each sensitivity test, the impact of a reasonably possible change in a
single factor is shown with other assumptions left unchanged.
(C$ in millions)
Sensitivity analysis
A fifty basis point change in assumed discount rates
$
A one-percentage-point change in assumed health care cost trend rates
A one-year change in assumed life expectancy
2021
Accrued benefit obligation
Increase
Decrease
(15.5) $
18.7
5.1
17.5
(16.0)
(5.1)
The weighted-average duration of the defined benefit plan obligation at January 1, 2022 is 16.6 years (January 2,
2021 – 17.2 years).
26. Share Capital
Share capital consists of the following:
(C$ in millions)
Authorized
3,423,366 Common Shares
100,000,000 Class A Non-Voting Shares
Issued
2021
2020
3,423,366 Common Shares (2020 – 3,423,366)
56,723,758 Class A Non-Voting Shares (2020 – 57,383,758)
$
$
0.2 $
593.4
593.6 $
0.2
596.8
597.0
All issued shares are fully paid. The Company does not hold any of its Common or Class A Non-Voting Shares.
Neither the Common nor the Class A Non-Voting Shares has a par value.
During 2021 and 2020, the Company issued and purchased Class A Non-Voting Shares. The Company’s share
purchases were made pursuant to its NCIB program, in connection with its anti-dilutive policy and announced
share purchase intentions.
During the fourth quarter of 2021, the Company entered into an automatic securities purchase plan (“ASPP”) and
provided notice to its broker to purchase Class A Non-Voting Shares under the NCIB during the Company’s
blackout period starting January 2, 2022. As at January 1, 2022, an obligation to purchase $163.2 million Class A
Non-Voting Shares (January 2, 2021 – n/a) was recognized under the ASPP in trade and other payables.
The following transactions occurred with respect to Class A Non-Voting Shares during 2021 and 2020:
(C$ in millions)
Number
2021
$
Number
Shares outstanding at beginning of the year
57,383,758 $
596.8
58,096,958 $
Issued under the dividend reinvestment plan
Purchased1
Accrued liability for ASPP commitment
Excess of purchase price over average cost
81,715
14.7
105,102
(741,715)
(131.1)
(818,302)
(110.7)
—
—
(10.2)
123.2
—
—
Shares outstanding at end of the period
56,723,758 $
593.4
57,383,758 $
1 Purchased shares, pursuant to the Company’s NCIB program, have been restored to the status of authorized but unissued shares. The Company records
shares purchased on a transaction date basis.
124 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
2020
$
587.8
14.3
3.0
102.4
596.8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Conditions of Class A Non-Voting Shares and Common Shares
The holders of Class A Non-Voting Shares are entitled to receive a fixed cumulative preferential dividend at the
rate of $0.01 per share per annum. After payment of fixed cumulative preferential dividends at the rate of $0.01
per share per annum on each of the Class A Non-Voting Shares with respect to the current year and each
preceding year and payment of a non-cumulative dividend on each of the Common Shares with respect to the
current year at the same rate, the holders of the Class A Non-Voting Shares and the Common Shares are entitled
to further dividends declared and paid in equal amounts per share without preference or distinction or priority of
one share over another.
In the event of the liquidation, dissolution, or winding up of the Company, all of the property of the Company
available for distribution to the holders of the Class A Non-Voting Shares and the Common Shares shall be paid or
distributed equally, share for share, to the holders of the Class A Non-Voting Shares and to the holders of the
Common Shares without preference or distinction or priority of one share over another.
The holders of Class A Non-Voting Shares are entitled to receive notice of and to attend all meetings of the
shareholders; however, except as provided by the Business Corporations Act (Ontario) and as hereinafter noted,
they are not entitled to vote at those meetings. Holders of Class A Non-Voting Shares, voting separately as a
class, are entitled to elect the greater of (i) three Directors or (ii) one-fifth of the total number of the Company’s
Directors.
The holders of Common Shares are entitled to receive notice of, to attend and to have one vote for each Common
Share held at all meetings of holders of Common Shares, subject only to the restriction on the right to elect those
directors who are elected by the holders of Class A Non-Voting Shares as set out above.
Common Shares can be converted, at any time and at the option of each holder of Common Shares, into Class A
Non-Voting Shares on a share-for-share basis. The authorized number of shares of either class cannot be
increased without the approval of the holders of at least two-thirds of the shares of each class represented and
voted at a meeting of the shareholders called for the purpose of considering such an increase. Neither the Class
A Non-Voting Shares nor the Common Shares can be changed in any manner whatsoever, whether by way of
subdivision, consolidation, reclassification, exchange, or otherwise, unless at the same time the other class of
shares is also changed in the same manner and in the same proportion.
Should an offer to purchase Common Shares be made to all, or substantially all of the holders of Common
Shares, or be required by applicable securities legislation or by the Toronto Stock Exchange to be made to all
holders of Common Shares in Ontario and should a majority of the Common Shares then issued and outstanding
be tendered and taken up pursuant to such offer, the Class A Non-Voting Shares shall thereupon and thereafter
be entitled to one vote per share at all meetings of the shareholders and thereafter the Class A Non-Voting Shares
shall be designated as Class A Shares. The foregoing voting entitlement applicable to Class A Non-Voting Shares
would not apply in the case where an offer is made to purchase both Class A Non-Voting Shares and Common
Shares at the same price per share and on the same terms and conditions.
The foregoing is a summary of certain conditions attached to the Class A Non-Voting Shares of the Company and
reference should be made to the Company’s articles of amendment dated December 15, 1983 for a full statement
of such conditions, which are available on SEDAR at www.sedar.com.
As of January 1, 2022, the Company had dividends declared and payable to holders of Class A Non-Voting
Shares and Common Shares of $78.2 million (January 2, 2021 – $70.5 million) at a rate of $1.3000 per share
(January 2, 2021 – $1.1750 per share).
On February 16, 2022 the Company’s Board of Directors declared a dividend of $1.3000 per share payable on
June 1, 2022 to shareholders of record as of April 30, 2022.
Dividends per share declared were $4.8250 in 2021 (January 2, 2021 – $4.5875).
The dilutive effect of employee stock options is 600,632 (January 2, 2021 – 193,302).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. Share-Based Payments
The Company’s share-based payment plans are described below.
Stock Options
The Company has granted stock options to certain employees that enable such employees to exercise their stock
options and subscribe for Class A Non-Voting Shares or surrender their options and receive a cash payment.
Such cash payment is calculated as the difference between the fair market value of Class A Non-Voting Shares as
at the surrender date and the exercise price of the option. Stock options vest over a three-year period. All
outstanding stock options have a term of seven years. At January 1, 2022, and January 2, 2021, the aggregate
number of Class A Non-Voting Shares authorized for issuance under the stock option plan was 3.4 million.
Stock option transactions during 2021 and 2020 were as follows:
2021
2020
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Outstanding at beginning of year
1,945,328 $
115.67
1,286,007 $
Granted
Exercised and surrendered1
Forfeited
Outstanding at end of year
224,448
(768,440)
174.11
1,021,688
128.55
(134,521)
(77,349)
101.89
(227,846)
1,323,987 $
118.91
1,945,328 $
146.71
80.49
121.08
129.88
115.67
Stock options exercisable at end of year
462,950
620,716
1 The weighted average market price of the Company's shares when the options were exercised in 2021 was $194.70 (January 2, 2021 – $158.78).
The following table summarizes information about stock options outstanding and exercisable at January 1, 2022:
Options outstanding
Options exercisable
Range of exercise prices
$ 177.09
173.14
156.29
144.35
129.14 to 129.92
80.49
$ 80.49 to 177.09
Number of
outstanding
options
100,404
219,716
74,135
206,168
39,463
684,101
Weighted
average
remaining
contractual
life1
3.15 $
6.21
2.16
4.15
0.94
5.22
Weighted
average
exercise
price
Number of
exercisable
options
Weighted
average
exercise
price
177.09
173.14
156.29
144.35
129.74
100,404 $
1,126
74,135
107,432
39,463
80.49
140,390
177.09
173.14
156.29
144.35
129.74
80.49
132.82
1,323,987
4.76 $
118.91
462,950 $
1 Weighted average remaining contractual life is expressed in years.
Performance Share Units and Performance Units
The Company grants Performance Share Units (“PSUs”) to certain of its employees that generally vest after three
years. Each PSU entitles the participant to receive a cash payment equal to the fair market value of the
Company’s Class A Non-Voting Shares on the date set out in the Performance Share Unit plan, multiplied by a
factor determined by specific performance-based criteria and a relative total shareholder return modifier.
CT REIT grants Performance Units (“PUs”) to certain of its employees that generally vest after three years. Each
PU entitles the participant to receive a cash payment equal to the fair market value of Units of CT REIT on the
date set out in the Performance Unit plan, multiplied by a factor determined by specific performance-based
criteria.
126 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of stock options and PSUs at the end of the year was determined using the Black-Scholes option
pricing model with the following inputs:
Share price at end of year (C$)
Weighted average exercise price1(C$)
Expected remaining life (years)
Expected dividends
Expected volatility2
Risk-free interest rate
Stock options
PSUs Stock options
2021
2020
PSUs
$
$
181.44
$
181.44
117.24
3.8
2.7 %
29.0 %
1.8 %
N/A
1.0
3.2 %
25.6 %
1.2 %
$
$
167.33
$
167.33
117.99
4.1
3.0 %
29.5 %
0.7 %
N/A
1.6
3.3 %
35.6 %
0.5 %
1 Reflects expected forfeitures.
2 Reflects historical volatility over a period of time similar to the remaining life of the stock options, which may not necessarily be the actual outcome.
Service and non-market performance conditions attached to the transactions are not taken into account in
determining fair value.
Deferred Share Units and Deferred Units
The Company offers Deferred Share Unit (“DSU”) plans to certain of its Executives and to members of its Board
of Directors. Under the Executives’ DSU plan, eligible Executives may elect to receive all or a portion of their
annual bonus in DSUs. The Executives’ DSU plan also provides for the granting of discretionary DSUs. Under
the Directors’ DSU plan, eligible Directors may defer all or a portion of their annual director fees into DSUs. DSUs
received under both the Executives’ and Directors’ DSU plans are settled in cash following termination of service
with the Company and/or the Board based on the fair market value of the Company’s Class A Non-Voting Shares
on the settlement date.
CT REIT also offers a Deferred Unit (“DU”) plan for members of its Board of Trustees. Under this plan, eligible
trustees may elect to receive all or a portion of their annual trustee fees in DUs. DUs are settled through the
issuance of an equivalent number of Units of CT REIT or, at the election of the trustee, cash, following termination
of service with the Board.
Restricted Unit Plan
CT REIT offers a Restricted Unit (“RU”) plan for its Executives. RUs may be issued as discretionary grants or,
Executives may elect to receive all or a portion of their annual bonus in RUs. At the end of the vesting period,
which is generally three years from the date of grant (in the case of discretionary grants) and five years from the
annual bonus payment date (in the case of deferred bonus), an Executive receives an equivalent number of Units
issued by CT REIT or, at the Executive’s election, the cash equivalent thereof.
The Company enters into equity derivative transactions to hedge share-based payments and does not apply
hedge accounting. The expense recognized for share-based compensation is summarized as follows:
(C$ in millions)
Expense arising from share-based payment transactions
Effect of hedging arrangements
Total expense included in net income
$
$
2021
123.5 $
(36.1)
87.4 $
2020
115.5
(82.1)
33.4
The total carrying amount of liabilities for share-based payment transactions at January 1, 2022, was $202.8
million (January 2, 2021 – $172.9 million).
The intrinsic value of the liability for vested benefits at January 1, 2022, was $39.3 million (January 2, 2021 –
$55.6 million).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28. Revenue
Revenue by reportable operating segment is as follows:
(C$ in millions)
Sale of goods
Retail
Financial
Services CT REIT
Adjust-
ments
Total
Retail
Financial
Services CT REIT
Adjust-
ments
2021
2020
Total
$ 14,510.1 $
— $
— $
— $ 14,510.1 $ 13,062.1 $
— $
— $
— $ 13,062.1
Interest income on loans
receivable
7.2 1,009.6
Royalties and licence fees
58.7
—
19.6
155.8
Services rendered
Rental income
—
—
—
(3.3) 1,013.5
12.9 1,056.6
—
58.7
50.0
—
(3.8)
171.6
21.1
152.1
—
—
—
(4.9) 1,064.6
—
50.0
(3.7)
169.5
484.8
—
53.4
—
538.2
471.1
—
53.7
—
524.8
$ 15,080.4 $ 1,165.4 $
53.4 $
(7.1) $ 16,292.1 $ 13,617.2 $ 1,208.7 $
53.7 $
(8.6) $ 14,871.0
Retail revenue breakdown is as follows:
(C$ in millions)
Canadian Tire
SportChek
Mark’s
Helly Hansen1
Petroleum
Other and intersegment eliminations
1 Helly Hansen revenue represents external revenue only.
Major Customers
The Company does not rely on any one customer.
29. Cost of Producing Revenue
Cost of producing revenue consists of the following:
(C$ in millions)
Inventory cost of sales1
Net impairment loss on loans receivable
Finance costs on deposits
Other
2021
$
9,197.1 $
2,036.5
1,422.0
644.9
1,737.2
42.7
2020
8,639.5
1,814.8
1,213.2
541.9
1,358.7
49.1
$
15,080.4 $
13,617.2
2021
$
10,101.6 $
210.1
89.7
55.5
2020
9,260.4
405.9
76.8
51.3
$
10,456.9 $
9,794.4
1 Inventory cost of sales includes depreciation for the year ended January 1, 2022 of $17.7 million (January 2, 2021 – $12.9 million).
Inventory writedowns, as a result of net realizable value being lower than cost, recognized in the year ended
January 1, 2022 were $115.9 million (January 2, 2021 – $91.5 million).
Inventory writedowns recognized in prior periods and reversed in the year ended January 1, 2022 were $14.9
million (January 2, 2021 – $8.3 million). The reversal of writedowns was the result of actual losses being lower
than previously estimated.
The writedowns and reversals are included in inventory cost of sales.
128 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the following:
(C$ in millions)
Personnel expenses
Occupancy
Marketing and advertising
Depreciation of property and equipment and investment property 1
Depreciation of right-of-use assets
Amortization of intangible assets
Information systems
Other
1 Refer to Note 29 for depreciation included in cost of producing revenue.
2021
$
1,575.5 $
461.6
377.6
271.5
292.7
119.6
248.7
587.1
2020
1,429.8
433.5
301.9
287.1
282.6
112.7
212.6
539.1
$
3,934.3 $
3,599.3
31. Net Finance Costs
Net finance costs consists of the following:
(C$ in millions)
Finance (income)
Finance (income) on lease receivables
Finance costs
Finance costs on lease liabilities
$
$
2021
(8.6) $
(5.1)
145.9
90.3
222.5 $
2020
(9.8)
(5.8)
173.9
98.2
256.5
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. Notes to the Consolidated Statements of Cash Flows
Changes in liabilities arising from financing activities comprise the following:
(C$ in millions)
Balance, beginning of year
Cash changes:
Lease liabilities
Deposits
Long-term debt
$
2,226.5 $
3,509.7 $
4,266.2
2021
Payment of lease liabilities (principal portion)
(365.3)
Change in deposits
Long-term debt issuance
Long-term debt repayment
Mortgage issuance
Mortgage repayment
Payment of transaction costs related to long-term debt
—
—
—
—
—
—
—
379.4
—
—
—
—
—
Total changes from financing cash flows
(365.3)
379.4
Non-cash changes:
New leases, interest accretion, currency translation
adjustment and other
Amortization of broker commission
Amortization of debt issuance costs
Balance, end of year
(C$ in millions)
Balance, beginning of year
Cash changes:
414.6
—
—
—
4.6
—
$
$
2,275.8 $
3,893.7 $
4,278.5
Lease liabilities
Deposits
Long-term debt
2,206.3 $
2,444.2 $
4,518.4
2020
—
—
150.0
(150.0)
9.6
(0.4)
(1.0)
8.2
0.3
—
3.8
Payment of lease liabilities (principal portion)
(367.9)
Change in deposits
Long-term debt issuance
Long-term debt repayment
Mortgage issuance
Mortgage repayment
Payment of transaction costs related to long-term debt
—
—
—
—
—
—
—
1,061.0
—
—
—
—
—
—
—
1,180.0
(1,450.4)
18.6
(0.4)
(2.8)
Total changes from financing cash flows
(367.9)
1,061.0
(255.0)
Non-cash changes:
New leases, interest accretion and other
Amortization of broker commission
Amortization of debt issuance costs
Balance, end of year
388.1
—
—
—
4.5
—
(1.0)
—
3.8
$
2,226.5 $
3,509.7 $
4,266.2
32.1 Cash and Marketable Investments Held in Reserve
Cash and marketable investments includes reserves held by the Financial Services segment in support of its
liquidity and regulatory requirements. As at January 1, 2022, reserves held by Financial Services totalled $383.1
million (January 2, 2021 – $398.3 million) and includes restricted cash disclosed in Note 7 as well as short-term
investments.
130 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33. Financial Instruments
33.1 Fair Value of Financial Instruments
Fair values have been determined for measurement and/or disclosure purposes based on the following:
The carrying amount of the Company’s cash and cash equivalents, trade and other receivables, loans receivable,
bank indebtedness, trade and other payables, short-term borrowings and loans approximate their fair value either
due to their short-term nature or because they are derivatives, which are carried at fair value.
The carrying amount of the Company’s long-term receivables and other assets approximate their fair value either
because the interest rates applied to measure their carrying amount approximate current market interest or
because they are derivatives, which are carried at fair value.
Fair values of financial instruments reflect the credit risk of the Company and counterparties when appropriate.
Investments in Debt Securities
The fair values of financial assets traded in active markets are determined by reference to their quoted closing bid
price or dealer price quotations at the reporting date. For investments that are not traded in active markets, the
Company determines fair values using a combination of discounted cash flow models, comparison to similar
instruments for which market-observable prices exist and other valuation models.
Derivatives
The fair value of a foreign exchange forward contract is estimated by discounting the difference between the
contractual forward price and the current forward price for the residual maturity of the contract using a risk-free
interest rate (based on government bonds).
The fair value of interest rate swaps and swaptions reflect the estimated amounts the Company would receive or
pay if it were to settle the contracts at the measurement date and is determined by an external valuator using
valuation techniques based on observable market input data.
The fair value of equity derivatives is determined by reference to share price movement adjusted for interest using
market interest rates specific to the terms of the underlying derivative contracts.
Redeemable Financial Instrument
On October 1, 2014, Scotiabank acquired a 20.0 percent interest in the Financial Services business from the
Company for proceeds of $476.8 million, net of $23.2 million in transaction costs. In conjunction with the
transaction, Scotiabank was provided an option to sell and require the Company to purchase all of the interest
owned by Scotiabank at any time during the six-month period following the tenth anniversary of the transaction.
This obligation gives rise to a liability for the Company (“redeemable financial instrument”) and is recorded on the
Company’s Consolidated Balance Sheets in Other long-term liabilities. The purchase price will be based on the
fair value of the Financial Services business and Scotiabank’s proportionate interest in the Financial Services
business, at that time.
The redeemable financial instrument was initially recorded at $500.0 million and is subsequently measured at fair
value with changes in fair value recorded in net income for the period in which they arise. The subsequent fair
value measurements of the redeemable financial instrument are calculated based on a discounted cash flow
analysis using earnings attributable to the Financial Services business, adjusted for any undistributed earnings
and Scotiabank’s proportionate interest in the business. The Company estimates future annual earnings over the
forecast time period, taking into account a terminal value calculated by discounting the final year in perpetuity.
The growth rate applied to the terminal value is based on an industry-based estimate of the Financial Services
business. The discount rate reflects the cost of equity of the Financial Services business and is based on
expected market rates adjusted to reflect the risk profile of the business. The fair value measurement is
performed quarterly using internal estimates and judgment supplemented by input from a third party, as required.
This recurring fair value measurement is categorized within Level 3 of the fair value hierarchy (refer to Note 33.2).
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33.2 Fair Value of Financial Assets and Financial Liabilities Classified Using the Fair Value
Hierarchy
The Company uses a fair value hierarchy to categorize the inputs used to measure the fair value of financial
assets and financial liabilities, the levels of which are:
Level 1 – Inputs are unadjusted quoted prices of identical instruments in active markets;
Level 2 – Inputs are other than quoted prices included in Level 1 but are observable for the asset or liability, either
directly or indirectly; and
Level 3 – Inputs are not based on observable market data.
The following table presents the financial instruments measured at fair value classified by the fair value hierarchy:
(C$ in millions)
Trade and other receivables
Trade and other receivables
Long-term receivables and other assets
Long-term receivables and other assets
Trade and other payables
Trade and other payables
Redeemable financial instrument
Other long-term liabilities
Other long-term liabilities
Category
FVTPL1
Effective hedging instruments
FVTPL1
Effective hedging instruments
FVTPL1
Effective hedging instruments
FVTPL
FVTPL1
Effective hedging instruments
1 Relates to derivatives not designated as hedging instruments.
2021
Level
Level
2
2
2
2
2
2
3
2
2
$
50.2
36.6
3.5
49.1
8.9
6.6
567.0
7.4
3.1
2
2
2
2
2
2
3
2
2
2020
69.8
0.2
28.2
14.4
25.6
93.7
567.0
2.2
8.2
There were no transfers in either direction between categories in 2021 or 2020.
Changes in Fair Value Measurement for Instruments Categorized in Level 3
Level 3 financial instruments include a redeemable financial instrument.
As of January 1, 2022, the fair value of the redeemable financial instrument was estimated to be $567.0 million
(January 2, 2021 – $567.0 million). The determination of the fair value of the redeemable financial instrument
requires significant judgment on the part of Management. Refer to Note 2 of these consolidated financial
statements for further information.
33.3 Fair Value Measurement of Investments, Debt and Deposits
The fair value measurement of investments, debt and deposits is categorized within Level 2 of the fair value
hierarchy (refer to Note 33.2). The fair values of the Company’s investments, debt and deposits compared to the
carrying amounts are as follows:
As at
(C$ in millions)
Short-term investments
Long-term investments
Long-term debt1
Deposits
1
Includes current portion of Long-term debt.
$
January 1, 2022
January 2, 2021
Carrying
amount
606.2 $
175.1
4,278.5
3,893.7
Fair value
605.6 $
174.5
4,475.4
3,915.0
Carrying
amount
643.0 $
146.2
4,266.2
3,509.7
Fair value
642.3
146.1
4,593.3
3,613.3
The difference between the fair values and the carrying amounts (excluding transaction costs, which are included
in the carrying amount of debt) is due to changes in market interest rates for similar instruments. The fair values
are determined by discounting the associated future cash flows using current market interest rates for items of
similar risk.
132 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33.4 Items of Income, Expense, Gains or Losses
The following table presents certain amounts of income, expense, gains, or losses, arising from financial
instruments that were recognized in net income or equity:
(C$ in millions)
Net (loss) gain on:
2021
Financial instruments designated and/or classified as FVTPL1
$
42.7 $
2020
71.0
Interest income (expense):
Total interest income calculated using effective interest method for financial
instruments that are not at FVTPL
Total interest income (expense) calculated using effective interest method for
financial instruments that are not at FVTPL
Fee expense arising from financial instruments that are not at FVTPL:
Other fee expense
1,022.1
1,074.4
232.3
(247.7)
(20.4)
(16.5)
1 Excludes gains (losses) on cash flow hedges, which are effective hedging relationships and are reflected on the Consolidated Statements of Comprehensive
Income.
33.5 Derivatives Designated as Hedging Instruments
The following table details the effectiveness of the hedging relationships and the amounts reclassified from
hedging reserve to profit or loss:
(C$ in millions)
Foreign currency risk
Interest rate risk
(C$ in millions)
Foreign currency risk
Interest rate risk
Current period
hedging gains
(losses)
recognized in OCI
$
$
7.7 $
9.3 $
Amounts reclassified to profit or loss
2021
Due to hedged
item affecting
profit or (loss)
Line item in profit or
loss affected by the
reclassification
3.1
16.1
Other expense
(income)
Net finance costs
Amounts reclassified to profit or loss
2020
Current period
hedging gains
(losses) recognized
in OCI
Due to hedged item
affecting profit or
loss
Line item in profit or
loss affected by the
reclassification
$
$
(41.4) $
(62.6) $
(1.5)
5.3
Other (income)
Net finance costs
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table shows a reconciliation of cash flow hedges, net of tax, in relation to hedge accounting:
(C$ in millions)
Balance, beginning of year
Changes in fair value:
Foreign currency risk
Hedging instruments entered into for cash flow hedges subject to basis
adjustment
Hedging instruments entered into for cash flow hedges not subject to basis
adjustment
Interest rate risk
Hedging instruments entered into for cash flow hedges not subject to basis
adjustment
Deferred cost of hedging not subject to basis adjustment – time value of an
option in relation to time-period related hedged items
Amount reclassified to profit or loss:
Foreign currency risk
Interest rate risk
Amount reclassified to non-financial assets:
Foreign currency risk
Tax on movements on reserves during the year
Attributable to non-controlling interests
Balance, end of year
34. Guarantees and Commitments
$
2021
(123.1) $
7.8
(0.1)
7.4
1.9
3.1
16.1
109.6
(38.4)
(4.2)
(19.9) $
$
2020
(28.3)
(40.5)
(0.9)
(46.3)
(16.3)
(1.5)
5.3
(40.4)
37.1
8.7
(123.1)
Guarantees
In the normal course of business, the Company enters into numerous agreements that may contain features that
meet the definition of a guarantee. A guarantee is defined to be a contract (including an indemnity) that
contingently requires the Company to make payments to the guaranteed party based on (i) changes in an
underlying interest rate, foreign exchange rate, equity or commodity instrument, index or other variable that is
related to an asset, a liability or an equity security of the counterparty; (ii) failure of another party to perform under
an obligating agreement; or (iii) failure of a third party to pay its indebtedness when due.
The Company has provided the following significant guarantees and other commitments to third parties:
Standby Letters of Credit
Franchise Trust, a legal entity sponsored by a third-party bank, originates loans to certain Dealers for their
purchase of Canadian Tire store inventory and fixed assets. While Franchise Trust is consolidated as part of
these financial statements, the Company has arranged for several major Canadian banks to provide standby LCs
to Franchise Trust to achieve the required “AAA” equivalent credit rating of the funding of the Dealer loan portfolio.
Franchise Trust has sold all of its rights in the LCs to the Co-owner Trusts. Franchise Trust, on behalf of the Co-
owner Trusts, may draw against the LCs in certain pre-defined circumstances. Should a draw be made against
an LC, the Company has agreed to reimburse the bank issuing such standby LC for the amount so drawn. The
Company has not recorded any liability for these amounts due to: there having been no historical draws made by
Franchise Trust under such LCs; the credit quality of the Dealer loans; and the nature of the underlying collateral
represented by the inventory and fixed assets of the borrowing Dealers. The Company’s maximum exposure as
at January 1, 2022 under the LCs was $62.9 million (January 2, 2021 – $71.9 million).
The Company has obtained documentary and standby LCs aggregating $31.0 million (January 2, 2021 – $28.7
million) relating to the importation of merchandise inventories and to facilitate various real estate activities.
134 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Business and Property Dispositions
In connection with agreements for the sale of all or part of a business or property, and in addition to
indemnifications relating to failure to perform covenants and breach of representations and warranties, the
Company has agreed to indemnify the purchasers against claims from its past conduct, including environmental
remediation. Typically, the term and amount of such indemnification will be determined by the parties in the
agreements. The nature of these indemnification agreements prevents the Company from estimating the
maximum potential liability it would be required to pay to counterparties. Historically, the Company has not made
any significant indemnification payments under such agreements and no amount has been accrued in the
consolidated financial statements with respect to these indemnification agreements.
Lease Agreements Guarantees
The Company has guaranteed leases on certain franchise stores in the event the franchisees are unable to meet
their remaining lease commitments. These lease agreements have expiration dates through November 2023.
The maximum amount that the Company may be required to pay under these agreements was $1.1 million
(January 2, 2021 – $1.8 million). In addition, the Company could be required to make payments for percentage
rents, realty taxes and common area costs. No amount has been accrued in the consolidated financial
statements with respect to these lease agreements.
Third-Party Financial Guarantees
The Company has guaranteed certain bank loan amounts of certain Dealers. These third-party financial
guarantees require the Company to make payments if the Dealer fails to make scheduled debt payments. The
majority of these third-party financial guarantees have expiration dates extending up to and including January
2024 and any extension is at the Company’s discretion. The Company’s maximum exposure as at January 1,
2022 under these financial guarantees was $5.8 million (January 2, 2021 – $11.0 million).
The Company has entered into agreements to buy back certain franchisee-owned merchandise inventory should
the banks foreclose on any of the applicable franchisees. The initial terms of the buy-back agreements are for
one year and any extension is at the Company’s discretion. The Company’s maximum exposure as at January 1,
2022 under these buy-back agreements was $21.8 million (January 2, 2021 – $30.7 million).
No amount has been accrued in the consolidated financial statements with respect to these guarantees and buy-
back agreements.
Indemnification of Lenders and Agents Under Credit Facilities
In the ordinary course of business, the Company has agreed to indemnify its lenders under various credit facilities
against costs or losses resulting from changes in laws and regulations that would increase the lenders’ costs and
from any legal action brought against the lenders related to the use of the loan proceeds. These indemnifications
generally extend for the term of the credit facilities and do not provide any limit on the maximum potential liability.
Historically, the Company has not made any significant indemnification payments under such agreements and no
amount has been accrued in the consolidated financial statements with respect to these indemnification
agreements.
Other Indemnification Agreements
In the ordinary course of business, the Company provides other additional indemnification agreements to
counterparties in transactions such as leasing transactions, service arrangements, investment banking
agreements, securitization agreements, indemnification of trustees under indentures for outstanding public debt,
Director and Officer indemnification agreements, escrow agreements, price escalation clauses, sales of assets
(other than dispositions of businesses noted above) and the arrangements with Franchise Trust noted above.
These additional indemnification agreements require the Company to compensate the counterparties for certain
amounts and costs incurred, including costs resulting from changes in laws and regulations (including tax
legislation) or as a result of litigation claims or statutory sanctions that may be suffered by a counterparty as a
consequence of the transaction.
The terms of these additional indemnification agreements vary based on the contract and do not provide any limit
on the maximum potential liability. Historically, the Company has not made any significant payments under such
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
additional indemnifications and no amount has been accrued in the consolidated financial statements with respect
to these additional indemnification commitments.
The Company’s exposure to credit risks related to the above-noted guarantees are disclosed in Note 5.
Capital Commitments
As at January 1, 2022, the Company had capital commitments for the acquisition of property and equipment,
investment property and intangible assets for an aggregate cost of approximately $136.1 million (January 2, 2021
– $263.9 million).
35. Related Parties
Martha Billes and Owen Billes, in aggregate, beneficially own, or control or direct approximately 61.4 percent of
the Common Shares of the Company through two privately held companies, Tire ‘N’ Me Pty. Ltd. and Albikin
Management Inc.
Transactions with Dealer members of the Company’s Board of Directors represented less than one percent of the
Company’s total revenue and were in accordance with established Company policy applicable to all Dealers.
Other transactions with related parties, as defined by IFRS, were not significant during the year.
The following outlines the compensation of the Company’s Board of Directors and key Management personnel
(the Company’s Chief Executive Officer, Chief Financial Officer and certain other Senior Officers):
(C$ in millions)
Salaries and short-term employee benefits
Share-based payments and other
36. Subsequent Events
$
$
2021
15.1 $
20.8
35.9 $
2020
14.4
31.0
45.4
On February 3, 2022, CT REIT issued a total aggregate of $250 million 3.029 percent Series H Senior Unsecured
Debentures due February 5, 2029.
On February 11, 2022, CT REIT completed an early redemption of its $150 million 2.852 percent Series A Senior
Unsecured Debentures due June 9, 2022.
136 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
2021 Quarterly Information
(C$ in millions, except where noted)
(Store numbers are cumulative at end of
period)
Retail segment1
Revenue
First Quarter Second Quarter
Third Quarter
Fourth Quarter
(January 3, 2021
to April 3, 2021)
(April 4, 2021 to
July 3, 2021)
(July 4, 2021 to
October 2, 2021)
(October 3, 2021 to
January 1, 2022)
Total
$
3,022.8
$
3,623.2
$
3,607.1
$
4,830.0
$
15,083.1
Income before income taxes
102.5
208.6
226.5
638.1
1,175.7
Financial Services segment
Revenue
Income before income taxes
CT REIT segment
Revenue
Income before income taxes
Total
Revenue
Cost of producing revenue
Other (income) expense
Selling, general and administrative
expenses
Net finance costs
Income taxes
Net income
Net income attributable to shareholders of
Canadian Tire Corporation
Net income attributable to non-controlling
interests
Basic EPS2
Diluted EPS2
Canadian Tire
Retail sales growth1, 3, 10
Comparable sales growth4, 10
Number of Canadian Tire stores
Number of Other Canadian Tire stores5
SportChek
Retail sales growth1, 6
Comparable sales growth4
Number of SportChek stores
Canadian Tire Petroleum
Number of gas bars
Mark’s
Retail sales growth1, 7
Comparable sales growth4
Number of Mark’s stores
Financial Services segment
297.2
126.4
129.9
74.6
296.1
125.3
129.6
178.6
307.6
117.7
125.5
78.3
312.4
63.0
129.5
125.4
1,213.3
432.4
514.5
456.9
$
3,322.9
$
3,918.5
$
3,913.1
$
5,137.6
$
16,292.1
2,136.5
(16.8)
2,573.5
(9.2)
2,556.0
(2.7)
3,190.9
10,456.9
5.2
(23.5)
891.4
57.3
68.1
186.4
151.8
34.6
2.50
2.47
20.1 %
19.2 %
504
163
10.0 %
18.7 %
397
940.5
56.2
98.4
259.1
223.6
35.5
3.68
3.64
1.9 %
(2.0) %
504
163
39.8 %
28.6 %
387
935.0
54.9
90.4
279.5
243.7
35.8
4.01
3.97
(0.6) %
1.4 %
504
163
9.0 %
11.2 %
377
1,167.4
3,934.3
54.1
184.3
535.7
222.5
441.2
1,260.7
508.5
1,127.6
27.2
8.40
8.34
3.4 %
9.8 %
504
160
5.8 %
15.9 %
375
133.1
18.56
18.38
4.3 %
5.4 %
13.8 %
17.7 %
296
296
293
292
13.7 %
22.0 %
380
58.0 %
43.2 %
381
10.5 %
7.9 %
382
9.6 %
15.0 %
380
17.8 %
19.2 %
Average number of accounts with a balance
(thousands)8
Average account balance($)8, 10
Gross average accounts receivable
(millions)9
2,025
2,788
2,078
2,752
2,128
2,791
2,180
2,843
2,103
2,794
5,645.5
5,720.0
5,940.0
6,200.0
5,876.4
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 137
2021 Quarterly Information
(C$ in millions, except where noted)
Class A Non-Voting Shares
High
Low
Close
Volume (thousands of shares)
Common Shares
High
Low
Close
Volume (thousands of shares)
First Quarter Second Quarter
Third Quarter
Fourth Quarter
(January 3, 2021
to April 3, 2021)
(April 4, 2021 to
July 3, 2021)
(July 4, 2021 to
October 2, 2021)
(October 3, 2021 to
January 1, 2022)
$
183.90 $
213.85 $
206.97 $
159.44
182.02
13,617
181.27
194.67
13,285
173.64
176.86
9,406
$
220.00 $
275.00 $
270.00 $
192.00
210.00
34
214.00
252.67
24
246.97
250.00
13
186.83 $
168.80
181.44
14,331
365.89 $
200.16
208.00
23
Total
213.85
159.44
181.44
50,639
365.89
192.00
208.00
94
1 The fourth quarter and full year 2021 results of Retail operations include 13 weeks and 52 weeks ended Jan 1, 2022 respectively. Unless otherwise indicated,
all comparisons of results for Q4 2021 (13 weeks ended January 1, 2022) are compared against Q4 2020 (14 weeks ended January 2, 2021) and all
comparisons of results for the full year 2021 (52 weeks ended January 1, 2022) are compared against results for full-year 2020 (53 weeks ended January 2,
2021).
2 Basic EPS is calculated by dividing the net income attributable to shareholders of Canadian Tire Corporation by the weighted average number of Common and
Class A Non-Voting shares outstanding during the reporting period. Diluted EPS is calculated by dividing the net income attributable to shareholders of
Canadian Tire Corporation by the weighted average number of shares outstanding adjusted for the effects of all dilutive potential equity instruments, which
comprise employee stock options.
3 Retail sales growth includes sales from Canadian Tire, PartSource, PHL, Party City and the labour portion of Canadian Tire’s auto service sales.
4 Comparable sales growth excludes Petroleum. The Canadian Tire banner includes PartSource, PHL and Party City. Comparable sales growth and
comparable store gasoline volume growth has been calculated by aligning the 2020 fiscal calendar to match the 2021 fiscal calendar (i.e., sales from the first
week in 2021 are compared with the sales from the second week of 2020) and includes the sales from stores which were temporarily closed during 2021.
Comparable sales in the prior year, for SportChek and Mark’s, were calculated on sales up to March 18, 2020, after which their retail stores were closed. Refer
to section 9.1 in this MD&A for additional information on Comparable sales growth.
5 Other Canadian Tire banners include PartSource, PHL and Party City.
6 Retail sales include sales from both corporate and franchise stores.
7 Retail sales growth includes Retail sales from Mark’s corporate and franchise stores, but excludes revenue relating to alteration and embroidery services.
8 Credit card portfolio only.
9 Total portfolio of loans receivable.
10 For further information about this measure see section 9.3 (Supplementary Financial Measures) of the Company’s MD&A included in this document.
11 Not meaningful.
138 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
2020 Quarterly Information
(C$ in millions, except where noted)
(Store numbers are cumulative at end of
period)
Retail segment1
Revenue
First Quarter Second Quarter
Third Quarter
Fourth Quarter
(December 29,
2019 to March
28, 2020)
(March 29, 2020
to June
27, 2020)
(June 28, 2020
to September
26, 2020)
(September 27,
2020 to January
2, 2021)
Total
$
2,503.2
$
2,849.8
$
3,684.8
$
4,582.2
$
13,620.0
Income before income taxes
(99.6)
(66.2)
326.2
577.9
738.3
CT REIT segment
Revenue
Income before income taxes
Financial Services segment
Revenue
Income before income taxes
Total
Revenue
Cost of producing revenue
Other (income) expense
Selling, general and administrative expenses
Net finance costs
Income taxes
Net income
Net income attributable to shareholders of
Canadian Tire Corporation
Net income attributable to non-controlling
interests
Basic EPS2
Diluted EPS2
Canadian Tire
Retail sales growth1, 3
Comparable sales growth4
Number of Canadian Tire stores
Number of Other Canadian Tire stores5
SportChek
Retail sales growth1, 6
Comparable sales growth4
Number of SportChek stores
Canadian Tire Petroleum
Number of gas bars
Mark’s
Retail sales growth1, 7
Comparable sales growth4
Number of Mark’s stores
Financial Services segment
126.8
43.2
341.9
70.2
125.5
62.0
309.9
51.0
123.2
64.1
301.3
90.5
126.8
14.0
295.3
115.6
502.3
183.3
1,248.4
327.3
$
2,848.3
$
3,161.8
$
3,986.4
$
4,874.5
$
14,871.0
1,909.1
2,221.1
2,639.6
3,024.6
9,794.4
18.9
48.7
1,053.6
3,599.3
(8.6)
876.7
68.2
(9.3)
12.2
(13.3)
25.5
(0.22)
(0.22)
2.2 %
0.7 %
503
163
(13.1) %
(1.8) %
400
32.8
830.2
69.4
6.0
2.3
(20.0)
22.3
(0.33)
(0.33)
20.3 %
NM10
504
163
(24.9) %
NM10
398
5.6
838.8
60.1
116.0
326.3
296.3
30.0
4.87
4.84
25.7 %
25.1 %
504
163
(1.7) %
(1.4) %
397
297
297
297
296
(15.3) %
(4.5) %
380
(36.4) %
NM10
380
4.9 %
5.7 %
381
11.9 %
7.6 %
381
58.8
196.8
521.8
488.8
33.0
8.04
7.97
17.1 %
12.8 %
504
163
0.5 %
(3.0) %
397
256.5
309.5
862.6
751.8
110.8
12.35
12.31
17.6 %
NM10
(8.5) %
NM10
(5.5) %
NM10
Average number of accounts with a balance
(thousands)8
Average account balance ($)8
Gross average accounts receivable
(millions)9
2,110
3,015
2,013
2,961
2,045
2,871
2,074
2,813
2,060
2,915
6,363.3
5,962.3
5,874.6
5,833.9
6,008.6
CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS 139
2020 Quarterly Information
(C$ in millions, except where noted)
Class A Non-Voting Shares
High
Low
Close
Volume (thousands of shares)
Common Shares
High
Low
Close
Volume (thousands of shares)
First Quarter Second Quarter
Third Quarter Fourth Quarter
(December 29,
2019 to March
28, 2020)
(March 29,
2020 to June
27, 2020)
(June 28, 2020
to September
26, 2020)
(September 27,
2020 to January
2, 2021)
$
153.90 $
128.57 $
139.69 $
170.39 $
67.15
86.11
27,329
80.30
116.39
35,652
114.67
134.34
19,845
132.50
167.33
18,235
$
199.25 $
239.99 $
225.00 $
217.99 $
140.00
185.00
36
180.00
224.97
60
200.01
216.66
23
195.26
208.00
32
Total
170.39
67.15
167.33
101,061
239.99
140.00
208.00
151
1 The fourth quarter and full year 2020 results of Retail operations include 14 weeks and 53 weeks ended Jan 2, 2021 respectively. Unless otherwise indicated,
all comparisons of results for Q4 2020 (14 weeks ended January 2, 2021) are compared against Q4 2019 (13 weeks ended December 28, 2019) and all
comparisons of results for the full year 2020 (53 weeks ended January 2, 2021) are compared against results for full year 2019 (52 weeks ended December 28,
2019).
2 Basic EPS is calculated by dividing the net income attributable to shareholders of Canadian Tire Corporation by the weighted average number of Common and
Class A Non-Voting shares outstanding during the reporting period. Diluted EPS is calculated by dividing the net income attributable to shareholders of
Canadian Tire Corporation by the weighted average number of shares outstanding adjusted for the effects of all dilutive potential equity instruments, which
comprise employee stock options.
3 Retail sales growth includes sales from Canadian Tire, PartSource, PHL, Party City and the labour portion of Canadian Tire’s auto service sales.
4 Comparable sales growth excludes Petroleum. Canadian Tire banner includes PartSource, PHL and Party City. Comparable sales growth has been calculated
by aligning the 2019 fiscal calendar to match the 2020 fiscal calendar (i.e., sales from the last week in 2020 are not included in the calculation for comparable
purposes), and, includes the impact of temporary store closures in the fourth quarter of 2020. Refer to section 9.1 in the MD&A for additional information on
comparable sales growth.
5 Other Canadian Tire banners include PartSource, PHL and Party City.
6 Retail sales include sales from both corporate and franchise stores.
7 Retail sales growth includes retail sales from Mark’s corporate and franchise stores, but excludes ancillary revenue relating to alteration and embroidery
services.
8 Credit card portfolio only.
9 Total portfolio of loans receivable.
10 Not meaningful.
140 CANADIAN TIRE CORPORATION 2021 REPORT TO SHAREHOLDERS
Intentionally left blank
12
CONTACT
HEAD OFFICE
Canadian Tire Corporation, Limited
2180 Yonge Street
P.O. Box 770, Station K
Toronto, Ontario M4P 2V8
Canada
Telephone: 416-480-3000
Fax: 416-544-7715
Website: http://corp.canadiantire.ca
INVESTOR RELATIONS CONTACT
Karen Keyes
Head of Investor Relations
karen.keyes@cantire.com
Investor Relations:
investor.relations@cantire.com
MEDIA CONTACT
Jane Shaw
Senior Vice-President, Communications
jane.shaw@cantire.com
Media Inquiries:
mediainquiries@cantire.com
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
100 University Avenue, 8th floor
Toronto, Ontario M5J 2Y1
Canada
Toll-free (Canada and U.S.): 1-877-982-8768
Telephone (Global): 514-982-7122
Fax (Canada and U.S.): 1-866-249-7775
Fax (Global): 416-263-9524
Email: service@computershare.com