CANADIAN TIRE CORPORATION
2023 REPORT TO SHAREHOLDERS
CANADIAN TIRE
CORPORATION
2023 REPORT TO SHAREHOLDERS
PAGE IX
2023 REPORT TO SHAREHOLDERS MESSAGE FROM J. MICHAEL OWENS, CH AIRMAN OF THE BOARD
DE AR SHA REHOLDERS,
The year 2023 was certainly a challenging one. Persistent inflation and multiple
interest rate hikes stressed Canadians financially, which, in turn, impacted
Canadian Tire Corporation (CTC), a reality reflected in its 2023 financial results.
As this company has done for over a century whenever it faces a challenge, we
all learn from it, and those lessons drive us to come back stronger.
Although results may have fallen short of expectations in 2023, Greg Hicks and his leadership team
managed well in an arduous macroeconomic environment. They made tough but necessary decisions to
balance overcoming short-term challenges while remaining committed to CTC’s long-term goals. They
may have slowed the pace of some investments, but those made to date are showing returns, indicating
that CTC is on the right path. Our management team faced considerable challenges, including a fire at
the A.J. Billes Distribution Centre, persistent inflation, and multiple interest rate hikes, all capped off by
unseasonable weather. Although one could argue these challenges were uncontrollable, they present an
opportunity to learn.
The lesson we have learned from 2023 is that our operating environment will remain dynamic and uncertain,
and that is a risk we must continue to address and manage moving forward. To that end, as a Board, we are
PAG E 01
2023 REPORT TO SHAREHOLDERS
MESSAGE FROM J. MICHAEL OWENS, CH AIRMAN OF THE BOARD
having active conversations about what disruptions may await us in this new economy, from consumers’
evolving shopping habits to the impact of climate change on weather patterns and how CTC can adapt
accordingly. As Martha Billes elucidated at the 2023 Canadian Tire Dealer Association Convention, “If we
expect to make progress, we must continue to change often.”
Evolution is a challenge but one I am confident the CTC Board and leadership team are ready and well-
equipped to undertake. In 2023, we further strengthened the insight and oversight of our Board with
the addition of Lyne Castonguay, Cathryn Cranston, and Sue Paish, all of whom have helped enhance
our perspective, strengthen our capabilities, and broaden our expertise. We have built an effective, high-
performing, collaborative Board that provides strength and stability as we move through these dynamic
times. We continue collaborating with the senior management team as they consider strategic choices to
manage the short-term reality while optimizing long-term value for our shareholders. I am grateful to all
our Directors for their steadfast commitment throughout 2023 and to Martha and Owen Billes for their
continued support and stewardship of their family’s enduring legacy.
Despite the current macroeconomic uncertainty, I remain confident in CTC’s future. Mine is not a naive
confidence but one built on 101 years of evidence. 2023 was neither the first difficult year CTC has had,
nor will it be the last, and I believe we have reached a catalyst moment: one in which this great company
evolves alongside its swiftly changing operating environment. Given this company’s history of success
and overcoming obstacles, its strong management, fiercely dedicated roster of team members and
Canadian Tire Associate Dealers, and loyal customers across the country, CTC is positioned to navigate
whatever new challenges come its way and emerge stronger than before.
Thank you for standing by us as we prepare for a brighter future. We look forward to your participation at
our Annual Meeting of Shareholders.
Sincerely,
J. Michael Owens
CHAIRMAN, BOARD OF DIRECTORS, CANADIAN TIRE CORPORATION
PAGE 02
2023 REPORT TO SHAREHOLDERS
MESSAGE FROM GREG HICKS, PRESIDENT AND C HIEF E XE CUTIV E OFFICE R
2-Line Title
Placeholder
DE AR SHA REHOLDERS,
When I reflect on 2023, there is no question it was a tough year more so
–
than we expected at the outset. The rising interest rates, stubborn inflation, and
unfavourable weather significantly impacted our results, which fell well short of
our expectations. But 2023 was also a year that bolstered my confidence in our
capabilities, strategic investments, and team. Despite the challenges, we remain
cautiously optimistic about the future and confident in our ability to make life
better for Canadians as they, too, navigate these trying economic times.
We believe the headwinds we faced in 2023 are temporary and, as such, remain committed to transforming
CTC into a fiercer competitor through our Better Connected strategy. Since introducing our strategy in
March 2022, we have invested $1.4 billion in capital – the vast majority of which was targeted to growth
initiatives. Through our supply chain modernization program, for example, we have invested $360 million
in transforming our network. We have introduced automated Goods-to-Person technology in our Montreal
and Calgary Distribution Centres (DC) and, in early 2023, commenced operations of our fully automated
Greater Toronto Area DC, investments that are enabling us to better serve our stores and customers while
driving operational efficiency across the network. We continued to upgrade our technology infrastructure,
including through our seven-year partnership with Microsoft, which will accelerate our modernization
journey and drive retail innovation across Canada.
PAG E 03
2023 REPORT TO SHAREHOLDERS
MESSAGE FROM GREG HICKS, PRESIDENT AND CH IEF EXECUTIVE OFFICER
We have also made significant progress in improving our omnichannel customer experience. Since 2022,
nearly 80 Canadian Tire stores have been refreshed, expanded, or replaced. By completing the rollout of
our One Digital Platform, we have gained scalability, enhanced stability, improved the customer experience,
and we are now laser-focused on serving customers the products they want and need – not from one of
our banners but across our group of companies. Key omnichannel initiatives, including pick-up lockers,
electronic shelf labels, and scan-and-buy features, were part of our continued investment in providing a
superior customer experience. Following a successful pilot in early 2023, we expanded Express Delivery
nationally across all our banners, offering same-day delivery services to customers.
Our Triangle Rewards Loyalty Program, a key component of our Better Connected strategy, maintains a
healthy and engaged membership. In 2023, 11.4 million members actively shopped with us, and loyalty sales
constituted nearly 60% of total sales. Moreover, sales through our one-to-one personalized offer program
increased by over $250 million in the year. We also continued to provide members with enhanced value
opportunities, developing a strategic loyalty partnership with Petro-Canada and launching Triangle Select.
The challenges of 2023 went beyond Canadians’ wallets, however, and we were there for our communities
when natural disasters struck, including the deadly flooding on Canada’s East Coast and Canada’s worst
wildfire season in history. We also continued to break down barriers to sport and recreation – literally
from playground to podium. In 2023, Jumpstart helped more than 440,000 kids participate in sport and
recreation, disbursed over 1,000 grants to support community programming, and completed construction
on seven new inclusive play spaces, bringing the total incremental square footage added since 2017 to
more than 550,000, or the equivalent of 32 NHL hockey rinks. We also launched our Women’s Sport
Initiative, our multi-million-dollar investment through which we will commit 50% of our sponsorship dollars
to women’s professional sports.
Looking ahead to 2024, it is clear that CTC’s current reality reflects that of Canada – one characterized
by limited visibility into and continued uncertainty around monetary policy. We expect we will continue
operating in a challenged demand environment, constraining our topline growth. However, we are in a
better position to deal with the macro environment and its impact on our financial performance heading
into 2024, and we are placing heightened attention on our financial flexibility. Our team is focused on
maximizing leverage, including our operating leverage, our existing assets and investments, and the strong
relationships we have built through Triangle Rewards.
Despite the challenges of today, we cannot lose sight of where we need to be tomorrow. Although we have
slowed the pace of some of our investments, we are moving forward with those that provide the greatest
PAGE 04
2023 REPORT TO SHAREHOLDERS
MESSAGE FROM GREG HICKS, PRESIDENT AND C HIEF E XE CUTIV E OFFICE R
return not only for us but also for our customers and shareholders. I am confident that CTC’s future is a
bright one – one in which we will continue delivering for you, our shareholders. We remain committed to
driving shareholder value and returning capital to you, as we have in previous years; in fiscal 2023, we
returned close to $740 million of capital to you through share buybacks and dividends and announced our
fourteenth consecutive dividend increase.
My conviction in our ability to turn the corner is reinforced by the strength of our Dealer Model and our
teams’ commitment to our purpose, no matter what. We faced a lot of hurdles in 2023 – and our people
stepped up, as they do every time they face a challenge. For that, I am very proud and grateful. There is
perhaps no better demonstration of this than our teams’ response to the fire at our A.J. Billes DC. Their
Herculean efforts kept our people safe and had our DC back online in record time. Theirs is a quintessential
demonstration of the unrivalled dedication that got us through the pandemic, previous economic
downturns, and every other challenge that has come our way these past 101 years. And it is what assures
me that we will get through this current economic cycle.
In closing, I want to thank Mike Owens and the CTC Board of Directors for their valuable insight and
oversight this past year, and Martha and Owen Billes for their continued support. And to you, our valued
shareholders: thank you for your sustained trust in us. Know that the lessons of 2023 were not lost on us. If
anything, they have further entrenched our focus on controlling what we can, mitigating what we cannot,
and balancing navigation of short-term headwinds with driving long-term growth and consistent returns.
Best,
Greg Hicks
PRESIDENT AND CHIEF EXECUTIVE OFFICER, CANADIAN TIRE CORPORATION
PAG E 0 5
2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION
AND
ANALYSIS
AND
CONSOLIDATED FINANCIAL
STATEMENTS
PAGE 06
2023 REPORT TO SHAREHOLDERS
Management’s Discussion and Analysis
Canadian Tire Corporation, Limited
Fourth Quarter and Full-Year 2023
Management’s Discussion and Analysis
Canadian Tire Corporation, Limited
Fourth Quarter and Full-Year 2023
Table of Contents
1.0
PREFACE
2.0
COMPANY AND INDUSTRY OVERVIEW
3.0
HISTORICAL PERFORMANCE HIGHLIGHTS
4.0
COMPANY STRATEGY
5.0
FINANCIAL PERFORMANCE
5.1 Consolidated Financial Performance
5.2 Retail Segment Performance
5.3 Financial Services Segment Performance
5.4 CT REIT Segment Performance
6.0
BALANCE SHEET ANALYSIS, LIQUIDITY, AND CAPITAL RESOURCES
7.0
EQUITY
8.0
TAX MATTERS
9.0
ACCOUNTING POLICIES AND ESTIMATES
10.0
NON-GAAP FINANCIAL MEASURES, RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES
11.0
KEY RISKS AND RISK MANAGEMENT
12.0
INTERNAL CONTROLS AND PROCEDURES
13.0
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
14.0
FORWARD-LOOKING INFORMATION AND OTHER INVESTOR COMMUNICATION
15.0
RELATED PARTIES
1
4
5
7
9
9
16
23
28
31
40
41
41
44
59
69
70
70
72
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 business carried on under the Canadian
Tire name and trademarks.
“Canadian Tire Retail” and “CTR” refer 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+ gas bars” refer to stores and gas bars (which may include
convenience stores, car washes, and propane stations) that operate under the Canadian Tire 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 names and trademarks.
“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, L’Équipeur, Mark’s WorkPro, and L’Équipeur
Pro names and trademarks.
“Owned Brands” refers to owned by the Company and managed within the Retail segment.
“PartSource stores” refers to stores that operate under the PartSource name and trademarks.
“Party City” refers to the party supply business carried on under the Party City name and trademarks in Canada.
“Petroleum” refers to the retail petroleum business carried on under the Canadian Tire Gas+ name and
trademark.
“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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 1
MANAGEMENT’S DISCUSSION AND ANALYSIS
Other terms that are capitalized in this document are defined the first time they are used.
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 information that may constitute forward-looking
information within the meaning of applicable securities laws. 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. Although the Company believes that the forward-
looking information in this MD&A is based on information, assumptions and beliefs that are current, reasonable,
and complete, such information is necessarily subject to a number of business, economic, competitive and other
risk factors that could cause actual results to differ materially from Management’s expectations and plans as set
forth in such forward-looking information. The Company cannot provide assurance that any financial or
operational performance, plans, or aspirations forecast will actually be achieved or, if achieved, will result in an
increase in the Company’s share price. Refer to section 14.0 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 14, 2024.
1.4 Quarterly and Annual Comparisons in the MD&A
Unless otherwise indicated, all comparisons of results for Q4 2023 (13 weeks ended December 30, 2023) are
compared against results for Q4 2022 (13 weeks ended December 31, 2022) and all comparisons of results for
the full-year 2023 (52 weeks ended December 30, 2023) are compared against results for the full-year 2022 (52
weeks ended December 31, 2022).
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 2023 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 9.1 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 10.0 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.
2 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 3
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 Company’s retail network. The Retail segment also includes Mark's, Mark's WorkPro, a leading
source for casual and industrial wear; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which
offer the best activewear brands. CTC’s 1,700 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 2023 Annual Information Form (“2023 AIF”),
including section 2 “Description of the Business” and on the Company’s Corporate (https://corp.canadiantire.ca)
and Investor Relations (https://corp.canadiantire.ca/investors) websites.
4 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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.
(C$ in millions,
except per share amounts and number of retail locations)
Consolidated Comparable sales growth1, 2
Retail sales, excluding Petroleum2
Revenue
Net income
Normalized3 net income4
Basic EPS
Diluted EPS
Normalized3 diluted EPS4
Total assets
Total non-current financial liabilities
Financial Services gross average accounts receivable2 (total
portfolio)
2023
(2.9) %
16,073.3
16,656.5
$
$
339.1
716.1
3.79
3.78
10.37
21,978.3
8,345.1
7,141.5
Number of retail locations
Cash dividends declared per share
Stock price (CTC.A)5
1 Does not include Helly Hansen.
2 For further information about this measure see section 10.2 of this MD&A.
3 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
4 This is a non-GAAP financial measure. For further information and a detailed reconciliation see section 10.1 of this MD&A.
5 Closing share price as of the date closest to the Company’s fiscal year end.
140.72
6.9250
1,695
$
$
$
2022
2.7 %
16,580.7
17,810.6
1,182.8
1,250.9
17.70
17.60
18.75
22,102.3
7,794.8
6,654.2
1,704
6.2750
$
141.50
2021
8.2 %
16,194.0
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
4.8250
181.44
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 5
MANAGEMENT’S DISCUSSION AND ANALYSIS
REVENUE BY BANNER/UNIT*
($ millions)
STORES AND RETAIL REVENUE
Retail revenue
($ billions)
Number of stores
Canadian Tire Retail
Financial Services
SportChek
Mark’s
Petroleum
*Excludes CT REIT
Helly Hansen
Store count
Retail revenue
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
6 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
20212022202305,00010,00015,00020,000$15.1$16.4$15.220212022202356789101112131415161716601680170017201740176017802021202220234,5004,7505,0005,2505,5005,7506,0006,2506,5006,7507,0007,2504.82506.27506.9250202120222023$5$10$15$20$25$30$0$1$2$3$4$5$6$7$8
MANAGEMENT’S DISCUSSION AND ANALYSIS
4.0 Company Strategy
The following contains forward-looking information and readers are cautioned that actual results may vary.
Better Connected Strategy
In the Company’s press release issued in conjunction with its Investor Day held on March 10, 2022, CTC
announced the Better Connected strategy to bolster its omnichannel capabilities and drive long-term growth. The
strategy built on the Company's unparalleled brand trust and brand purpose: to Make Life in Canada Better.
In conjunction with the strategy, CTC announced investments to create better customer experiences and deeper
customer connections, enhancing the omnichannel customer experience by better connecting digital and physical
channels and rolling out a new "Concept Connect" to Canadian Tire stores, strengthening supply chain fulfillment
infrastructure and automation, modernizing IT infrastructure, and driving efficiency in how CTC operates.
The Company’s Better Connected strategy initiatives have already proven to drive incremental sales and enhance
connections to customers through an offering that has greater relevance and value and the Company continues to
manage its resources to create room for continued investment over the longer term.
In 2023, the Company has:
•
Invested $615.3 million in operating capital expenditures. More than 15 percent of CTR stores, or
approximately 18 percent of the CTR footprint, have now been refreshed, expanded, or replaced since
March 2022, driving incremental sales, with 45 store projects completed in 2023.
• Completed the multi-year rollout of the Company’s digital platform across all banners, enhancing the
online experience for customers, and equipping over 90 percent of CTR stores with new technology to
drive better economic efficiency and a better customer experience.
• Announced a seven-year flagship strategic retail partnership with Microsoft, leveraging Microsoft Azure to
modernize its systems and infrastructure. In addition, the partnership provides the Company with direct
access to Microsoft’s cloud products and solutions, expertise and upskilling capabilities to increase the
speed and efficiency of its business modernization and enhance customers’ omnichannel journey and
brand experiences across the Company.
• Repurchased $470.0 million of the Company’s Class A Non-Voting Shares, and announced a new share
repurchase program to purchase up to $200.0 million of the Company’s Class A Non-Voting Shares
during 2024.
• Decreased full-time equivalent (“FTE”) employees as a result of targeted headcount reductions of three
percent in Q4 and the elimination of the majority of vacancies for a further reduction of three percent,
resulting in a corporate FTE reduction of six percent. Annualized run-rate savings are estimated to be
approximately $50.0 million.
Given the macroeconomic environment and consumer demand which differed significantly from the Company’s
expectations, and further to the noticeable slowdown in Retail sales during the second quarter of 2023, the
Company withdrew the financial aspirations (average annual comparable sales growth, Retail Return on Invested
Capital [“ROIC”] and Diluted EPS) for fiscal years 2022 to 2025, previously announced at its Investor Day and
disclosed in section 4.0 of the Company’s 2022 MD&A. Other sales aspirations disclosed in connection with
Investor Day were similarly impacted.
The Company remains committed to pursuing the strategic objectives which support its vision and build on its
strong market position, and to prioritizing investments within the Better Connected strategy to solidify CTC's brand
and competitive positioning in Canada over the long term. Acceleration of the Company’s loyalty strategy and
omnichannel investments continue to be key areas of focus.
Since the beginning of 2022, CTC has invested close to $1.4 billion in operating capital, including approximately
$800.0 million to enable a better omnichannel experience through investments in the CTR store network and
loyalty strategy. More than $550.0 million has been invested in the Company’s fulfillment infrastructure and
modernization initiatives.
Given the changed economic conditions since early 2022 and continued softening of demand, the Company
slowed the pace of previously-identified operating capital investments in 2023, which it will continue into 2024,
prioritizing its best returning capital investments. As a result, the Company announced in the third quarter of 2023
that it no longer expects to invest the level of operating capital expenditures during the 2022-2025 period, as
previously announced at its Investor Day and disclosed in section 4.0 of the Company’s 2022 MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 7
MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Allocation
Notwithstanding the challenging economic environment, CTC remains focused on investing in the business and
pursuing a balanced approach to dividends and share buybacks over the longer term.
2023 operating capital expenditures were $615.3 million, slightly below the disclosed range in Q3 2023 of $650.0
to $700.0 million and below the range disclosed in the Company’s 2022 MD&A of $750.0 to $800.0 million. The
Company expects 2024 operating capital expenditures to be in a range of $475.0 million to $525.0 million, below
the range previously disclosed in Q3 2023 of $550.0 million to $600.0 million.
On November 9, 2023, CTC announced an increase in its annual dividend for the 14th consecutive year, to $7.00
per share from $6.90 per share, as well as its intention to repurchase up to an additional $200.0 million of its
Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, during 2024.
8 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.0 Financial Performance
5.1 Consolidated Financial Performance
5.1.1 Consolidated Financial Results
(C$ in millions, except where noted)
Retail sales1
Q4 2023
Q4 2022
$ 5,323.4 $ 5,729.4
Change
2022
(7.1) % $ 18,504.1 $ 19,248.8
2023
Change
(3.9) %
(6.5) %
(6.5) %
— bps
NM3
4.9 %
7.3 %
39.2 %
NM3
(63.8) %
(41.7) %
$ 4,443.0 $ 5,340.4
$ 1,536.8 $ 2,018.4
34.6 %
37.8 %
(16.8) % $ 16,656.5 $ 17,810.6
(23.9) % $ 5,703.6 $ 6,097.9
34.2 %
(321) bps
34.2 %
$
3.2 $
0.2
NM3 $
34.4 $
61.6
983.5
196.3
90.8
—
$
263.0 $
65.8
1,012.0
188.1
65.9
—
752.2
189.6
25.0 %
25.2 %
(2.8) %
4.4 %
37.8 %
NM3
(65.0) % $
(65.3) %
3,675.7
3,502.5
771.2
321.5
328.0
719.0
231.0
—
572.8 $ 1,583.8
233.7
40.8 %
401.0
25.3 %
$
197.2 $
562.6
(65.0) % $
339.1 $ 1,182.8
(71.3) %
$
172.5 $
531.9
24.7
30.7
197.2 $
562.6
3.10 $
3.09 $
9.13
9.09
$
$
$
(67.6) % $
(19.6) %
(65.0) % $
(66.0) % $
(66.0) % $
213.3 $ 1,044.1
125.8
138.7
339.1 $ 1,182.8
3.79 $
3.78 $
17.70
17.60
(79.6) %
(9.3) %
(71.3) %
(78.6) %
(78.5) %
Revenue
Gross margin dollars
Gross margin rate1
Other expense (income)
Selling, general and administrative
2
expenses
Depreciation and amortization2
Net finance costs
Change in fair value of redeemable
financial instrument
Income before income taxes
Income tax expense
Effective tax rate1
Net income
Net income attributable to:
Shareholders of Canadian Tire
Corporation
Non-controlling interests
Basic EPS
Diluted EPS
Weighted average number of Common
and Class A Non-Voting Shares
outstanding:
Basic
Diluted
55,623,542 58,237,893
55,761,553 58,499,745
NM3 56,228,680 58,983,364
NM3 56,457,450 59,336,919
NM3
NM3
1 For further information about this measure see section 10.2 of this MD&A.
2 Certain prior year figures have been restated to conform to the current year presentation.
3 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 2023 Consolidated Financial Statements.
(C$ in millions)
Financial Services
Non-controlling interest 0.0% (2022 – 20.0%)
CT REIT
Non-controlling interest 31.6% (2022 – 31.3%)
Retail segment subsidiary
Non-controlling interest 50.0% (2022 – 50.0%)
Net income attributable to non-controlling interests
Q4 2023
Q4 2022
2023
2022
$
5.5 $
12.6 $
48.4 $
64.3
18.3
17.1
72.5
68.6
0.9
1.0
4.9
5.8
$
24.7 $
30.7 $
125.8 $
138.7
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 9
MANAGEMENT’S DISCUSSION AND ANALYSIS
Normalizing Items
The full year results of operations in 2023 include costs and recoveries associated with the fire at its A.J. Billes
Distribution Centre (the “DC fire”), the Impact of Bill C-47 GST/HST Legislative Amendments (“GST/HST-related
charge”), the Change in fair value of redeemable financial instrument, and the fourth quarter targeted headcount
reduction charge, which were considered as normalizing items. In 2022, costs relating to the Company’s
Operational Efficiency program and the Helly Hansen Russia exit were considered as normalizing items. These
costs are included in Other expense (income), Change in fair value of redeemable financial instrument, and
Selling, general and administrative expenses in the Consolidated Statements of Income. Further explanation on
these normalizing items can be found below.
(C$ in millions)
Targeted headcount reduction charge
DC fire
GST/HST-related charge
Change in fair value of redeemable financial instrument
Operational Efficiency program
Helly Hansen Russia exit
Q4 2023
Q4 2022
$
21.6 $
— $
2023
21.6 $
—
—
—
—
—
—
—
—
19.6
—
11.3
33.3
328.0
—
—
Total
$
21.6 $
19.6 $
394.2 $
2022
—
—
—
—
47.2
36.5
83.7
Impact of the March 15th A.J. Billes Distribution Centre Fire
During the first quarter of 2023, the Company was impacted by the DC fire which services Canadian Tire Retail
stores nationally and is one of the Company’s largest distribution centres. Operations at the facility were
suspended on March 15, 2023, and partially resumed on March 27, 2023. The Company has recognized a full
year charge of $11.3 million net of insurance recoveries, relating to cleanup and repair costs, lost inventory, asset
disposals, and building damage, up to the end of the reporting period. These costs and the related recovery are
included in Other expense (income) in the Consolidated Statements of Income and have been treated as a
normalizing item in the Retail segment.
On a full year basis, the DC fire also resulted in approximately $32.0 million lower Income before income taxes
due to operating inefficiencies at CTR, which are included in the Company’s results of operations but not reflected
as normalizing adjustments. The Company continues to work with its insurers on the recovery of these indirect
costs.
While remediation efforts remain underway, the Distribution Centre returned to full operational shipment capacity
faster than anticipated, during the second quarter of 2023.
Impact of the GST/HST-related Charge
The 2023 Federal Budget, released on March 28, 2023, included certain tax measures affecting CTB, specifically
a proposal to amend the definition of “financial services” to exclude clearing services rendered by a payment card
network operator. On June 22, 2023, Bill C-47 (“Bill C-47”), which included this proposal, received Royal Assent
and as a result these services are subject to GST/HST both prospectively and retroactively, with a one-year
deadline from Royal Assent for the CRA to reassess prior periods that are statute-barred. As previously disclosed,
a $33.3 million provision was recorded in the second quarter in Selling, general and administrative expenses
(“SG&A”) and Provisions in the Consolidated Statements of Income and Consolidated Balance Sheet as a result
of this development. This has been treated as a normalizing item in the Financial Services segment.
Redeemable Financial Instrument
Since 2014 the Company has recognized a redeemable financial instrument in its Financial Statements in relation
to Scotiabank’s option to require the Company to purchase their 20 percent share of CTFS Holdings Limited
(“CTFS”).
During the third quarter, the negotiations with Scotiabank to repurchase the shares for $895.0 million resulted in a
change in fair value of $328.0 million and thus the Company recognized a non-cash charge to the Consolidated
Statements of Income. The full $328.0 million impacted net income, as the fair value change is non-deductible,
and has reduced Diluted EPS by approximately $5.81. This expense has been treated as a normalizing item.
10 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The purchase of the shares from Scotiabank was completed in Q4 prior to the release of the Company’s Q3
results. For more information refer to the 2023 Consolidated Financial Statements, Notes 15 and 34.1.
Targeted Headcount Reduction
In November of 2023, the Company announced its intention to decrease FTE employees through targeted
headcount reductions in Q4, resulting in a corporate FTE reduction of three percent. The Company took a charge
of $21.6 million in Q4 2023 in relation to these actions. This has been treated as a normalizing item in the Retail
and Financial Services segments. Annualized run-rate savings are expected to be approximately $50.0 million.
Selected Normalized Metrics – Consolidated
(C$ in millions, except
where noted)
Revenue
Cost of producing revenue
Gross margin dollars
Gross margin rate4
Other expense (income)
Selling, general and
administrative expenses6
Depreciation and
amortization6
Net finance costs
Change in fair value of
redeemable financial
instrument
Q4 2023
$ 4,443.0 $
Normalizing Normalized
Q4 20232
4,443.0 $ 5,340.4 $
Q4 2022
Items1
— $
Normalizing
Items1
2,906.2
—
2,906.2
3,322.0
$ 1,536.8 $
— $
1,536.8 $ 2,018.4 $
34.6 %
— bps
34.6 %
37.8 %
— bps
$
3.2 $
— $
3.2 $
0.2 $
— $
— $
—
— $
Normalized
3,322.0
Q4 20222 Change3
(16.8) %
5,340.4
(12.5) %
(23.9) %
37.8 % (321) bps
NM5
2,018.4
0.2
(21.6)
961.9
1,012.0
(19.6)
992.4
(3.1) %
983.5
196.3
90.8
—
—
196.3
90.8
188.1
65.9
—
—
—
188.1
65.9
4.4 %
37.8 %
—
NM5
—
—
—
—
$
5.7
65.8
21.6 $
263.0 $
752.2 $
284.6 $
197.2 $
Income before income taxes $
Income tax expense
Net income
Net income attributable to
shareholders of CTC
Diluted EPS
1 Refer to Normalizing Items table in this section for more details.
2 These normalized measures (excluding Revenue, Cost of producing revenue, Gross margin dollars, Gross margin rate, Other expense (income), Depreciation
and amortization, Net finance costs, and Change in fair value of redeemable financial instrument) are non-GAAP financial measures or non-GAAP ratios. For
further information and a detailed reconciliation see section 10.1 of this MD&A.
(63.1) %
(63.3) %
(63.1) %
(65.5) %
(63.8) %
562.6 $
213.1 $
3.38 $
9.09 $
3.09 $
15.9 $
14.4 $
19.6 $
0.25 $
0.29 $
188.4
194.8
531.9
546.3
771.8
172.5
189.6
577.0
15.9
71.5
9.34
14.4
5.2
$
3 Change is between normalized results.
4 For further information about this measure see section 10.2 of this MD&A.
5 Not meaningful.
6 Certain prior year figures have been restated to conform to the current year presentation.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 11
MANAGEMENT’S DISCUSSION AND ANALYSIS
(C$ in millions, except
where noted)
Revenue
Cost of producing revenue
Gross margin dollars
Gross margin rate4
Other expense (income)
Selling, general and
administrative expenses6
Depreciation and
amortization6
Net finance costs
Change in fair value of
redeemable financial
instrument
Income before income taxes $
Income tax expense
Net income
Net income attributable to
shareholders of CTC
Diluted EPS
$
$
2023
$ 16,656.5 $
Normalizing Normalized
20232
2022
— $ 16,656.5 $ 17,810.6
Items1
10,952.9
—
10,952.9
11,712.7
Normalizing
Items1
$
— $
—
Normalized
20222 Change3
(6.5) %
(6.5) %
17,810.6
11,712.7
$ 5,703.6 $
— $
5,703.6 $ 6,097.9
$
— $
6,097.9
34.2 %
— bps
34.2 %
34.2 %
— bps
34.2 %
$
34.4 $
(11.3) $
23.1 $
61.6
$
(36.5) $
25.1
3,675.7
(54.9)
3,620.8
3,502.5
(47.2)
3,455.3
771.2
321.5
—
—
771.2
321.5
719.0
231.0
328.0
(328.0)
—
—
—
—
—
719.0
231.0
—
572.8 $
394.2 $
967.0 $ 1,583.8
$
83.7 $
1,667.5
233.7
17.2
250.9
401.0
15.6
416.6
339.1 $
377.0 $
716.1 $ 1,182.8 $
68.1 $
1,250.9
(42.8) %
213.3
372.0
585.3
1,044.1
68.1
1,112.2
3.78 $
6.59 $
10.37
$
17.60 $
1.15 $
18.75
(47.4) %
(44.7) %
(6.5) %
— bps
NM5
4.8 %
7.3 %
39.2 %
NM5
(42.0) %
(39.8) %
1 Refer to Normalizing Items table in this section for more details.
2 These normalized measures (excluding Revenue, Cost of producing revenue, Gross margin dollars, Gross margin rate, Depreciation and amortization, and Net
finance costs) are non-GAAP financial measures or non-GAAP ratios. For further information and a detailed reconciliation see section 10.1 of this MD&A.
3 Change is between normalized results.
4 For further information about this measure see section 10.2 of this MD&A.
5 Not meaningful.
6 Certain prior year figures have been restated to conform to the current year presentation.
12 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Consolidated Results Commentary
Effective from the first quarter of 2023, the Company’s results reflect a change in accounting estimate related to
the Company’s Margin-Sharing Arrangement (“MSA”) with Dealers (the “change in accounting estimate”), as
outlined below.
Change in Accounting Estimate
The Company’s contract with its Dealers governs how margin and expenses are shared between the two groups.
Beginning in the first quarter of 2023, the Company implemented a change to accounting estimates associated
with one component of the contract, the MSA with the Dealers. The Company already records a portion of its
margin relating to revenue and margin on shipments to its Dealers in the quarter incurred, but the majority of the
MSA has historically been accrued in the fourth quarter of every year. Effective with the first quarter of 2023, the
Company began to record the MSA throughout the year to better reflect the pattern over which the MSA is earned.
This change simply reflected a change in the timing of this revenue. It results in less quarterly fluctuation in Retail
segment Gross margin and Income before income taxes. In the fourth quarter of 2023, the unfavourable impact to
Revenue in the Retail segment due to the change in accounting estimate relating to the Company’s MSA with its
Dealers was $171.0 million. Excluding this impact, Consolidated fourth quarter Revenue was down $726.4 million,
Consolidated Income before income taxes was down $318.2 million and Retail segment Gross margin rate
excluding Petroleum1 was down 88 bps.
Consolidated Results Summary
Diluted EPS for the fourth quarter of 2023 was $3.09 per share, $6.00 lower than the prior year. Normalized
Diluted EPS was $3.38, $5.96 lower than the prior year.
Consolidated Income before income taxes was $263.0 million, a decrease of $489.2 million compared to the prior
year. Normalized Income before income taxes was $284.6 million, down $487.2 million from the prior year,
primarily due to lower Revenue in the Retail segment.
On a full year basis, Consolidated Income before income taxes decreased by $1,011.0 million, and Normalized
Income before income taxes decreased by $700.5 million. The decline was primarily attributable to the Retail
segment as a result of lower Revenue and higher operating costs, including operating inefficiencies as a result of
the DC fire.
1
For further information about this measure see section 10.2 of this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 13
MANAGEMENT’S DISCUSSION AND ANALYSIS
Consolidated Results Commentary (continued)
Consol-
idated
Results
Summary
Q4 2023
q Diluted EPS: $6.00 per share
Full Year
q Diluted EPS: $13.82 per share
Consolidated Revenue was $4,443.0 million, a
decrease of $897.4 million or 16.8 percent.
Consolidated Revenue excluding Petroleum1 was
$3,939.9 million, a decrease of 17.8 percent. The
decline was driven by
the Retail segment,
partially offset by revenue growth in the Financial
Services segment.
Consolidated Revenue was $16,656.5 million, a
decrease of $1,154.1 million or 6.5 percent.
Consolidated Revenue excluding Petroleum was
$14,525.4 million, a decrease of 6.1 percent,
driven by the Retail segment, partially offset by
revenue growth
the Financial Services
segment.
in
Consolidated Gross margin dollars were
$1,536.8 million, a decrease of $481.6 million or
23.9 percent from the prior year due to a decline
in the Retail segment.
Consolidated Gross margin dollars were
$5,703.6 million, a decrease of $394.3 million, or
6.5 percent from the prior year, due to a decline in
the Retail segment.
Other expense
(income) was $3.2 million,
unfavourable by $3.0 million compared to the
prior year driven by lower real estate related
gains, partially offset by foreign exchange losses
recognized at Helly Hansen in the prior year.
Other expense (income) of $34.4 million included
$11.3 million related to the DC fire and was
favourable by $27.2 million compared to the prior
year which included a $36.5 million charge
relating to the exit of Helly Hansen operations in
Russia. Normalized Other expense (income) was
favourable by $2.0 million driven by foreign
exchange losses recognized at Helly Hansen in
the prior year, partially offset by a $13.5 million
one-time cost to exit a supply chain contract and
lower real estate related gains in 2023.
in
Consolidated SG&A was $983.5 million, a
decrease of $28.5 million or 2.8 percent
compared to the prior year. Normalized for the
current year targeted headcount reduction charge
and costs associated with
the Operational
Efficiency program
the prior year, SG&A
decreased $30.5 million. The decrease was
driven by the Retail segment, due to lower
volume-related supply chain costs and lower
variable compensation expenses. This was
partially offset by strategic investments in the
store network and the transition to cloud-based IT
infrastructure as part of the Better Connected
strategy, and higher SG&A
in the Financial
Services segment.
Consolidated SG&A was $3,675.7 million, an
increase of $173.2 million or 4.9 percent
compared to the prior year. Normalized for the
GST/HST-related charge and targeted headcount
reduction charge in the current year, and costs
the Operational Efficiency
associated with
program in the prior year, SG&A
increased
$165.5 million. The increase was driven by the
Retail segment due to strategic investments as
part of the Better Connected strategy, including
the transition to cloud-based IT infrastructure and
investment in supply chain and store network. In
addition,
inefficiencies
incurred relating to the DC fire.
there were operating
Depreciation and amortization was $196.3 million,
an increase of 4.4 percent from the prior year
driven by costs associated with the Company’s
strategic capital investments.
Depreciation and amortization was $771.2 million,
an increase of 7.3 percent from the prior year
driven by costs associated with the Company’s
strategic capital investments.
Net finance costs were $90.8 million, an increase
of 37.8 percent from the prior year due to
increased borrowings,
the
repurchase of Scotiabank’s interest in CTFS, and
higher interest rates.
in part
fund
to
Net
finance costs were $321.5 million, an
increase of 39.2 percent from the prior year due
to increased borrowings, in part to fund the
repurchase of Scotiabank’s interest in CTFS,
higher interest rates, and higher lease-related
costs.
1
For further information about this measure see section 10.2 of this MD&A.
14 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Consolidated Results Commentary (continued)
Q4 2023
Income tax expense was $65.8 million, compared
to $189.6 million in the prior year primarily due to
lower Income before income taxes. The Effective
tax rate was relatively flat to the prior year.
Full Year
Income
tax expense was $233.7 million,
compared to $401.0 million in the prior year
primarily due to lower Income before income
taxes, partially offset by a higher Effective tax
rate. The Effective tax rate increased for the year,
primarily due to the non-deductibility of the
Change in fair value of redeemable financial
instrument and higher non-deductible stock
option expense.
Diluted EPS was $3.09, a decrease of $6.00
compared to the prior year. Normalized Diluted
EPS was $3.38, a decrease of $5.96 compared to
the prior year, of which $2.26 was attributable to
the impact of the change in accounting estimate.
Diluted EPS was $3.78, a decrease of $13.82
compared to the prior year. Normalized Diluted
EPS was $10.37, a decrease of $8.38, driven by
the decline in earnings attributable to the reasons
above.
5.1.2 Consolidated Key Performance Measures
(C$ in millions) increase/(decrease)
Selling, general and administrative expenses1
Normalized2 SG&A as a percentage of revenue1,3
Income before income taxes
Normalized1 EBITDA4 as a percentage of revenue1,2
1 Certain prior year figures have been restated to conform to the current year presentation
2 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
3 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 10.1 of this MD&A.
4 Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”).
.
Q4 2023
983.5
13.0 %
21.6 %
263.0
$
$
(C$ in millions) increase/(decrease)
Selling, general and administrative expenses1
Normalized2 SG&A as a percentage of revenue1,3
Income before income taxes
Normalized2 EBITDA as a percentage of revenue1,3
1 Certain prior year figures have been restated to conform to the current year presentation.
2 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
3 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 10.1 of this MD&A.
2023
3,675.7
12.6 %
21.7 %
572.8
$
$
$
$
$
$
Q4 2022
1,012.0
$
18.6 %
752.2
$
Change
(28.5)
306 bps
(489.2)
19.3 %
(630) bps
2022
3,502.5
$
19.4 %
Change
173.2
234 bps
1,583.8
$
(1,011.0)
14.8 %
(228) bps
Changes in the percentages disclosed are driven by the related Revenue, SG&A, and Income before income
taxes variances discussed under the Consolidated Results commentary in the previous charts.
5.1.3 Seasonal Trend Analysis
The following table shows the consolidated financial performance of the Company by quarter for the last two
years. As discussed in section 5.1.1 of this MD&A, the Company implemented a change in accounting estimate
beginning in the first quarter of 2023, with no change to the historical amounts reported.
(C$ in millions, except per
share amounts)
Revenue
Net income (loss)
Diluted EPS
Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021
$ 4,443.0 $ 4,250.5 $ 4,255.8 $ 3,707.2 $ 5,340.4 $ 4,228.8 $ 4,404.0 $ 3,837.4 $ 5,137.6
197.2
(27.8)
126.9
3.09
(1.19)
1.76
42.8
0.13
562.6
225.0
177.6
217.6
535.7
9.09
3.14
2.43
3.03
8.34
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 15
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.2 Retail Segment Performance
5.2.1 Retail Segment Financial Results
(C$ in millions, except where noted)
Retail sales1
Revenue
Gross margin dollars
Gross margin rate1
Other expense (income)
Selling, general and administrative
2
expenses
Q4 2023
Q4 2022
$ 5,323.4 $ 5,729.4
$ 4,070.0 $ 4,990.9
$ 1,338.8
$ 1,825.7
32.9 %
36.6 %
$
(35.8)
$
(39.3)
899.2
935.9
Depreciation and amortization2
Net finance costs
Income before income taxes
1 For further information about this measure see section 10.2 of this MD&A.
2 Certain prior year figures have been restated to conform to the current year presentation.
161.7 $
235.6
232.9
642.4
53.8
78.1
$
Selected Normalized Metrics – Retail
2023
Change
2022
(7.1) % $ 18,504.1 $ 19,248.8
(18.5) % $ 15,171.3 $ 16,436.3
$ 5,238.0
(26.7) %
(369) bps
(8.7) %
$ 4,846.7
(115.3)
31.9 %
31.9 %
(84.0)
$
$
Change
(3.9) %
(7.7) %
(7.5) %
8 bps
37.3 %
(3.9) %
1.1 %
45.0 %
(74.8) % $
3,320.9
3,191.5
958.2
275.9
897.2
185.3
407.0 $ 1,048.0
4.1 %
6.8 %
48.9 %
(61.2) %
(C$ in millions, except
where noted)
Revenue
Cost of producing revenue
Gross margin dollars
Gross margin rate4
Other expense (income)
Selling, general and
administrative expenses5
Depreciation and
amortization5
Net finance costs
Income before income
taxes
Q4 2023
$ 4,070.0 $
Normalizing Normalized
Q4 20232
4,070.0 $ 4,990.9 $
Q4 2022
Items1
— $
2,731.2
—
2,731.2
3,165.2
$ 1,338.8 $
— $
1,338.8 $ 1,825.7 $
32.9 %
— bps
32.9 %
36.6 %
— bps
$
(35.8) $
— $
(35.8) $
(39.3) $
— $
Normalizing Normalized
Items1
— $
—
— $
3,165.2
Q4 20222 Change3
(18.5) %
4,990.9
(13.7) %
(26.7) %
36.6 % (369) bps
(8.7) %
(39.3)
1,825.7
899.2
235.6
78.1
(19.6)
879.6
935.9
(19.6)
916.3
(4.0) %
—
—
235.6
78.1
232.9
53.8
—
—
232.9
53.8
1.1 %
45.0 %
$
161.7 $
19.6 $
181.3 $
642.4 $
19.6 $
662.0
(72.6) %
1 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
2 These normalized measures (Selling, general and administrative expenses and Income before income taxes) are non-GAAP financial measures. For further
information and a detailed reconciliation see section 10.1 of this MD&A.
3 Change is between normalized results.
4 For further information about this measure see section 10.2 of this MD&A.
5 Certain prior year figures have been restated to conform to the current year presentation.
16 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
(C$ in millions, except
where noted)
Revenue
Cost of producing revenue
Gross margin dollars
Gross margin rate4
Other expense (income)
Selling, general and
administrative expenses5
Depreciation and
amortization5
Net finance costs
Income before income
taxes
Normalizing Normalized
20232
Items1
2023
2022
Normalizing Normalized
Items1
$ 15,171.3 $
— $ 15,171.3 $ 16,436.3 $
10,324.6
—
10,324.6
11,198.3
$ 4,846.7 $
— $
4,846.7 $ 5,238.0 $
31.9 %
— bps
31.9 %
31.9 %
— bps
$
(115.3) $
(11.3) $
(126.6)
$
(84.0) $
(36.5) $
— $ 16,436.3
—
— $
11,198.3
20222 Change3
(7.7) %
(7.8) %
(7.5) %
8 bps
5.1 %
31.9 %
(120.5)
5,238.0
3,320.9
(19.6)
3,301.3
3,191.5
(47.2)
3,144.3
5.0 %
958.2
275.9
—
—
958.2
275.9
897.2
185.3
—
—
897.2
185.3
6.8 %
48.9 %
$
407.0 $
30.9 $
437.9 $ 1,048.0 $
83.7 $
1,131.7
(61.3) %
1 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
2 These normalized measures (Other expense (income), Selling, general and administrative expenses and Income before income taxes) are non-GAAP financial
measures. For further information and a detailed reconciliation see section 10.1 of this MD&A.
3 Change is between normalized results.
4 For further information about this measure see section 10.2 of this MD&A.
5 Certain prior year figures have been restated to conform to the current year presentation.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 17
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.2.2 Retail Segment Key Performance Measures
(Year-over-year percentage change,
C$ in millions, except as noted)
Revenue1
Q4 2023 Q4 2022
Change
2023
2022
Change
$ 4,070.0 $ 4,990.9
(18.5) % $ 15,171.3 $ 16,436.3
(7.7) %
(7.5) %
Revenue, excluding Petroleum
3,566.9
4,441.9
(19.7) % 13,040.2
14,094.8
Store count
Retail square footage (in millions)
Retail sales growth2
Retail sales growth, excluding Petroleum2
Consolidated Comparable sales growth2, 3
Retail ROIC4, 5
Retail normalized6 SG&A as a percentage of revenue
excluding Petroleum2,5
Revenue1, 7
Store count8
Retail square footage (in millions)
Sales per square foot2, 9
Retail sales growth2, 10
Comparable sales growth2
Revenue1
Store count
Retail square footage (in millions)
Sales per square foot2, 11
Retail sales growth2, 12
Comparable sales growth2
Revenue1, 13
Store count
Retail square footage (in millions)
Sales per square foot2, 11
Retail sales growth2, 14
Comparable sales growth2
Revenue1
Revenue1
Gas bar locations
Gross margin dollars
Retail sales growth2
Gasoline volume growth in litres
Comparable store gasoline volume growth in litres2
1,695
1,704
34.9
34.7
(7.1) %
(6.9) %
(6.8) %
1.2 %
0.2 %
0.3 %
7.9 %
12.5 % (468) bps
(3.9) %
(3.1) %
(2.9) %
n/a
5.4 %
2.4 %
2.7 %
n/a
24.7 %
20.6 %
403 bps
25.3 %
22.3 %
301 bps
$ 2,172.6 $ 2,900.3
(25.1) % $ 8,699.3
$ 9,647.9
(9.8) %
663
24.0
665
23.8
$
510 $
535
(4.7) %
n/a
n/a
(6.9) %
(0.1) %
(6.8) %
— %
(3.1) %
(2.9) %
2.0 %
2.0 %
$ 552.2 $ 637.9
(13.4) % $ 1,952.3
$ 2,099.2
(7.0) %
371
7.2
375
7.2
$
317 $
331
(4.2) %
n/a
n/a
(6.8) %
(1.6) %
(6.4) %
(1.7) %
(3.5) %
— %
(3.2) %
1.8 %
$ 561.7 $ 608.2
(7.6 %) $ 1,532.0
$ 1,561.2
(1.9 %)
380
3.7
380
3.7
$
408 $
417
(2.2 %)
n/a
n/a
(7.6) %
(7.2) %
4.4 %
4.3 %
(2.2) %
(1.9) %
9.8 %
9.6 %
$ 274.0 $ 301.8
(9.2) % $ 837.2
$ 781.2
7.1 %
$ 503.1 $ 549.0
(8.4) % $ 2,131.1
$ 2,341.5
(9.0) %
281
284
$ 52.6 $ 55.0
(4.5) % $ 214.0
$ 220.1
(2.8) %
(8.2) %
10.2 %
(3.0) %
(0.6) %
(1.4) %
0.5 %
(8.9) %
28.9 %
(0.8) %
1.8 %
4.7 %
5.0 %
1 Revenue reported for Canadian Tire Retail, SportChek, Mark’s and Petroleum for the 13 and 52 weeks ended December 30, 2023 include inter-segment
revenue of $1.1 million (2022 – $1.1 million) and $4.2 million (2022 - $4.9 million), respectively. 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 10.2 of this MD&A.
3 Comparable sales growth excludes Petroleum.
4 Retail ROIC is calculated on a rolling 12-month basis based on normalized earnings.
5 This is a non-GAAP financial measure. For further information and a detailed reconciliation see section 10.1 of this MD&A.
6 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
7 Revenue includes revenue from Canadian Tire, PartSource, PHL, Party City and Franchise Trust.
8 Store count includes stores from Canadian Tire, and other banner stores of 161 (2022: 161 stores). Other banners include PartSource, PHL, and Party City.
9 Sales per square foot figures are calculated on a rolling 12-month basis. Retail space excludes seasonal outdoor garden centres, auto service bays,
warehouse, and administrative space.
10 Retail sales growth includes sales from Canadian Tire, PartSource, PHL, Party City and the labour portion of Canadian Tire’s auto service sales.
11 Sales per square foot figures are calculated on a rolling 12-month basis, include both corporate and franchise stores and warehouse, and administrative space.
12 Retail sales growth includes sales from both corporate and franchise stores.
13 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.
14 Retail sales growth includes Retail sales from Mark’s corporate and franchise stores but excludes revenue relating to alteration and embroidery services.
18 CANADIAN TIRE CORPORATION 2023 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. As discussed in section 5.1.1 of this MD&A, the Company implemented a change in
accounting estimate beginning in the first quarter of 2023 which impacted Revenue, excluding Petroleum, with no
change to the historical amounts reported; Retail sales, excluding Petroleum were not impacted by this change.
Retail Segment Commentary
Retail sales decreased 7.1 percent and, excluding Petroleum, were down 6.9 percent in the quarter, driven by a
continued softening of consumer demand, compounded by weaker sales in winter categories across all banners
due to unseasonable weather across the country in December.
Retail Income before income taxes decreased by $480.7 million in the fourth quarter and by $480.7 million on a
normalized basis, mainly due to the decline in Retail Revenue. In addition, a lower Gross margin rate and higher
Net finance costs, partially offset by lower SG&A, contributed to the decline. In the quarter, Retail Revenue was
down $920.9 million, or down $749.9 million excluding the impact of the change in accounting estimate. Lower
sales across banners contributed to the revenue reduction, as did the timing and magnitude of the margin sharing
arrangement (“MSA”) contribution at CTR.
On a full year basis, Retail sales decreased 3.9 percent and, excluding Petroleum, were down 3.1 percent in the
year, reflecting softening consumer demand through the second half of the year and the impact of unseasonable
weather in Q4. eCommerce sales1 were $1.1 billion on a rolling 12-month basis. Consolidated Owned Brands
penetration1 was 37.6 percent, broadly unchanged on the prior year due to declines in Owned Brands penetration
at SportChek and Mark’s driven by lower contributions from seasonal categories.
On a full year basis, Retail Income before income taxes decreased by $641.0 million, and Normalized Income
before income taxes decreased by $693.8 million. The decline was driven by lower Revenue, higher operating
and net finance costs, as well as operating inefficiencies due to the DC fire. The Company estimates that
approximately $32.0 million of the decrease in Normalized Income before income taxes was attributable to
operating inefficiencies due to the DC fire.
1
For further information about this measure see section 10.2 of this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 19
Year-over-year Retail Sales and Revenue Growth4.5%6.7%5.6%4.6%0.6%0.2%2.4%(2.5)%(0.1)%(1.9)%(6.9)%(3.1)%2.7%8.8%12.2%5.1%5.0%2.3%5.6%(5.0)%(1.2)%0.3%(19.7)%(7.5)%Retail sales, excluding PetroleumRevenue, excluding PetroleumQ4 20212021Q1 2022Q2 2022Q3 2022Q4 20222022Q1 2023Q2 2023Q3 2023Q4 20232023
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Retail Sales
Q4 2023
q $406.0 million or 7.1%
q 6.8% in Comparable sales growth
Full Year
q $744.7 million or 3.9%
q 2.9% in Comparable sales growth
of
7.1
Retail sales were $5,323.4 million, a
decrease
percent. Excluding
Petroleum, Retail sales declined 6.9 percent,
or $354.5 million compared to the prior year,
with all banners impacted by continued
softening of consumer demand, leading to a
mix shift
to more essential and value
offerings, and unseasonable weather.
Retail sales were $18,504.1 million, a
decrease of 3.9 percent. Excluding
Petroleum, Retail sales declined 3.1 percent
or $507.4 million compared to the prior year,
with all banners impacted by softening of
consumer demand, leading to a mix shift to
more essential and value offerings, and
unseasonable weather.
CTR Retail sales were down 6.9
percent, impacted by unseasonable weather
and continued softening of consumer
demand, leading to a mix shift to more
essential and value offerings. The majority of
categories declined, led by Seasonal &
Gardening, while Automotive
remained
relatively flat.
Retail sales were down 6.8
percent, driven by continued softening of
consumer demand in more discretionary
categories such as Outerwear, Skiing/
Snowboards and Winter Clothing, and the
impact of unseasonable weather.
Retail sales were down 7.6
percent, impacted by unseasonable weather,
driven by declines in Industrial Businesses,
Casual Footwear, Ladies’ Casualwear,
partially offset by growth
in Men’s
Casualwear .
Retail sales declined 8.2 percent
due to lower per litre gas prices and lower
gas volumes.
CTR Retail sales were down 3.1 percent
driven by softening of consumer demand,
leading to a mix shift to more essential and
value offerings and unseasonable weather in
Q4 and Q1, partially offset by growth in
Automotive categories.
Retail sales declined 3.5 percent,
impacted by softening consumer demand
and unseasonable weather, led by declines
in Outerwear, Outdoor Footwear, and Skiing/
Snowboards, partially offset by growth in
Team Sports.
Retail sales decreased 2.2
percent, against strong growth of 9.8 percent
in the prior year, driven by declines in
Industrial Businesses and Casual Footwear
due to unseasonable weather, partially offset
by growth in Men’s Casualwear and Ladies’
Casualwear, with both experiencing
the
highest sales volumes to date.
Retail sales declined 8.9 percent
due to lower per litre gas prices and lower
gas volumes due to fewer gas bar locations.
Comparable store volume was up 1.8
percent.
Revenue
q $920.9 million or 18.5%
q 19.7% excluding Petroleum
q $1,265.0 million or 7.7%
q 7.5% excluding Petroleum
Retail Revenue was $4,070.0 million, down
$920.9 million. Excluding the $171.0 million
impact of the change in accounting estimate,
Retail Revenue was down $749.9 million
due to lower sales and shipments across
banners from continued softening customer
demand and unseasonable weather, as well
as lower revenue recognized under the MSA
for the reasons identified above.
Retail Revenue was $15,171.3 million, down
$1,265.0 million due to lower shipments,
lower revenue recognized under the MSA, a
decline in Petroleum revenue, and lower
sales and franchise shipments at SportChek.
in
This was partially offset by growth
eCommerce and wholesale channels at
Helly Hansen.
20 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Gross Margin
Q4 2023
q $486.9 million or 26.7%
q 369 bps in gross margin rate
q 27.4% excluding Petroleum1
q 380 bps in gross margin rate,
excluding Petroleum
Retail Gross margin
a
dollars were
of
decrease
$1,338.8 million,
$486.9 million. Excluding Petroleum, Gross
margin dollars were $1,286.2 million, a
decrease of $484.5 million. Excluding the
impact of the change in accounting estimate,
Retail Gross margin dollars excluding
Petroleum were down $313.5 million driven
by
in Revenue previously
described, and a lower Gross margin rate.
the decline
Full Year
q $391.3 million or 7.5%
p 8 bps in gross margin rate
q 7.7% excluding Petroleum
q 7 bps in gross margin rate, excluding
Petroleum
Retail Gross margin
dollars were
$4,846.7 million, a decrease of $391.3
million. Excluding Petroleum, Gross margin
dollars were $4,632.7 million, a decrease of
$385.2 million, driven by the decline in
Revenue previously described.
Other Expense
(Income)
Gross margin rate, excluding Petroleum,
was 36.1 percent, a decrease of 380 bps.
Excluding the 292 bps impact of the change
in accounting estimate, Gross margin rate,
excluding Petroleum, was down 88 bps
driven by lower margin recognized under the
MSA and increased promotional intensity
across banners, partially offset by lower
freight costs.
the prior year, despite
Gross margin rate, excluding Petroleum,
was 35.5 percent. The rate was relatively flat
to
increased
intensity at SportChek and
promotional
Mark’s,
impacts
macroeconomic
experienced across all banners, and a lower
margin recognized under the MSA, as these
factors were offset by lower freight costs and
actions
to manage product cost
headwinds.
taken
q $3.5 million or 8.7%
p $31.3 million or 37.3%
Other
income was
$35.8 million,
unfavourable by $3.5 million driven by lower
real estate related gains, partially offset by
foreign exchange losses recognized at Helly
Hansen in the prior year.
Other income of $115.3 million included
$11.3 million of expenses related to the DC
fire and was favourable by $31.3 million
compared to the prior year which included a
$36.5 million charge relating to the exit of
in Russia.
Helly Hansen operations
Normalized Other income was favourable by
$6.1 million driven by foreign exchange
losses recognized at Helly Hansen in the
prior year, partially offset by a $13.5 million
one-time cost to exit a supply chain contract
and lower real estate related gains in 2023.
SG&A
q $36.7 million or 3.9%
p $129.4 million or 4.1%
SG&A was $899.2 million, a decrease of
$36.7 million, or 3.9 percent, compared to an
increase in the previous quarters of 2023.
The decrease was due to lower volume-
related supply chain costs and lower variable
compensation expenses, partially offset by
strategic investments in the store network
IT
and
infrastructure as part of
the Better
Connected strategy.
p $2.7 million or 1.1%
to cloud-based
transition
the
Depreciation and amortization was relatively
flat to the prior year.
SG&A was $3,320.9 million, an increase of
$129.4 million, or 4.1 percent. This increase
was due to strategic investments as part of
the Better Connected strategy, including the
transition to cloud-based IT infrastructure
and investment in supply chain and store
network. In addition, there were operating
inefficiencies incurred relating to the DC fire.
p $61.0 million or 6.8 %
Depreciation and amortization increased due
to costs associated with the Company’s
strategic capital investments, including the
Greater Toronto Area Distribution Centre
which became fully operational in the year.
Depreciation and
amortization
1 For further information about this measure see section 10.2 of this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 21
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail Segment Commentary (continued)
Net
Finance
Costs
Q4 2023
Full Year
p $24.3 million or 45.0%
p $90.6 million or 48.9%
Net finance costs increased due to higher
borrowings, in part to fund the repurchase of
Scotiabank’s interest in CTFS, and higher
interest rates.
Net finance costs increased due to higher
borrowings, in part to fund the repurchase of
Scotiabank’s interest in CTFS, increased
interest
lease-related
costs.
rates, and higher
Earnings Summary q $480.7 million or 74.8%
q $641.0 million or 61.2%
Income before income taxes decreased by
$480.7 million. Normalized Income before
income taxes decreased by $480.7 million
attributable to the reasons above.
Income before income taxes decreased by
$641.0 million. Normalized Income before
income taxes decreased by $693.8 million.
attributable to the reasons above.
5.2.3 Retail Segment Seasonal Trend Analysis
Quarterly operating net income and revenue are affected by seasonality. The fourth quarter typically generates the
greatest contribution to revenue and earnings, and the first quarter the least. The following table shows the Retail
segment financial performance of the Company by quarter for the last two years. As discussed in section 5.1.1 of
this MD&A, the Company implemented a change in accounting estimate in the first quarter of 2023 which
impacted Revenue and Income (loss) before income taxes, with no change to the historical amounts reported.
Retail sales were not affected by this change.
(C$ in millions)
Retail sales
Revenue
Income (loss) before income
taxes
Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021
$ 5,323.4 $ 4,639.3 $ 5,214.9 $ 3,326.5 $ 5,729.4 $ 4,734.2 $ 5,363.8 $ 3,421.4 $ 5,661.0
4,070.0 3,867.3 3,896.1 3,337.9 4,990.9 3,873.7 4,067.2 3,504.5 4,830.0
161.7
239.0
85.6
(79.3)
642.4
133.0
123.8
148.8
638.1
22 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.3 Financial Services Segment Performance
5.3.1 Financial Services Segment Financial Results
(C$ in millions)
Revenue
Gross margin dollars
Gross margin rate1
Other expense (income)
Selling, general and administrative
expenses2
Depreciation and amortization2
Net finance (income)
Income before income taxes
Q4 2023
379.9 $
Q4 2022
357.2
181.7 $
180.4
Change
6.4 % $
0.7 % $
2023
1,507.3
2022
$ 1,389.7
783.4
$
803.9
Change
8.5 %
(2.6) %
47.8 %
50.5 %
(270) bps
52.0 %
57.8 %
(587) bps
1.4 $
3.4
(57.5) % $
5.5
$
4.3
28.7 %
$
$
$
96.2
2.3
(3.4)
$
85.2 $
88.8
3.2
(1.8)
86.8
8.2 %
(29.2) %
89.5 %
(1.8) % $
394.7
9.7
(11.5)
349.9
13.3
(5.2)
385.0 $
441.6
12.8 %
(27.0) %
NM3
(12.8) %
1 For further information about this measure see section 10.2 of this MD&A.
2 Certain prior year figures have been restated to conform to the current year presentation.
3 Not meaningful.
Selected Normalized Metrics – Financial Services
(C$ in millions, except where
noted)
Q4 2023
Normalizing Normalized
Q4 20232
Items1
Q4 2022
Normalizing Normalized
Items1
Q4 2022 Change3
Revenue
$
379.9
$
— $
379.9
$
357.2
$
— $
357.2
Gross margin dollars
Gross margin rate5
Other expense (income)
Selling, general and
administrative expenses4
Depreciation and
amortization4
Net finance (income)
181.7
—
181.7
180.4
—
180.4
47.8 %
— bps
47.8 %
50.5 %
— bps
50.5 % (270) bps
$
1.4
$
— $
1.4
$
3.4
$
— $
3.4
(57.5) %
96.2
2.3
(3.4)
(2.0)
94.2
88.8
—
—
2.3
(3.4)
3.2
(1.8)
—
—
—
88.8
6.1 %
3.2
(1.8)
(29.2) %
89.5 %
Income before income taxes $
1 Refer to section 5.1.1 for a description of normalizing items.
2 These normalized measures (Selling, general and administrative expenses and Income before income taxes) are non-GAAP financial measures. For further
85.2 $
0.5 %
2.0 $
— $
86.8
87.2
86.8
$
$
information and a detailed reconciliation see section 10.1 of this MD&A.
3 Change is between normalized results.
4 Certain prior year figures have been restated to conform to the current year presentation.
5 For further information about this measure see section 10.2 of this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 23
6.4 %
0.7 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
(C$ in millions, except
where noted)
Revenue
Gross margin dollars
Gross margin rate5
Other expense (income)
Selling, general and
administrative expenses4
Depreciation and
amortization4
Normalizing Normalized
20232
Items1
2023
Normalizing Normalized
20222
Items1
2022
$ 1,507.3
$
— $ 1,507.3
$ 1,389.7
$
— $ 1,389.7
783.4
—
783.4
803.9
—
803.9
Change3
8.5 %
(2.6) %
52.0 %
5.5
$
$
— bps
— $
52.0 %
5.5
$
57.8 %
4.3
$
— bps
57.8 % (587) bps
— $
4.3
28.7 %
394.7
(35.3)
359.4
349.9
9.7
—
9.7
13.3
—
—
13.3
349.9
2.7 %
Net finance (income)
Income before income taxes $
1 Refer to section 5.1.1 for a description of normalizing items.
2 These normalized measures (Selling, general and administrative expenses and Income before income taxes) are non-GAAP financial measures. For further
385.0 $
35.3 $
(11.5)
(11.5)
441.6
441.6
420.3
— $
(5.2)
(5.2)
—
—
$
$
(27.0) %
NM6
(4.8) %
information and a detailed reconciliation see section 10.1 of this MD&A.
3 Change is between normalized results.
4 Certain prior year figures have been restated to conform to the current year presentation.
5 For further information about this measure see section 10.2 of this MD&A.
6 Not meaningful.
24 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Services Segment Commentary
Financial Services segment Income before income taxes was $85.2 million in the quarter, a $1.6 million decrease
from the prior year. Normalized Financial Services segment Income before income taxes was $87.2 million in the
quarter, an increase of $0.4 million from the prior year. Revenue growth of $22.7 million was mainly attributable to
higher interest income due to growth in receivables and higher yield. The increase in Revenue was offset by
higher net impairment losses, funding costs, and SG&A.
Gross average accounts receivable (“GAAR”)1 was 4.7 percent higher than Q4 2022 due to an increase in active
accounts and average balances, up 1.1 percent and 3.5 percent, respectively. Past due credit card receivables
(“PD2+ rate”)2 was higher than the prior year and the net write-off rate finished the quarter at 6.1 percent,
returning to historic levels. Ending Receivables grew at 4.5%, as new account growth continued to slow year over
year, and credit sales remained relatively flat as consumers continued to adapt to economic circumstances.
The expected credit loss (“ECL”) allowance for loans receivable was $926.3 million, an increase of $13.9 million
from Q3 2023 driven by higher receivables. The ECL allowance rate1 finished the quarter at 12.5 percent, within
the previously disclosed range of 11.5 percent to 13.5 percent.
On a full year basis, Financial Services Income before income taxes was $385.0 million, a decrease of $56.6
million. Excluding the impact of the targeted headcount reduction charge of $2.0 million and the previously
disclosed second quarter GST/HST-related charge of $33.3 million, Normalized Financial Services segment
Income before income taxes was $420.3 million, a decrease of $21.3 million from the prior year. The decline was
mainly attributable to higher net impairment losses and increased funding costs, partially offset by higher
Revenue.
Revenue
Q4 2023
p $22.7 million or 6.4%
Full Year
p $117.6 million or 8.5%
Revenue for the quarter was $379.9 million, an
increase of $22.7 million, or 6.4 percent
compared to the prior year. The increase in
Revenue was mainly due to higher interest
income driven by growth in receivables.
Revenue was $1,507.3 million, an increase of
$117.6 million, or 8.5 percent compared to the
prior year. The increase in Revenue was primarily
attributable to higher interest and fee income.
Gross
Margin
Dollars
p $1.3 million or 0.7%
q $20.5 million or 2.6%
Gross margin dollars were $181.7 million, an
increase of $1.3 million, or 0.7 percent compared
to the prior year. The increase in Gross margin
dollars was mainly due to Revenue growth,
partially offset by higher net impairment losses
and funding costs.
Gross margin dollars were $783.4 million, a
decrease of $20.5 million, or 2.6 percent
compared to the prior year. The decrease in
Gross margin dollars was mainly due to higher
net impairment losses and funding costs, partially
offset by Revenue growth.
SG&A
p $7.4 million or 8.2%
p $44.8 million or 12.8%
SG&A was $96.2 million, an increase of $7.4
million, or 8.2 percent. Excluding the $2.0 million
targeted headcount reduction charge, Normalized
SG&A increased $5.4 million, primarily due to
higher IT costs and other expenses.
SG&A was $394.7 million, an increase of $44.8
million or 12.8 percent. Excluding the $33.3
million GST/HST-related charge and the $2.0
million
targeted headcount reduction charge,
Normalized SG&A was higher by $9.5 million due
to higher IT costs.
Earnings
Summary
q $1.6 million or 1.8%
q $56.6 million or 12.8%
Income before income taxes was $85.2 million, a
decrease of $1.6 million, or 1.8 percent.
Normalized Income before income taxes was
increase of $0.4 million
$87.2 million, an
attributable to the reasons above.
Income before income taxes was $385.0 million,
a decrease of $56.6 million or 12.8 percent.
Normalized Income before income taxes was
$420.3 million, a decrease of $21.3 million
attributable to the reasons above.
1 For further information about this measure see section 10.2 of this MD&A.
2 This is a non-GAAP ratio. For further information and a detailed reconciliation see section 10.1 of this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 25
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.3.2 Financial Services Segment Key Performance Measures
2023
0.1 %
21.1 %
Change
(0.6) %
$ 7,294 $
Q4 2023 Q4 2022
4.0 %
6,970
(C$ in millions, except where noted)
Credit card sales growth1
GAAR
Revenue (as a percentage 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 receivables (“PD2+”) rate3
Allowance rate
Return on receivables1, 2
1 For further information about this measure see section 10.2 of this MD&A.
2 Figures are calculated on a rolling 12-month basis.
3 This is a non-GAAP financial measure. For further information and a detailed reconciliation see section 10.1 of this MD&A.
4.9 %
2.9 %
12.6 %
6.6 %
6.1 %
3.6 %
12.5 %
5.4 %
1.1 %
3.5 %
$ 3,118 $
20.9 %
2,340
2,313
3,012
$
n/a
2,319
3,080
n/a
n/a
n/a
n/a
4.7 % $ 7,141 $
2022
16.3 %
6,654
n/a
Change
7.3 %
2,253
$
2,953
2.9 %
4.3 %
n/a
n/a
n/a
n/a
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 2023 vs. Q4 2022
Growth
p
4.7% in GAAR
0.6% in credit card sales growth
1.1% in average number of accounts with a balance
3.5% in average account balance
q
p
p
GAAR increased by 4.7 percent relative to last year driven by continued strong cardholder
engagement. The average number of active accounts for the quarter increased by 1.1 percent
and average account balance was up 3.5 percent.
Credit card sales declined by 0.6 percent over the prior year driven by softer sales at Retail
segment banners and external merchants.
Performance
q
p
125 bps in return on receivables
22 bps in Revenue as a percentage of GAAR
Return on receivables decreased by 125 bps compared to the prior year due to both GAAR
growth and a decline in earnings on a 12-month basis.
Revenue as a percentage of GAAR increased by 22 bps compared to the prior year due to
strong revenue growth.
Operational metrics
p
p
q
70 bps in PD2+ rate
127 bps in net credit card write-off rate
12.5% allowance rate, down 15 bps
The PD2+ rate increased by 70 bps compared to the prior year as a result of higher aging of the
portfolio.
The increase in the net write-off rate compared to the prior year was driven by an expected
increase in net write-off dollars relative to receivables with a return to historic levels of
performance.
The allowance rate decreased by 15 bps to 12.5 percent, remaining within the previously
disclosed range of 11.5 to 13.5 percent.
26 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.3.3 Financial Services Segment Seasonal Trend Analysis
Quarterly operating net income and revenue are affected by seasonality. The following table shows the financial
performance of the segment by quarter for the last two years.
(C$ in millions)
Revenue
Income before income taxes
Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021
$ 379.9 $ 393.1 $ 364.5 $ 369.8 $ 357.2 $ 360.4 $ 340.4 $ 331.7 $ 312.4
85.2
125.7
55.4
118.7
86.8
139.6
90.0
125.3
63.0
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 27
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.4 CT REIT Segment Performance
5.4.1 CT REIT Segment Financial Results
(C$ in millions)
Property revenue1
Property expense1
General and administrative expense (“G&A”)
Net finance costs
Fair value loss (gain) adjustment3
Income before income taxes
Adjustment from fair value to amortized cost
method on Investment property
Fair value (loss) gain adjustment
Depreciation and impairment loss
Q4 2023
$
140.0 $
Q4 2022
135.2
28.8
4.1
29.5
39.3
$
38.3 $
27.8
4.1
27.7
0.9
74.7
Change
3.5 % $
3.6 %
2.4 %
6.2 %
NM2
(48.8) % $
2023
552.8 $
115.5
15.2
114.0
78.6
2022
532.8
111.1
14.5
110.4
(27.8)
229.5
$
324.6
Change
3.7 %
4.0 %
5.2 %
3.2 %
NM2
(29.3) %
(39.3)
19.7
(0.9)
21.1
NM2
(6.6) %
(78.6)
77.7
27.8
76.7
NM2
1.3 %
Income before income taxes, applying CTC
accounting policies
1 For further information about this measure see section 10.2 of this MD&A.
2 Not meaningful.
3 Fair value is eliminated on consolidation.
$
57.9 $
54.5
6.2 % $
230.4 $
220.1
4.7 %
The following shows the CT REIT year-over-year Property revenue performance by quarter for the last two years.
CT REIT Segment Commentary
CT REIT segment income increased $3.4 million due to higher Property revenue, partially offset by higher Net
finance costs and Property expense during the quarter. The increase in earnings was mainly due to the
intensifications and developments completed during 2022 and 2023, in addition to contractual rent escalations.
28 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
Year-over-year Property Revenue Growth2.1%2.4%1.6%2.3%6.1%4.4%3.5%4.2%4.0%3.2%3.5%3.7%Property RevenueQ4 20212021Q1 2022Q2 2022Q3 2022Q4 20222022Q1 2023Q2 2023Q3 2023Q4 20232023
MANAGEMENT’S DISCUSSION AND ANALYSIS
CT REIT Segment Commentary (continued)
Q4 2023
p $4.8 million or 3.5%
Property
Revenue
Full Year
p $20.0 million or 3.7%
Property
revenue was $140.0 million, an
increase of $4.8 million, or 3.5 percent. The
increase was mainly due to the intensifications
and developments completed during 2022 and
2023, in addition to contractual rent escalations,
partially offset by vacancies.
Property
revenue was $552.8 million, an
increase of $20.0 million, or 3.7 percent. The
increase was mainly due to the intensifications
and developments completed during 2022 and
2023, in addition to contractual rent escalations,
partially offset by vacancies.
Property
Expense
p $1.0 million or 3.6%
p $4.4 million or 4.0%
Property expense was $28.8 million, an increase Property expense was $115.5 million, an
increase of $4.4 million, or 4.0 percent due to the
intensifications and developments completed in
2022 and 2023.
of $1.0 million, or 3.6 percent due to the
intensifications and developments completed in
2022 and 2023.
G&A
p $0.0 million or 2.4%
p $0.7 million or 5.2%
Depreciation
and
Impairment
Net
Finance
Costs
G&A was $4.1 million, relatively flat to the prior G&A was $15.2 million, an increase of 0.7
million, or 5.2 percent. The increase was driven
by higher variable compensation expense.
year.
q $1.4 million or 6.6%
p $1.0 million or 1.3 %
Depreciation and impairment was $19.7 million,
a decrease of $1.4 million or 6.6% due to
in
accelerated depreciation
the prior year,
partially offset by
intensifications and
the
developments completed during 2022 and 2023.
Depreciation and impairment was $77.7 million,
an increase of $1.0 million or 1.3 percent due to
the intensifications and developments completed
during 2022 and 2023, partially offset by
accelerated depreciation in the prior year.
p $1.8 million or 6.2%
p $3.6 million or 3.2%
Net
finance costs were $29.5 million, an
increase of $1.8 million or 6.2 percent, driven by
the issuance of Series I senior unsecured
debentures in the quarter, higher credit facilities
utilization
fund 2023 developments and
intensifications, partially offset by lower interest
costs due to mortgage maturity and capitalized
interest on properties under development.
to
Net
finance costs were $114.0 million, an
increase of $3.6 million or 3.2 percent, driven by
an increase in credit facilities utilization to fund
2023 developments and intensifications, higher
interest rate on the credit facilities, and the
issuance of Series
senior unsecured
debentures in the fourth quarter. This was
partially offset by capitalized
interest on
properties under development, lower interest
costs due
to mortgage maturity, and a
prepayment cost in the prior year relating to the
early
redemption of Series A unsecured
debentures.
I
Earnings
Summary
p $3.4 million or 6.2%
p $10.3 million or 4.7%
Income before income taxes was $57.9 million, Income before income taxes was $230.4 million,
an increase of $10.3 million or 4.7 percent
attributable to the reasons above.
an increase of $3.4 million or 6.2 percent
attributable to the reasons above.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 29
MANAGEMENT’S DISCUSSION AND ANALYSIS
5.4.2 CT REIT Segment Key Performance Measures
(C$ in millions)
Net operating income1
Funds from operations1
Adjusted funds from operations1
Q4 2023 Q4 2022
106.8
111.5 $
$
Change
4.4 % $
2023
439.0 $
77.7
71.5
75.6
68.5
2.8 %
4.3 %
307.9
283.4
2022
419.8
296.2
268.8
Change
4.6 %
4.0 %
5.4 %
1
This measure is a non-GAAP financial measure. For further information and a detailed reconciliation see section 10.1 of this MD&A.
Net Operating Income (“NOI”)
NOI for the quarter increased by 4.4 percent compared to the prior year, primarily due to the intensifications of
income-producing properties completed in 2023 and 2022, and rent escalations.
Funds from Operations (“FFO”)
FFO for the quarter increased by 2.8 percent compared to the prior year, primarily due to the impact of NOI
variances.
Adjusted Funds from Operations (“AFFO”)
AFFO for the quarter increased by 4.3 percent compared to the prior year, primarily due to the impact of NOI
variances.
30 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
6.0 Balance Sheet Analysis, Liquidity, and Capital Resources
6.1 Selected Balance Sheet Highlights
Selected line items from the Company’s assets and liabilities, as at December 30, 2023 and the year-over-year
change versus December 31, 2022, are noted below:
Change in Total assets
q
$
124.0
Selected Assets
December 30, 2023
Trade and other receivables
Loans receivable (current portion)
Merchandise inventories
Property and equipment
1,151.3
6,568.3
2,693.7
5,219.5
Change in Total liabilities
p
$
470.4
Selected Liabilities
December 30, 2023
Deposits (current and long-term)
Trade and other payables
Short-term borrowings
Other long-term liabilities
Long-term debt (current and long-
term portion)
3,364.3
2,689.4
965.7
190.0
4,964.5
Assets
Trade and other q $158.6 million
receivables
Loans receivable p $297.2 million
(current portion)
Merchandise
inventories
Property and
equipment
q $522.4 million
p $225.4 million
The decrease was a result of lower Dealer receivables due to timing and volume
of payments, and a decrease in fair values of derivative contracts.
The increase was primarily due to increased cardholder activity, in both the
number of active credit cards and average balance, partially offset by a higher
allowance.
Inventory declined 16.2 percent compared to prior year. Active management of
inventory across the banners contributed to the decline despite unseasonable
weather in Q4 2023.
The increase was primarily driven by the Company’s store investments as part of
its Better Connected strategy.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 31
Year-over-year change in assets(158.6)297.2(522.4)225.4Year-over-year change in liabilities398.6(511.5)389.5(544.6)706.8
MANAGEMENT’S DISCUSSION AND ANALYSIS
Liabilities
Deposits (current
and long-term)
Trade and other
payables
Short-term
borrowings
p $398.6 million
The increase was primarily due to increases in guaranteed investment certificate
("GIC") deposits to fund loans receivable growth in the Financial Services
segment.
q $511.5 million
The decrease was due to timing and volume of payments.
p $389.5 million
Other long-term
liabilities
q $544.6 million
Long-term debt
(current and long-
term portion)
p $706.8 million
The increase was primarily due to funding and capital requirements in the Retail
segment. This was partially offset by the CT REIT's repayment of short term
indebtedness by using the proceeds from the issuance of $250 million series I
unsecured debentures.
The decrease was primarily due to the extinguishment of the redeemable financial
instrument as a result of the Company's repurchase of Scotiabank's 20 percent
interest in CTFS.
The increase was primarily due to total debt issuances of $1.7 billion by CTC and
GCCT, partially offset by repayment of $1.0 billion in debt maturing in the year.
32 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
6.2 Summary Cash Flows
Selected line items from the Company’s Consolidated Statements of Cash Flows for the quarters and years
ended December 30, 2023 and December 31, 2022 are noted in the following tables:
(C$ in millions)
Cash generated from (used for) operating activities
Cash generated from (used for) investing activities
Cash generated from (used for) financing activities
Cash (used) generated in the period
(C$ in millions)
Cash generated from (used for) operating activities
Cash generated from (used for) investing activities
Cash generated from (used for) financing activities
Cash (used) generated in the period
Q4 2023
Q4 2022
869.9 $
911.2 $
(353.0)
(664.6)
(182.3)
(705.5)
(147.7) $
23.4 $
2023
1,353.7 $
(747.8)
(621.0)
2022
466.5 $
(230.4)
(1,661.5)
(15.1) $
(1,425.4) $
$
$
$
$
Change
(41.3)
(170.7)
40.9
(171.1)
Change
887.2
(517.4)
1,040.5
1,410.3
Operating
activities
Investing
activities
Financing
activities
Q4 2023
q $41.3 million change
Full Year
p $887.2 million change
The decrease in Cash generated from operating
activities is primarily due to lower net income
adjusted for non-cash items, partially offset by
decreased working capital in comparison to the
same period in the prior year.
The increase in Cash generated from operating
activities is primarily driven by a lower increase in
loans receivable and other changes in working
capital compared to the prior year. This is partially
offset by increased interest paid and lower net
income adjusted for non-cash items in the current
year.
q $170.7 million change
q $517.4 million change
The increase in Cash used for investing activities
is due to increased acquisitions of short-term and
long-term investments, and Additions to property
and equipment and investment property.
The increase in Cash used for investing activities
is primarily due to reduced sales of short-term
investments and increased acquisition of long-
term investments, partially offset by reduced
Additions to property and equipment, investment
property and Additions to intangible assets.
p $40.9 million change
p $1,040.5 million change
The decrease in Cash used for financing activities
is primarily due to Change in deposits in the
Financial Services segment, and issuance of
long-term debt partially offset by the repurchase
of Scotiabank's 20 percent interest in CTFS
Holdings Ltd.
The decrease in Cash used for financing activities
is primarily due to cash generated from increased
deposits compared to the prior year’s cash used
to repay deposits and cash proceeds
from
financing debt net of repayments, partially offset
by cash used to repurchase Scotiabank’s 20
percent interest in CTFS Holdings.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 33
MANAGEMENT’S DISCUSSION AND ANALYSIS
6.3 Capital Management
The definition of capital varies from company to company, from industry to industry, and for different purposes. In
the process of managing the Company’s capital, Management includes the following items in its definition of
capital, which includes Glacier Credit Card Trust (“GCCT”) indebtedness but excludes Franchise Trust
indebtedness:
(C$ 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
Share capital
Contributed surplus
Retained earnings
Total capital under management
2023 % of total
2022 % of total
$
1,041.7
965.7
560.5
4,404.0
2,322.6
$
9,294.5
—
598.7
2.9
5,128.2
$ 15,024.3
7.0 % $
6.4 %
3.7 %
29.3 %
15.5 %
61.9 % $
— %
4.0 %
— %
34.1 %
100.0 % $
1,226.3
576.2
1,040.2
3,217.5
1,739.4
7,799.6
567.0
587.8
2.9
5,070.2
14,027.5
8.8 %
4.1 %
7.4 %
23.0 %
12.4 %
55.7 %
4.0 %
4.2 %
— %
36.1 %
100.0 %
The Company’s objectives when managing capital are:
• Ensuring sufficient liquidity to meet its financial obligations when due and executing 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 11.0
of this MD&A including current and future industry, market, and economic risks and conditions.
6.3.1 Canadian Tire Bank's Regulatory Environment
CTB manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions
(“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. Basel III is a global regulatory accord that was
introduced to enhance the reputation, supervision, and risk management practices within the banking sector. The
Bank has implemented several capital policies, procedures, and controls, including an annual Internal Capital
Adequacy Assessment Process (“ICAAP”). These measures support the Bank in achieving its goals and
objectives.
The Bank’s objectives include maintaining capital to:
• meet all applicable regulatory requirements;
• maintain and reinforce confidence in the safety and soundness of the Bank;
• support growth in assets and liabilities; and
• offset possible operating and investment losses.
As at Q4 2023, the Bank complied with all regulatory capital guidelines established by OSFI, and its internal
targets as determined by its ICAAP.
34 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
6.4 Investing
6.4.1 Capital Expenditures
The Company’s capital expenditures for the periods ended December 30, 2023 and December 31, 2022 were as
follows:
(C$ in millions)
Modernization and efficiency enablers
Omnichannel customer experience
Fulfilment infrastructure and automation
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 10.1 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
2023
78.0 $
2022
119.5
615.3 $
683.4 $
391.4
410.5
747.6
217.6
145.9
848.7
101.1
68.1
$
$
$
business combinations, intellectual properties, and tenant allowances received.
Full Year
Total capital q $165.4 million
expenditures
The Company’s full year operating capital expenditures and total capital expenditures were
$615.3 million and $683.4 million respectively, a decrease of $132.3 million and
$165.3 million from the prior year. The decrease was driven by lower spend relating to the
Greater Toronto Area Distribution Centre and the Company’s digital platform, both of which
became fully operational in the year and fewer ongoing store capital projects.
Capital Commitments
The Company had commitments of approximately $173.8 million as at December 30, 2023 (December 31, 2022 –
$165.5 million) for the acquisition of tangible and intangible assets.
Operating Capital Expenditures
The following contains forward-looking information and readers are cautioned that actual results may vary.
The Company’s 2023 full-year operating capital expenditures were $615.3 million, slightly below the disclosed
range in Q3 2023 of $650.0 to $700.0 million, and below the range disclosed in the Company’s 2022 MD&A of
$750.0 to $800.0 million. The decline in the operating capital expenditures is primarily due to a timing shift in real
estate and supply chain operating capital expenditures, due in part to the DC fire, and lower capitalization of IT
cloud-based solutions.
We have slowed our operating capital expenditure slightly in response to the returns we can expect to generate in
a more challenging economic environment, but with a continued focus on investing in the Company’s long term
competitive positioning. Based on this, the Company plans to fund the Better Connected strategy, sustain the
business, and continue prudent capital management and expects 2024 full-year operating capital expenditures to
be in the range of $475.0 to $525.0 million, below the previously disclosed range in Q3 2023 of $550.0 to $600.0
million.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 35
MANAGEMENT’S DISCUSSION AND ANALYSIS
6.5 Liquidity and Financing
Management is focused on ensuring that the Company has sufficient liquidity, both through maintaining a strong
balance sheet and having the ability to access additional capital from multiple sources. Several alternative liquidity
sources are available to its Retail, Financial Services, and CT REIT segments to meet their financial obligations
when due and to execute their operating and strategic plans.
As at December 30, 2023
(C$ in millions)
Cash and cash equivalents
Short-term investments
Total net cash and cash equivalents and short-term
investments1
Committed Bank Lines of Credit
Less: Borrowings outstanding2
Less: U.S. commercial paper outstanding
Less: Letters of credit outstanding
Available Committed Bank Lines of Credit
Liquidity1
Consolidated
$
311.2 $
177.2
Retail
85.6 $
—
Financial
Services
205.8 $
177.2
CT REIT
19.8
—
$
488.4 $
85.6 $
383.0 $
4,397.8
2,997.8
307.0
365.6
3.1
160.0
365.6
—
1,100.0
147.0
—
—
$
$
3,722.1 $
2,472.2 $
953.0 $
4,210.5 $
2,557.8 $
1,336.0 $
19.8
300.0
—
—
3.1
296.9
316.7
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 10.2 of this MD&A.
The Company ended the quarter with $488.4 million in cash and short-term investments, net of bank
indebtedness, and $4.2 billion in liquidity with $2.6 billion, $1.3 billion, and $316.7 million at its Retail, Financial
Services, and CT REIT segments, respectively.
As at Q4 2023, 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 following Financing Source table:
36 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Financing Source
Committed Bank
Lines of Credit and
Securitized Note
Purchase Facility
Commercial Paper
Programs
Medium-Term
Notes, Term Loan
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 bank line of credit is available to the Retail segment for general corporate
purposes, expiring in June 2027. As of December 30, 2023, the Retail segment had $160.0 million
outstanding on this bank line of credit. During the fourth quarter of 2023, CTC entered into a new
unsecured bank line of credit for $1.0 billion with five Canadian financial institutions, expiring in May
2025. As of December 30, 2023, there were no borrowings outstanding on this bank line of credit.
Helly Hansen has a 175 million Norwegian Krone (”NOK”) secured overdraft facility ($22.8 million of
Canadian dollar equivalent) provided by a Norwegian bank, which automatically renewed in January
and will expire in January 2025. As of December 30, 2023, Helly Hansen had no borrowings
outstanding on its facility.
Provided by a syndicate of seven Canadian financial institutions, $300 million in an unsecured bank
line of credit is available to CT REIT for general business purposes, expiring in September 2027. As
of December 30, 2023, CT REIT had no borrowings outstanding on its bank line of credit.
Scotiabank has provided CTB with a $400 million unsecured bank line of credit and a $700 million
securitized note purchase facility for the purchase of senior and subordinated credit card asset-
backed notes issued by GCCT, both of which expire in April 2025. As of December 30, 2023, CTB
had $147.0 million of borrowings outstanding on its bank line of credit and a nominal amount owing
on its note purchase facility.
CTC has a commercial paper program that allows it to issue up to a maximum aggregate principal
amount of US$1.0 billion of unsecured short-term promissory notes in the United States. Terms to
maturity for the promissory notes range from one to 270 days from the date of issue. Notes are
issued at a discount and rank equally in right of payment with all other present and future unsecured
and unsubordinated obligations to creditors of CTC. As of December 30, 2023, CTC had a C$
equivalent of 365.6 million U.S. commercial paper outstanding.
Concurrent with CTC’s US$ commercial paper issuances, CTC enters 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.
GCCT has a commercial paper program that allows it to issue up to a maximum aggregate principal
amount of $300 million of short-term credit card asset-backed promissory notes. As of
December 30, 2023, GCCT had $293.1 million of asset-backed commercial paper notes
outstanding.
As of December 30, 2023, CTC had an aggregate principal amount of $1,150.0 million of medium-
term notes outstanding and a $400M term loan from Desjardins Capital Markets.
As of December 30, 2023, CT REIT had an aggregate principal amount of $1,425 million of senior
unsecured debentures outstanding.
As of December 30, 2023, GCCT had an aggregate principal amount of $1,990.1 million of credit
card asset-backed term notes outstanding, consisting of $1,860.7 million principal amount of senior
term notes and $129.4 million principal amount of subordinated term notes.
Funds continue to be readily available to CTB through broker networks. As at December 30, 2023,
CTB held $2,734.4 million in broker GIC deposits.
Retail deposits consist of High Interest Savings ("HIS") and retail GIC deposits held by CTB,
available both within and outside a tax-free savings account. As of December 30, 2023, CTB held
$629.9 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 of
December 30, 2023, CTC had a 68.4 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.
As of December 30, 2023, CT REIT had an aggregate principal amount of $8.9 million of mortgages,
secured by certain investment properties, outstanding.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
Credit Ratings
A credit rating generally provides an indication of the risk that the borrower will not fulfill its full obligations in a
timely manner with respect to both interest and principal commitments. Ratings for long-term debt instruments
range from highest credit quality (generally “AAA”) to default in payment (generally “D”). Ratings for short-term
debt instruments range from “R-1 (high)” (Morningstar DBRS), “A-1+” (S&P), “P-1” (Moody’s), or “F1+” (Fitch),
representing the highest credit quality to “D” (Morningstar DBRS and Fitch), “C” (S&P and Fitch), and “not
prime” (Moody’s) for the lowest credit quality of securities rated.
Credit Rating Summary
Canadian Tire Corporation
Issuer rating
Medium-term notes
U.S. Commercial Paper
Glacier Credit Card Trust
Asset-backed senior-term
notes
Asset-backed subordinated-
term notes
Asset-backed commercial
paper
CT REIT
Issuer rating
Senior unsecured debentures
Morningstar DBRS
Trend
Rating
S&P
Moody’s
Rating Outlook Rating Outlook Rating Outlook
Fitch
BBB
BBB
—
Stable
Stable
—
BBB
BBB
A-2
Stable
—
—
—
—
P-2
—
—
Stable
AAA (sf)
A (sf)
R-1 (high) (sf)
—
—
—
AAA (sf)
A (sf)
—
—
—
—
BBB
BBB
Stable
Stable
BBB
BBB
Stable
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F1+ (sf)
—
—
—
—
—
—
—
—
—
—
6.5.1 Contractual Obligations, Guarantees, and Commitments
The Company funds capital expenditures, working capital needs, dividend payments, and other financing needs,
such as debt repayments and Class A Non-Voting Share purchases under a Normal Course Issuer Bid (“NCIB”),
from a combination of sources. The following table shows the Company’s contractual obligations to be paid over
the next five years and beyond. The Company believes it had the ability to meet these contractual obligations as
at December 30, 2023.
(C$ in millions)
Deposits
Total debt1
Lease obligations2
Purchase obligations
Other obligations
Interest payments
2024
1,053.2
$
$
2025
636.1
$
560.5
443.0
2,261.7
51.7
311.5
1,080.4
435.8
353.3
19.9
281.7
$
2026
480.5
408.0
379.9
277.0
17.7
253.9
$
2027
609.0
825.1
294.0
271.1
14.6
203.8
2028
597.0
900.0
221.8
234.6
6.5
135.4
2029 &
beyond
—
$
Total
$ 3,375.8
1,200.0
4,974.0
1,116.1
2,890.6
278.8
3,676.5
15.0
125.4
350.8
1,537.1
$ 4,681.6 $ 2,807.2 $ 1,817.0 $ 2,217.6 $ 2,095.3 $ 2,960.7 $ 16,579.4
1 Includes current debt, long-term debt (senior and subordinated term notes), GCCT term notes, and mortgages. Details of both can be found in Note 23 to the
2023 Consolidated Financial Statements.
2 Excludes reasonably certain options of $232.8 million (2022 - $82.1 million).
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 35 of the 2023 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 2023 Consolidated Financial
Statements.
38 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
During the second quarter, the Company entered into agreements to spend $445 million over a period of seven
years.
6.6 Funding Costs
The table below shows the funding costs relating to short-term and long-term debt, excluding deposits held by
CTB, Franchise Trust indebtedness, and lease liability interest:
(C$ in millions)
Interest expense1
Cost of debt1
1
For further information about this measure see section 10.2 of this MD&A.
2023
$
240.2
$
4.09 %
2022
171.7
3.53 %
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 11.1 in this MD&A.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 39
MANAGEMENT’S DISCUSSION AND ANALYSIS
7.0 Equity
7.1 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 (2022 – 3,423,366)
52,197,823 Class A Non-Voting Shares (2022 – 54,276,998)
2023
2022
$
$
0.2 $
598.5
598.7 $
0.2
587.6
587.8
Each year, the Company files a Notice of Intention to Make a Normal Course Issuer Bid (“Notice of Intention”) with
the Toronto Stock Exchange (“TSX”) which allows it to repurchase 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 repurchase or as otherwise permitted under the rules of the TSX and applicable
securities laws. Class A Non-Voting Shares repurchased by the Company pursuant to the Normal Course Issuer
Bid (“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 17, 2022, the TSX accepted the Company’s Notice of Intention to repurchase up to 5.3 million Class
A Non-Voting Shares during the period March 2, 2022 to March 1, 2023 (the “2022-23 NCIB”). On February 16,
2023, the TSX accepted the Company’s Notice of Intention to repurchase up to 5.1 million Class A Non-Voting
Shares during the period March 2, 2023 to March 1, 2024 (the “2023-24 NCIB”). Also on February 16, 2023, the
TSX accepted a new Automatic Securities Purchase Plan (“ASPP”) which expires on March 1, 2024 (the “2023-24
ASPP”) and allows a designated broker to repurchase Class A Non-Voting Shares under the 2023-24 NCIB during
the Company’s blackout periods, subject to pre-defined parameters.
The following contains forward-looking information and readers are cautioned that actual results may vary.
On November 10, 2022, the Company announced its intention to repurchase $500 million to $700 million of its
Class A Non-Voting Shares by the end of 2023, in excess of the amount required for anti-dilutive purposes. The
following table summarizes the Company’s repurchases relating to the 2022-23 Share Repurchase Intention.
(C$ in millions)
2022-23 Share Repurchase Intention announced on November 10, 2022
Shares repurchased in fiscal 2022 under the 2022-23 Share Repurchase Intention
Shares repurchased in fiscal 2023 under the 2022-23 Share Repurchase Intention
Total shares repurchased under the 2022-23 Share Repurchase Intention
$ 500 - 700
121.8
348.2
$
470.0
On November 9, 2023, the Company announced its intention to repurchase up to $200 million of its Class A Non-
Voting Shares during 2024, in excess of the amount required for anti-dilutive purposes, and subject to acceptance
by the TSX of the renewal of the Company’s NCIB in 2024.
7.2 Dividends
The Company has a long-term dividend payout ratio1 target of approximately 30 to 40 percent of the prior year’s
normalized net income, after considering the period-end cash position, future cash flow requirements, capital
market conditions, and investment opportunities. The dividend payout ratio may fluctuate in any particular year.
1
For further information about this measure see section 10.1 of this MD&A.
40 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Company increased its annual dividend for the 14th consecutive year, to $7.00 per share, an increase of
approximately 1.5 percent over last year. On February 14, 2024, the Company’s Board of Directors declared
dividends at a rate of $1.750 per share payable on June 1, 2024 to shareholders of record as of April 30, 2024.
The dividend is considered an “eligible dividend” for tax purposes.
7.3 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 2023, 210,000 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 payment to the counterparties of
approximately $8.2 million. The Company entered into 150,000 units of new equity-forward contracts in Q4 2023
with a hedge rate of $168.11.
8.0 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.
Refer to the Income Taxes accounting policy described in Note 3 of the 2023 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 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 December 30, 2023 were $65.8 million compared with $189.6 million in 2022.
The Effective tax rate was relatively flat compared to the prior year.
Income taxes for the full-year ended December 30, 2023 were $233.7 million compared with $401.0 million in
2022. The Effective tax rate for the full year ended December 30, 2023 increased to 40.8 percent from 25.3
percent in 2022 primarily due to the non-deductible change in the fair value of the redeemable financial instrument
and higher non-deductible stock option expense. When adjusted for normalizing items1 the effective tax rate2 is
25.9 percent.
1 Refer to section 5.1.1 in this MD&A for a description of normalizing items.
2 This measure is a non-GAAP ratio. For further information and a detailed reconciliation see section 10.1 of this MD&A.
9.0 Accounting Policies and Estimates
9.1 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 of the 2023 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
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 41
MANAGEMENT’S DISCUSSION AND ANALYSIS
by the Canadian Securities Administrators, except for the allowance for loan impairment in the Financial Services
segment.
Details of the accounting policies subject to judgments and estimates that the Company believes could have the
most significant impact on the amounts recognized in its consolidated financial statements are described in Note 2
of the 2023 Consolidated Financial Statements.
Effective first quarter of 2023, the Company changed an accounting estimate which results in a shift of earnings
from the fourth quarter to the first, second, and third quarters; with no change to the annual amount. Refer to
section 5.1.1 for a discussion of the impacts of the Company’s MSA with Dealers.
9.2 Changes in Accounting Policies
Standards, Amendments and Interpretations Issued and Adopted
Insurance Contracts
In May 2017, the International Accounting Standards Board (“IASB”) issued IFRS 17, which replaced IFRS 4 –
Insurance Contracts and established 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. The Company adopted IFRS 17 on January 1, 2023 and
determined there to be no material impact on the consolidated financial statements.
As a result of adopting IFRS 17, the Company updated its accounting policies for Reinsurance revenue and the
measurement of insurance contracts as follows:
Reinsurance revenue in each reporting period represents the changes in liabilities for remaining coverage that
relate to services for which the Company expects to receive consideration, and an allocation of premiums that
relate to recovering insurance acquisition cash flows.
IFRS 17 allows the optional simplification of the measurement of reinsurance contracts by applying the Premium
Allocation Approach (“PAA”). When measuring liabilities for remaining coverage, the PAA is similar to the
Company’s previous accounting treatment. However, when measuring liabilities for incurred claims, the Company
now discounts the future cash flows and includes an explicit risk adjustment for non-financial risk.
Clarifying Distinction Between Accounting Policies and Accounting Estimates
In February 2021, the IASB issued narrow-scope amendments to IAS 8 – Accounting Policies, Changes in
Accounting Estimates and Errors (“IAS 8”). 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 applied retroactively to past transactions and other past events. The Company
assessed the impact of the amendment and determined there to be no material impact on the consolidated
financial statements.
International Tax Reform
The Organisation for Economic Co-operation and Development published the Pillar Two model rules designed to
address the tax challenges arising from the digitalization of the global economy. It is unclear if the Pillar Two
model rules create additional deferred taxes.
In response to this uncertainty, in May 2023, the IASB issued
amendments to IAS 12 – Income Taxes introducing a mandatory temporary exception from the recognition and
disclosure of deferred taxes related to the implementation of Pillar Two model rules. The amendments also
require that the Company separately disclose the current tax expense/income related to Pillar Two income taxes
effective for the annual reporting period beginning on or after January 1, 2023. The Company does not expect a
material exposure to Pillar Two income taxes. The Company has retrospectively adopted the amendments and
applied the temporary mandatory exception.
42 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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 ended December 30, 2023 and, accordingly, have not been applied in preparing these financial statements.
Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued amendments to IFRS 16 – Leases (“IFRS 16”) relating to sale leaseback
transactions for seller-lessees. The amendment adds a requirement that measuring lease payments or revised
lease payments shall not result in the recognition of a gain or loss that relates to the right-of-use asset retained by
the seller-lessee. The amendments are effective for annual reporting periods beginning on or after January 1,
2024, with early adoption permitted. The Company assessed the impact of the amendments and determined there
to be no material impact on the consolidated financial statements.
Non-current Liabilities with Covenants
In October 2022, the IASB issued amendments to IAS 1 – Presentation of Financial Statements, which specifies
that covenants whose compliance is assessed after the reporting date do not affect the classification of debt as
current or non-current at the reporting date. Instead, the amendments require disclosure of information about
these covenants in the notes to the financial statements. The amendments are effective for annual reporting
periods beginning on or after January 1, 2024, with early adoption permitted. The Company assessed the impact
of the amendments and determined there to be no material impact on the consolidated financial statements.
Supplier Finance Arrangements
In May 2023, the IASB issued amendments to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial
Instruments: Disclosures. The amendments add requirements to disclose information that allows users to assess
how supplier finance arrangements affect an entity’s liabilities, cash flows, and exposure to liquidity risk. The
amendments are effective for annual reporting periods beginning on or after January 1, 2024, with early adoption
permitted. The Company assessed the impact of the amendments and determined there to be no material impact
on the consolidated financial statements.
Lack of Exchangeability
In August 2023, the IASB issued amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates in
relation to Lack of Exchangeability. The amendments require entities to apply a consistent approach in assessing
whether a currency can be exchanged into another currency, and in determining the exchange rate to use and the
disclosures to provide when it cannot. These amendments are effective for annual reporting periods beginning on
or after January 1, 2025, with early adoption permitted. The Company assessed the impact of the amendments
and determined there to be no material impact on the consolidated financial statements.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 43
MANAGEMENT’S DISCUSSION AND ANALYSIS
10.0 Non-GAAP Financial Measures, Ratios and Supplementary Financial
Measures
10.1 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 rollouts, and infrequent non-operational fair value adjustments,
are removed from SG&A and Other expense (income) where applicable. Explanations of normalizing items can be
found in subsection 5.1.1.
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. Normalized Other expense (income) is most directly
comparable to Other expense (income), a GAAP measure reported in the consolidated financial statements.
(C$ in millions)
Other expense (income)
Add normalizing items:
DC fire
Helly Hansen Russia exit
Q4 2023
Q4 2022
$
3.2 $
0.2 $
2023
34.4 $
2022
61.6
—
—
—
—
(11.3)
—
—
(36.5)
25.1
Normalized Other expense (income)
$
3.2 $
0.2 $
23.1 $
Retail Normalized Other Expense (Income)
The following table reconciles Retail Normalized Other expense (income) to Other expense (income), a GAAP
measure reported in the consolidated financial statements.
(C$ in millions)
Other expense (income)
Less: Other operating segments
Retail Other expense (income)
Add normalizing items:
2023
34.4 $
2022
61.6
Q4 2022
Q4 2023
(115.3) $
(35.8) $
(39.3) $
3.2 $
0.2 $
(84.0)
145.6
149.7
39.0
39.5
$
$
DC fire
Helly Hansen Russia exit
—
—
—
—
(11.3)
—
—
(36.5)
Retail Normalized Other expense (income)
$
(35.8) $
(39.3) $
(126.6) $
(120.5)
44 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Normalized SG&A and Normalized SG&A as a Percentage of Revenue
Normalized SG&A is used as an additional measure when assessing the performance of the Company’s ongoing
operations. Normalized SG&A is most directly comparable to SG&A, a GAAP measure reported in the
consolidated financial statements. SG&A is adjusted for normalizing items.
Normalized SG&A as a percentage of Revenue is a non-GAAP ratio that is calculated by dividing Normalized
SG&A by Revenue.
(C$ in millions)
Selling, general and administrative expenses1
Less normalizing items:
Targeted headcount reduction charge
GST/HST-related charge
Operational Efficiency program
Q4 2023
Q4 2022
2023
2022
$
983.5 $
1,012.0 $
3,675.7 $
3,502.5
21.6
—
—
—
—
19.6
21.6
33.3
—
—
—
47.2
Normalized Selling, general and administrative expenses
$
961.9 $
992.4 $
3,620.8 $
3,455.3
1
Certain prior year figures have been restated to conform to the current year presentation.
Retail Normalized SG&A and Retail Normalized SG&A as a Percentage of Revenue excluding
Petroleum
Retail Normalized SG&A is used as an additional measure when assessing the performance of the Company’s
ongoing operations. This metric is most directly comparable to SG&A, a GAAP measure reported in the
consolidated financial statements. Retail SG&A is adjusted for normalizing items.
Retail Normalized SG&A as a percentage of Revenue excluding Petroleum is a non-GAAP ratio that is calculated
by dividing Retail Normalized SG&A by Retail Revenue excluding Petroleum.
(C$ in millions)
Selling, general and administrative expenses1
Less: Other operating segments
Retail Selling, general and administrative expenses
Less normalizing items:
Targeted headcount reduction charge
Operational Efficiency program
Q4 2023
983.5 $
Q4 2022
1,012.0 $
2023
3,675.7 $
84.3
76.1
354.8
2022
3,502.5
311.0
899.2 $
935.9 $
3,320.9 $
3,191.5
$
$
19.6
—
—
19.6
19.6
—
—
47.2
3,144.3
Retail Normalized Selling, general and administrative expenses
$
879.6 $
916.3 $
3,301.3 $
1
Certain prior year figures have been restated to conform to the current year presentation.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 45
MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Services Normalized SG&A
Financial Services Normalized SG&A is used as an additional measure when assessing the performance of the
Company’s ongoing operations. This metric is most directly comparable to SG&A, a GAAP measure reported in
the consolidated financial statements. Financial Services SG&A is adjusted for normalizing items.
(C$ in millions)
Selling, general and administrative expenses1
Less: Other operating segments
Financial Services Selling, general and administrative expenses
Less normalizing items:
Targeted headcount reduction charge
GST/HST-related charge
Financial Services Normalized Selling, general and
administrative expenses
1
Certain prior year figures have been restated to conform to the current year presentation.
Q4 2023
983.5 $
Q4 2022
1,012.0 $
2023
3,675.7 $
887.3
923.2
3,281.0
2022
3,502.5
3,152.6
96.2 $
88.8 $
394.7 $
349.9
$
$
2.0
—
—
—
2.0
33.3
—
—
$
94.2 $
88.8 $
359.4 $
349.9
EBITDA and related measures
EBITDA, Normalized EBITDA, and Normalized EBITDA as a percentage of Revenue 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 Net finance costs and Depreciation and amortization. EBITDA itself is
then adjusted for normalizing items.
Normalized EBITDA as a Percentage of Revenue is
Normalized EBITDA by Revenue.
a non-GAAP Ratio that is calculated by dividing the
(C$ in millions)
Income before income taxes
Add:
Depreciation and amortization1
Net finance costs
EBITDA
Add normalizing items:
Targeted headcount reduction charge
DC fire
GST/HST-related charge
Change in fair value of redeemable financial instrument
Operational Efficiency program
Helly Hansen Russia exit
Q4 2023
Q4 2022
$
263.0 $
752.2 $
2023
572.8 $
2022
1,583.8
203.2
90.8
194.3
65.9
802.2
321.5
743.5
231.0
$
557.0 $
1,012.4 $
1,696.5 $
2,558.3
21.6
—
—
—
—
—
—
—
—
—
19.6
—
21.6
11.3
33.3
328.0
—
—
—
—
—
—
47.2
36.5
Normalized EBITDA
$
578.6 $
1,032.0 $
2,090.7 $
2,642.0
1
Depreciation and amortization reported in Cost of producing revenue for the 13 and 52 weeks ended December 30, 2023 was $6.9 million (2022 – $6.2 million)
and $31.0 million (2022 - $24.5 million), respectively.
46 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail EBITDA and related measures
Retail EBITDA and Retail Normalized EBITDA are used as additional measures when assessing the performance
of the Retail segment’s ongoing operations and its ability to generate cash flows to fund its cash requirements,
including capital expenditures. Retail EBITDA and its successive derivations are most directly comparable to
Income before income tax, a GAAP measure reported in the consolidated financial statements, and is adjusted by
deducting Net finance costs and Depreciation and amortization. Retail EBITDA is then adjusted for normalizing
items.
(C$ in millions)
Income before income taxes
Less: Other operating segments
Retail Income before income taxes
Add:
Depreciation and amortization1
Net finance costs
Retail EBITDA
Add normalizing items:
Targeted headcount reduction charge
DC fire
Operational Efficiency program
Helly Hansen Russia exit
Retail Normalized EBITDA
1
Q4 2023
Q4 2022
263.0 $
752.2 $
2023
572.8 $
101.3
109.8
165.8
2022
1,583.8
535.8
161.7 $
642.4 $
407.0 $
1,048.0
$
$
242.5
78.1
239.1
53.8
989.2
275.9
921.7
185.3
$
482.3 $
935.3
$
1,672.1
$
2,155.0
19.6
—
—
—
—
—
19.6
—
19.6
11.3
—
—
—
—
47.2
36.5
$
501.9 $
954.9 $
1,703.0 $
2,238.7
Depreciation and amortization reported in Cost of producing revenue for the 13 and 52 weeks ended December 30, 2023 was $6.9 million (2022 – $6.2 million)
and $31.0 million (2022 - $24.5 million), respectively.
Normalized Income Before Income Taxes
Normalized Income before income taxes is used as an additional measure to assess the Company’s underlying
operating performance and assists in making decisions regarding the ongoing operations of its business. The
following table reconciles Normalized Income before income taxes to Income before income taxes which is a
GAAP measure reported in the consolidated financial statements.
(C$ in millions)
Income before income taxes
Add normalizing items:
Targeted headcount reduction charge
DC fire
GST/HST-related charge
Change in fair value of redeemable financial instrument
Operational Efficiency program
Helly Hansen Russia exit
Q4 2023
Q4 2022
$
263.0 $
752.2 $
2023
572.8 $
2022
1,583.8
21.6
—
—
—
—
—
—
—
—
—
19.6
—
21.6
11.3
33.3
328.0
—
—
—
—
—
—
47.2
36.5
Normalized Income before income taxes
$
284.6 $
771.8 $
967.0 $
1,667.5
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 47
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 Income before income taxes to Income before income
taxes which is a GAAP measure reported in the consolidated financial statements.
(C$ in millions)
Income before income taxes
Less: Other operating segments
Retail Income before income taxes
Add normalizing items:
Targeted headcount reduction charge
DC fire
Operational Efficiency program
Helly Hansen Russia exit
Q4 2023
Q4 2022
263.0 $
752.2 $
2023
572.8 $
2022
1,583.8
101.3
109.8
165.8
535.8
161.7 $
642.4 $
407.0 $
1,048.0
$
$
19.6
—
—
—
—
—
19.6
—
19.6
11.3
—
—
—
—
47.2
36.5
Retail Normalized Income before income taxes
$
181.3 $
662.0 $
437.9 $
1,131.7
Financial Services Normalized Income Before Income Taxes
Financial Services 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 Financial Services Normalized Income before income taxes to
Income before income taxes which is a GAAP measure reported in the consolidated financial statements.
(C$ in millions)
Income before income taxes
Less: Other operating segments
Financial Services Income before income taxes
Add normalizing items:
Targeted headcount reduction charge
GST/HST-related charge
Q4 2023
Q4 2022
263.0 $
752.2 $
2023
572.8 $
2022
1,583.8
177.8
665.4
187.8
1,142.2
85.2 $
86.8 $
385.0 $
441.6
$
$
2.0
—
—
—
2.0
33.3
—
—
Financial Services Normalized Income before income taxes
$
87.2 $
86.8 $
420.3 $
441.6
48 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Normalized Income Tax Expense and Normalized Effective Tax Rate
Management uses Normalized Income tax expense 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 expense to Income tax expense which is a GAAP measure reported in the
consolidated financial statements.
Normalized effective tax rate is calculated by dividing normalized income tax expense by normalized income
before income taxes.
(C$ in millions)
Income tax expense
Add tax effect of normalizing items:
Targeted headcount reduction charge
DC fire
GST/HST-related charge
Operational Efficiency program
Helly Hansen Russia exit
Normalized Income tax expense
Q4 2023
Q4 2022
$
65.8 $
189.6 $
2023
233.7 $
2022
401.0
5.7
—
—
—
—
—
—
—
5.2
—
5.7
3.0
8.5
—
—
—
—
—
12.5
3.1
$
71.5 $
194.8 $
250.9 $
416.6
Normalized Net Income, Normalized Net Income Attributable to Shareholders, Normalized
Diluted Earnings per Share, and Dividend Payout Ratio
Normalized Net income, Normalized Net income attributable to shareholders, and Normalized Diluted EPS 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 EPS to Net income, a GAAP measure reported in the consolidated financial statements.
Dividend payout ratio is calculated by dividing total dividends by the prior year’s Normalized Net income.
(C$ in millions, except per share amounts)
Net income
Net income attributable to shareholders
Add normalizing items:
Q4 2023
Q4 2022
$
197.2 $
562.6 $
2023
339.1 $
2022
1,182.8 $
2021
1,260.7
172.5
531.9
213.3
1,044.1
1,127.6
Targeted headcount reduction charge
DC fire
GST/HST-related charge1
Change in fair value of redeemable financial instrument
Operational Efficiency program
Helly Hansen Russia exit
$
15.9 $
— $
15.9 $
— $
—
—
—
—
—
—
—
—
14.4
—
8.4
24.7
328.0
—
—
—
—
—
34.7
33.4
—
—
—
—
30.1
—
Normalized net income
Normalized net income attributable to shareholders1
Normalized diluted EPS
$
$
$
213.1 $
577.0 $
716.1 $
1,250.9 $
1,290.8
188.4 $
546.3 $
585.3 $
1,112.2 $
1,157.7
3.38 $
9.34 $
10.37 $
18.75 $
18.91
1
$5.0 million relates to non-controlling interests and is not included in the sum of Normalized net income attributable to shareholders.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 49
MANAGEMENT’S DISCUSSION AND ANALYSIS
Operating Capital Expenditures
Operating capital expenditures is used to assess the resources used to maintain capital assets at their productive
capacity. Operating capital expenditures is most directly comparable to the Total additions, a GAAP measure
reported in the consolidated financial statements.
(C$ in millions)
Total additions1, 2
Add: Accrued additions
Less: 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.
2 Certain prior year figures have been restated to conform to the current year presentation.
2023
668.6 $
$
14.8
68.1
$
615.3 $
2022
735.1
113.6
101.1
747.6
50 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail Return on Invested Capital
Retail ROIC is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing
12-month 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.
(C$ in millions, except where noted)
Income before income taxes
Less: Other operating segments
Retail Income before income taxes
Add normalizing items:
Operational Efficiency program
Helly Hansen Russia exit
Targeted headcount reduction-related charge
DC fire
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 assets in other operating segments
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
2023
2022
572.8 $ 1,583.8
$
165.8
535.8
$
407.0 $ 1,048.0
—
—
19.6
11.3
47.2
36.5
—
—
$
437.9 $ 1,131.7
213.2
207.1
323.5
622.7
246.7
589.4
28.4 %
(332.2)
25.9 %
(456.4)
$
838.7 $ 1,304.3
$ 22,173.6 $ 21,734.5
4,421.3
4,413.5
$ 17,752.3 $ 17,321.0
3,722.2
2,841.2
517.0
—
3,534.8
2,924.5
458.0
—
$ 10,671.9 $ 10,403.7
7.9 %
12.5 %
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 2023 REPORT TO SHAREHOLDERS 51
MANAGEMENT’S DISCUSSION AND ANALYSIS
Retail Free Cash Flow
Retail free cash flow is a measure used to assess the Company’s ability to generate cash from its Retail
operations. Retail free cash flow is defined as cash generated by Retail operating activities less capital
expenditures and lease rent payments. Available Retail cash flow is free cash flow plus distributions received from
Financial Services and CT REIT. Management believes that available Retail cash flow is an important measure in
evaluating the Company’s ability to fund its shareholder distributions, financing activities, and potential business
acquisitions.
The following table reconciles cash generated from operating activities,
consolidated financial statements, to available Retail cash flow.
a GAAP measure reported in the
(C$ in millions)
Cash generated from operating activities1
Less: Other operating segments
Retail cash generated from operating activities
Retail capital expenditures, net of tenant allowances1
Retail payment of lease liabilities (principal portion), net of payments received
Retail free cash flow
Dividends from Financial Services to Retail
Distributions from CT REIT to Retail
Available Retail cash flow
1
Certain prior year figures have been restated to conform to the current year presentation.
2023
1,354.3 $
$
2022
466.5
220.0
(123.6)
$
1,134.3 $
590.1
(475.6)
(656.2)
(512.0)
(588.8)
$
2.5
$
(510.7)
344.4
206.7
$
553.6 $
428.8
201.5
119.6
The following table reconciles Retail income before income taxes to Retail cash from operating activities.
(C$ in millions)
Income before income taxes
Less: Other operating segments
Retail income before income taxes
Adjustments for:
Income from Financial Services and CT REIT
Retail depreciation and amortization
Retail change in working capital1
Retail income taxes, interest costs and other
Retail cash generated from operating activities
1
Certain prior year figures have been restated to conform to the current year presentation.
2023
572.8 $
165.8
2022
1,583.8
535.8
407.0 $
1,048.0
$
$
(328.3)
(320.1)
989.1
102.5
(36.0)
921.7
(714.2)
(345.8)
$
1,134.3 $
589.6
52 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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 is 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, except where noted)
Revenue
Less: Other operating segments and other banners
Helly Hansen Revenue (CAD)
NOK/CAD average FX rate
Helly Hansen Revenue (Kroner)
NOK/CAD constant FX rate
Helly Hansen Revenue (constant currency)
$
$
Q4 2023
4,443.0 $
Q4 2022
2022
5,340.4 $ 16,656.5 $ 17,810.6
2023
4,169.0
5,038.6
15,819.3
17,029.4
274.0 $
301.8 $
837.2 $
781.2
7.96
7.53
7.82
7.41
$
2,182.0 $
2,271.6 $
6,546.9 $
5,787.7
7.53
7.53
7.41
7.41
$
289.9 $
301.8 $
883.5 $
781.2
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 December 30, 2023
(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 investments1
Long-term investments1
Net debt
Intercompany debt
Adjusted net debt
1
Includes regulatory reserves.
Consolidated
Retail
Financial
Services
$
1,041.7 $
— $
1,041.7 $
2,322.6
965.7
4,964.5
—
525.6
1,550.3
2,322.6
440.1
1,984.8
$
9,294.5 $
2,075.9 $
5,789.2 $
(311.2)
(177.2)
(108.2)
(85.6)
—
(8.3)
(205.8)
(177.2)
(99.9)
$
$
8,697.9 $
1,982.0 $
5,306.3 $
—
(1,539.4)
87.8
8,697.9 $
442.6 $
5,394.1 $
REIT
—
—
—
1,429.4
1,429.4
(19.8)
—
—
1,409.6
1,451.6
2,861.2
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 53
MANAGEMENT’S DISCUSSION AND ANALYSIS
As at December 31, 2022
(C$ in millions)
Consolidated net debt
Bank indebtedness
Short-term deposits
Long-term deposits
Short-term borrowings
Long-term debt
Total debt
Cash and cash equivalents1
Short-term investments1
Long-term investments1
Net debt
Intercompany debt
Adjusted net debt
1
Includes regulatory reserves.
Consolidated
Retail
Financial
Services
$
5.0 $
5.0 $
— $
1,226.3
1,739.4
576.2
4,257.7
—
—
21.7
952.4
1,226.3
1,739.4
454.6
2,069.1
$
7,804.6 $
979.1 $
5,489.4 $
(331.3)
(176.3)
(62.6)
(102.0)
—
(3.2)
(226.7)
(176.3)
(59.4)
$
$
7,234.4 $
873.9 $
5,027.0 $
—
(1,542.7)
91.1
7,234.4 $
(668.8) $
5,118.1 $
REIT
—
—
—
99.9
1,236.2
1,336.1
(2.6)
—
—
1,333.5
1,451.6
2,785.1
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 with 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 in our 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
2023
2022
$ 6,568.3 $ 6,271.1
926.3
897.1
157.4
73.2
127.1
65.6
$ 7,264.0 $ 6,975.5
7,004.5
6,774.9
$
259.5 $
200.6
54 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
CT REIT Net Operating Income
NOI is defined as Property revenue less Property expense adjusted further for straight-line rent. This measure is
most directly comparable to Revenue, a GAAP measure reported in the consolidated financial statements.
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.
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: Other operating segments
CT REIT Property revenue
Less:
Q4 2023
4,443.0 $
Q4 2022
2022
5,340.4 $ 16,656.5 $ 17,810.6
2023
4,303.0
5,205.2
16,103.7
17,277.8
140.0 $
135.2 $
552.8 $
532.8
$
$
CT REIT Property expense
CT REIT property straight-line rent revenue
CT REIT net operating income
28.8
(0.3)
27.8
0.6
115.5
(1.7)
111.1
1.9
$
111.5 $
106.8 $
439.0 $
419.8
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
publicly-traded entities that own and operate income-producing properties. This measure is most directly
comparable to Net income and Comprehensive income, GAAP measures reported in the consolidated financial
statements. 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 publication “REALPAC Funds From Operations & Adjusted Funds From Operations for
IFRS” (“REALPAC FFO & AFFO”). 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. This measure is most directly comparable to Net income and Comprehensive
income, GAAP measures reported in the consolidated financial statements. 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 FFO and 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 as 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 determined by
building condition reports prepared by independent consultants.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 55
MANAGEMENT’S DISCUSSION AND ANALYSIS
Management believes that AFFO is a useful measure of operating performance similar to FFO as described,
adjusted for the impact of non-cash income and expense items.
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 Income before income taxes to FFO and further reconciles FFO to AFFO:
(C$ in millions)
Income before income taxes
Less: Other operating segments
CT REIT income before income taxes
Add:
CT REIT fair value loss (gain) adjustment
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
Less:
CT REIT properties straight-line rent revenue
CT REIT direct leasing costs
CT REIT capital expenditure reserve
CT REIT adjusted funds from operations
Q4 2023
Q4 2022
263.0 $
752.2 $
2023
572.8 $
224.7
677.5
343.3
2022
1,583.8
1,259.2
38.3 $
74.7 $
229.5 $
324.6
$
$
39.3
(0.6)
(0.2)
0.5
0.4
0.9
(0.5)
(0.1)
0.3
0.3
78.6
—
(0.9)
(0.6)
1.3
(27.8)
(0.1)
(0.6)
(0.9)
1.0
$
77.7 $
75.6 $
307.9 $
296.2
(0.3)
0.3
6.2
0.6
0.2
6.3
(1.7)
1.2
25.0
1.9
0.5
25.0
$
71.5 $
68.5 $
283.4 $
268.8
10.2 Supplementary Financial Measures
Average Account Balance
Average account balance measures average aggregate account balances in 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 represents 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.
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 Retail,
SportChek and Mark’s).
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.
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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 Dollars excluding Petroleum and Gross Margin Rate excluding Petroleum
Gross margin dollars excluding Petroleum captures gross margin dollars in the consolidated entity or Retail
segment, as measured according to the Company’s IFRS accounting policy, while excluding gross margin dollars
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.
Loyalty Sales and Loyalty Sales as a Percentage of Retail Sales (Loyalty Penetration)
Loyalty sales are Retail sales attributable to Triangle members. Loyalty sales as a percentage of retail sales is
calculated by dividing loyalty sales by Retail sales.
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.
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).
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
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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 Retail, 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 Percentage of GAAR
Revenue as percentage 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.
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11.0 Key Risks and Risk Management
Overview
In the normal course of its business activities, the Company is exposed to risks that could have a material adverse
impact on the Company’s brand, financial performance, and/or ability to achieve its strategic objectives.
The effective management of risk is a key priority in order 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 key risks. Refer to section 2.6 in the 2023 AIF for
further details of CTC’s ERM Framework.
Set out below are the key risks identified through the Company’s ERM framework as well as other business risks
that may impact the Company’s Retail, Financial Services and CT REIT segments which may have a materially
adverse effect on the Company. There may be additional risks and uncertainties not currently known to
management or risks that are not considered material at this time which may evolve and materially and adversely
affect the Company in the future. The actual effect of any risk may be materially different than what is currently
anticipated.
The description of these risks also sets out the risk management strategies and measures undertaken by
management. Although the Company believes the strategies and measures taken are reasonable in order to
effectively manage the risks within the Company’s risk appetite, there can be no assurance that these measures
will effectively mitigate these risks.
When considering whether to purchase or sell securities of CTC, investors and others should carefully consider
these factors (including that risk management strategies and measures may not effectively mitigate such risks) as
well as other uncertainties, potential events and global, macroeconomic, industry-specific or other factors that
may adversely impact CTC’s future performance.
11.1 Key Risks
The Company regularly assesses its businesses to identify and assess key risks (including emerging 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 description of those which Management believes may have a materially adverse
effect on the Company.
11.1.1 Strategic Risks
CTC is exposed to strategic risks, including those 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;
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•
•
•
•
introduction and maintenance of an Owned Brand portfolio impacting the ability to offer differentiated and
innovative products;
changes in the rewards landscape impacting the ability of the Triangle Rewards program to drive
customer engagement and attract competitive partnerships;
introduction of new technologies and trends impacting the relevance of the products, channels, or
services offered by CTC; and
health events, including pandemics, 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
manage 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.
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.
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, its 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
60 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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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.
11.1.2 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 is exposed to a number of financial risks including
those 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 34 of the 2023 Consolidated Financial
Statements.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with 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 with the ability to react under
uncertainty.
For a comprehensive discussion of the Company’s liquidity risk, see Note 5 of the 2023 Consolidated Financial
Statements.
Foreign Currency Risk
CTC sources merchandise globally. In 2023, approximately 55 percent, 23 percent and 46 percent of the value of
inventory purchases of Canadian Tire Retail, 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 forecast
purchases, a change in foreign currency rates will not materially impact that portion of the cost relating 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 foreign currency purchases over the entirety of its
hedging horizon. This ensures that the cost of foreign currency 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 foreign 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 or exercise its contractual early redemption options for Medium-
Term Notes and Debentures to manage interest rate risk. The Company has a policy 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.
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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 6.3 in this MD&A for
further details.
In particular, the Company’s hedging activities are governed by this policy. Hedge transactions are executed with
well-rated financial institutions and are monitored against policy limits.
11.1.3 Operational Risks
CTC manages a number of operational risks, including those described below.
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, its 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.
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.
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
support the Company’s hybrid work 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.
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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 hybrid
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 manage 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.
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.
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 business continuity plans to manage and respond to significant disruptions.
Further information regarding the Company’s exposure to this risk for each business segment is provided in
section 11.2.
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.
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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 12.0.
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.
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
(“LCs”) issued by highly-rated financial institutions and guaranteed by the Company 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 manages its exposure to counterparty
credit risk by transacting only with well-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 manage 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 risk management
strategies is provided in section 11.2.2.
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 of the 2023 Consolidated Financial Statements.
For further disclosure of the Company’s allowance for impairment on loans receivable, refer to Note 9 of the 2023
Consolidated Financial Statements.
Legal, Regulatory and Litigation
The Company is or may become subject to claims, disputes, legal proceedings, and regulatory compliance
issues, including those related to the use and protection of customers’ personal and sensitive information, 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 related to climate change) may be adopted or
instituted that impose additional constraints on CTC’s operations, which may adversely impact its financial
performance.
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Regulatory risk may have a negative impact on business activities, earnings, capital, regulatory relationships, and
the 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.
11.2 Business Segment Risks
11.2.1 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, including those described below.
Seasonality Risk
Canadian Tire Retail derives a significant amount of its revenue from the sale of seasonal merchandise, which
can be affected by variations in weather patterns. Canadian Tire Retail manages 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 managing 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 its merchandise which is 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
The Company continues to respond to shifts in consumer behaviour, especially the increase in online shopping.
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 manage 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 Retail, 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 manages 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.
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Responsible Product Sourcing Risk
If the unacceptability of products is not discovered until after such products are sold, customers could lose
confidence in them or the Company could face a product recall and our results of operations could suffer and our
business, reputation, and brand could be harmed. Additionally, 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. To manage 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 factory audit methodology to assess the hiring and employment practices, as well as the
health and safety standards of its foreign suppliers.
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 manage this risk, 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. SportChek and
Mark’s manage 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-
In addition,
branded suppliers that continually evolve their assortments to reflect customer preferences.
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.
11.2.2 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, including those described below.
66 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Consumer Credit Risk
Credit risk is the risk of financial loss resulting from the failure of a customer, for any reason, to fully honour its
financial contractual obligations to Financial Services and arises principally from the Company’s loans receivable.
Financial Services manages credit risks incurred through its business activities by:
• maintaining credit risk management policies, processes and controls;
•
•
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.
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 manages 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
$400.0 million unsecured revolving committed credit facility and $700.0 million in note purchase facilities for the
purchase of senior and subordinated notes issued by GCCT, each of which expire in April 2025. 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 6.5.
Interest Rate Risk
Interest rate risk reflects the financial sensitivity of Financial Services to movements in interest rates. Interest rate
exposure may produce favourable or unfavourable effects depending on the nature of the exposure, and the
direction and volatility of interest rate fluctuations. Interest rate exposure is affected by the interest rate sensitivity
of assets and liabilities and would impact net interest income or net economic value performance. 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.
11.2.3 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 including those described below. 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, 2023, which are not incorporated herein by reference, for a
discussion of risks that affect CT REIT’s operations.
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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 67
MANAGEMENT’S DISCUSSION AND ANALYSIS
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.
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.
Environmental, Social and Governance
CT REIT has a responsibility to understand, manage and mitigate the ESG risks that derive from its strategic
choices. These ESG-related risks may have a material effect on the REIT’s financial position and its ability to
achieve its strategic goals and aspirations.
68 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
12.0 Internal Controls and Procedures
12.1 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 material 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.
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 December 30, 2023. 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
December 30, 2023.
12.2 Internal Control over Financial Reporting
Management is also responsible for establishing and maintaining appropriate internal control over financial
reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of
consolidated financial statements for external purposes in accordance with IFRS.
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 and may not prevent or detect misstatements.
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
using the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control – Integrated Framework (2013). 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 December 30,
2023.
12.3 Changes in Internal Control over Financial Reporting
During the quarter and year ended December 30, 2023, 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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 69
MANAGEMENT’S DISCUSSION AND ANALYSIS
13.0 Environmental, Social and Governance
CTC has integrated ESG directly into its enterprise strategy as it is critical to fulfilling the Company’s brand
purpose, achieving its financial aspirations, and improving environmental and social outcomes for Canadians. The
Company has identified 12 priority ESG topics, organized into four pillars, that are most relevant to the enterprise
and its stakeholders:
CTC’s ESG Topics
Environment
People & Community
Climate Change
Talent & Culture
Circularity: Packaging,
Product & Operational
Waste
Diversity, Inclusion &
Belonging
Responsible Sourcing
Sustainable Supply Chain
Management
Human Rights & Social
Responsibility
Governance
Corporate Governance
Business Ethics
Community Impact
Product Safety & Quality
Privacy & Data Security
CTC’s leaders develop and implement strategies for each of these ESG topics, aligned to the overall ESG
strategy. The Company has been making progress in furthering its ESG program through initiatives that reduce
its energy consumption, increase its waste diversion, and increase recycled and sustainable materials in its
products. In line with global and Canadian efforts to combat climate change, the Company has also set a target to
reduce its Scope 1 and 2 Greenhouse Gas emissions, which include its Dealer-operated Canadian Tire stores, by
40% by 2030 relative to a 2020 baseline.
For additional details on the Company’s approach to ESG, please refer to section 2.8 of the 2023 AIF. A copy of
is available at: https://
the Company’s ESG
corp.canadiantire.ca/Environmental-Social-Governance/default.aspx. These reports are not incorporated herein
by reference.
includes a Climate Data Supplement,
report, which
14.0 Forward-Looking Information and Other Investor Communication
Caution Regarding Forward-Looking Information
This document contains information that may constitute forward-looking information reflecting 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 includes,
but is not limited to, information with respect to:
• The Company’s operating capital expenditures for the 2024 fiscal year in sections 4.0 and 6.4.1;
• The Company’s intention to purchase its Class A Non-Voting Shares during the 2024 fiscal year in
sections 4.0 and 7.1; and
• The expected annualized run-rate savings related to the Company’s FTE reduction in sections 4.0 and
5.1.1.
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 other information, other than historical information, may also 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
70 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
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 include, but are not limited
to, future economic conditions and related impacts on inflation, consumer spending, interest rates, and foreign
exchange rates, current and future competitive conditions, and the Company’s position in the competitive
environment, anticipated cost savings and operational efficiencies as well as anticipated benefits from strategic
and other initiatives, and the availability of sufficient liquidity, and that risks do not materialize or are successfully
mitigated. Additional assumptions relating to Management’s expectations with respect to the Company’s strategic
investments and operating capital expenditures include: (a) no material changes in the Company's strategic and
capital allocation priorities; (b) no material changes to the Company's earnings prospects and financial leverage;
(c) no significant changes to the retail landscape or regulatory environment; (d) continued availability of skilled
talent and source materials to execute on the capital investment agenda; and (e) continued successful
investments in businesses to achieve organic growth and in projects and initiatives which yield improved asset
productivity. 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 a number of business, economic, competitive and other 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, customer loyalty
programs and the introduction of new technologies; (f) geopolitical risks, 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, privacy and
data breaches, property management and development, environmental liabilities, social matters, 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 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 and timing to
complete any proposed acquisition or divestiture; (o) the Company’s ability to realize the anticipated benefits or
synergies from its acquisitions and investments or divestitures; and (p) the timing and results of the review of
strategic alternatives for the Company’s Financial Services business. Additional risk factors relating to
Management’s expectations with respect to the Company’s strategic investments and operating capital
expenditures include: (a) the occurrence of widespread economic restrictions, construction limitations, or supply
chain delays due to, among other events, a global pandemic resurgence; (b) shortages of raw materials and/or
skilled labour required to execute capital investment plans; (c) higher than expected cost inflation for materials,
equipment, and labour required to execute capital investment plans; and (d) organizational capacity to execute
the capital agenda. 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 11.0 (Key Risks and Risk Management) in this MD&A and all subsections therein. For further information,
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 71
MANAGEMENT’S DISCUSSION AND ANALYSIS
refer to the Company’s other public filings, available on the SEDAR+ website at http://www.sedarplus.ca and
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 take into account 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
transparent disclosure,
the Company’s website at: https://
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 Company’s Approach to Corporate Governance.
the Annual Information Form;
the Management Information Circular;
Information for Debtholders; and
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.sedarplus.ca.
If you would like to contact the Investor Relations department directly, email investor.relations@cantire.com.
15.0 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.
February 14, 2024
72 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
CANADIAN TIRE CORPORATION, LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 30, 2023 and December 31, 2022
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 73
Index to the Consolidated Financial Statements and Notes
MANAGEMENT’S RESPONSIBILITY FOR
Note 13. Property and Equipment
114
115
117
Note 14. Leases
Note
15
. Subsidiaries
20
Income Taxes
Note 16.
Note 17. Deposits
Note 18. Trade and Other Payables
Note 19. Provisions
. Contingencies
Note
Note 21. Short-Term Borrowings
Note 22. Loans
Note 23. Long-Term Debt
Note 24. Other Long-Term Liabilities
Note
. Employment Benefits
Note 26. Share Capital
Note 27. Share-Based Payments
Note 28. Revenue
Note 29. Cost of Producing Revenue
Note
Note 31. Depreciation and Amortization
Note 32. Net Finance Costs
Note 33. Notes to the Consolidated Statements of
119
121
121
122
122
122
123
123
125
125
126
128
130
131
. Selling, General and Administrative Expenses 131
132
132
132
25
30
Cash Flows
Note 34. Financial Instruments
Note
Note 36. Related Parties
35
. Guarantees and Commitments
133
137
139
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
75
76
80
81
82
83
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and its Operations
Note 2. Basis of Preparation
Note 3. Material Accounting Policy Information
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
Investment Property
Note 12.
85
85
89
99
101
104
106
107
107
110
111
113
74 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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
Chief Executive Officer
February 14, 2024
Gregory Craig
Executive Vice-President
and Chief Financial Officer
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 75
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”),
which comprise the consolidated balance sheets at December 30, 2023 and December 31, 2022, 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 December 30, 2023 and
December 31, 2022, and notes to the consolidated financial statements, including material accounting policy
information (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 December 30, 2023 and December 31, 2022, 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 December 30, 2023. 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 - Impairment of assets
The Company’s evaluation of goodwill for impairment involves the comparison of the recoverable amount of each
cash generating unit to its carrying value. The goodwill balance was $844.8 million as of December 30, 2023, of
which $353.7 million related to the Helly Hansen cash generating unit (“CGU”) and $362.5 million related to the
SportChek CGU. As noted in Note 11, the recoverable amount of the Helly Hansen CGU is estimated based on
fair value less costs of disposal, estimated using discounted cash flows based on an after-tax discount rate and a
market multiple approach. The recoverable amount of the SportChek CGU is estimated using a value in use
(“VIU”) model, determined using discounted cash flows based on an after tax discount rate. These require
management to make significant estimates and assumptions related to the projected revenues and associated
earnings before income taxes, depreciation and amortization (“EBITDA”) margins, terminal growth rate, discount
rate and guideline public company (“GPC”) multiples. Changes in these assumptions could have a significant
impact on the recoverable amount. Management determined that the recoverable amounts of the Helly Hansen
and SportChek CGUs exceeded their carrying value as of the measurement date and, therefore, no impairment
was recognized.
Given the significant judgments made by management to estimate the fair value of the Helly Hansen CGU and the
VIU of the SportChek CGU, performing audit procedures to evaluate the reasonableness of the estimates and
assumptions related to the projected cash flows, terminal growth rate, discount rate and GPC multiples required a
high degree of auditor judgment and an increased extent of effort, including the need to involve fair value
specialists.
How the Key Audit Matter Was Addressed in the Audit:
Our audit procedures related to the projected revenues and associated EBITDA margins, terminal growth rate and
discount rate for the Helly Hansen and SportChek CGUs used by management to determine the recoverable
76 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
Independent Auditor’s Report
amount and GPC multiples used by management to estimate the fair value of the Helly Hansen CGU, included
the following, among others:
• Evaluated management’s ability to accurately forecast future revenues and EBITDA margins by comparing
actual results to management’s historical forecasts.
• Evaluated the reasonableness of management’s forecasts of future revenues and EBITDA margins by
comparing forecasts to:
◦ Historical revenues and operating margins.
◦ Internal communications to management and the board of directors.
◦ Underlying analyses detailing business strategies and growth plans.
◦ Third-party economic research, projected and historical growth of Helly Hansen’s peer group and
SportChek’s peer group.
• With the assistance of our fair value specialists;
◦ Compared the terminal growth rate to available industry data and expected long term inflation rates.
◦ Evaluated the reasonableness of the discount rate by testing the source information underlying the
determination of the discount rate and developing a range of independent estimates and compared those to
the discount rate used.
◦ For the Helly Hansen CGU, we evaluated the reasonableness of the GPC multiples by testing the source
information underlying the estimate and developing an independent estimate of the GPC multiples and
compared that to those used by management.
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
$926.3 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. These
matters required a high degree of auditor judgment and increased audit effort, including the involvement of
financial modelling specialists.
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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 77
Independent Auditor’s Report
◦ 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.
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.
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.
78 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
Independent Auditor’s Report
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.
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 Megan Curry Vance.
Chartered Professional Accountants
Licensed Public Accountants
February 14, 2024
Toronto, Ontario
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 79
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
Bank indebtedness (Note 7)
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
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
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
December 30, 2023 December 31, 2022
$
$
$
311.2 $
177.2
1,151.3
6,568.3
2,693.7
125.9
246.6
18.9
11,293.1
645.8
108.2
2,254.7
443.7
5,219.5
1,933.8
79.5
21,978.3 $
— $
1,041.7
2,689.4
219.9
965.7
519.9
378.5
13.4
560.5
6,389.0
59.8
4,404.0
2,322.6
1,986.0
182.1
190.0
15,533.5
598.7
2.9
(181.8)
5,128.2
5,548.0
896.8
6,444.8
21,978.3 $
331.3
176.3
1,309.9
6,271.1
3,216.1
27.4
195.7
2.6
11,530.4
676.7
62.6
2,341.6
421.5
4,994.1
1,932.0
143.4
22,102.3
5.0
1,226.3
3,200.9
197.2
576.2
472.9
381.2
47.1
1,040.2
7,147.0
66.1
3,217.5
1,739.4
2,026.4
132.1
734.6
15,063.1
587.8
2.9
(42.4)
5,070.2
5,618.5
1,420.7
7,039.2
22,102.3
Equity attributable to shareholders of Canadian Tire Corporation
Non-controlling interests (Note 15)
Total equity
Total liabilities and equity
The related notes form an integral part of these consolidated financial statements.
$
J. Michael Owens
Director
Nadir Patel
Director
80 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
Consolidated Statements of Income
For the years ended
(C$ in millions, except share and per share amounts)
Revenue (Note 28)
Cost of producing revenue (Note 29)
Gross margin
Other expense (income)
Selling, general and administrative expenses1 (Note 30)
Depreciation and amortization1 (Note 31)
Net finance costs (income) (Note 32)
Change in fair value of redeemable financial instrument (Note 34)
Income before income taxes
Income tax expense (recovery) (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
Weighted average number of Common and Class A Non-Voting Shares
outstanding:
December 30, 2023 December 31, 2022
$
16,656.5 $
10,952.9
5,703.6
34.4
3,675.7
771.2
321.5
328.0
572.8
233.7
339.1 $
213.3 $
125.8
339.1 $
3.79 $
3.78 $
$
$
$
$
$
17,810.6
11,712.7
6,097.9
61.6
3,502.5
719.0
231.0
—
1,583.8
401.0
1,182.8
1,044.1
138.7
1,182.8
17.70
17.60
Basic
Diluted
56,228,680
56,457,450
58,983,364
59,336,919
1
Certain prior-year figures have been restated to conform to the current-year presentation.
The related notes form an integral part of these consolidated financial statements.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 81
Consolidated Statements of Comprehensive Income
For the years ended
(C$ in millions)
Net income
Other comprehensive income (loss), net of taxes
Items that may be reclassified subsequently to Net income (loss):
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
Currency translation adjustment
Items that will not be reclassified subsequently to Net income (loss):
Actuarial (losses) gains
Net fair value (losses) gains on hedging instruments entered into for cash flow
hedges subject to basis adjustment
Other comprehensive income (loss)
Other comprehensive income (loss) attributable to:
Shareholders of Canadian Tire Corporation
Non-controlling interests
Comprehensive income
Comprehensive income attributable to:
Shareholders of Canadian Tire Corporation
Non-controlling interests
December 30, 2023 December 31, 2022
$
339.1 $
1,182.8
(38.4)
38.5
0.8
(51.1)
(6.4)
(7.2)
(63.8) $
(74.0) $
10.2
(63.8) $
275.3 $
139.3 $
136.0
275.3 $
77.1
4.1
5.7
(26.0)
41.3
165.8
268.0
249.2
18.8
268.0
1,450.8
1,293.3
157.5
1,450.8
$
$
$
$
$
$
The related notes form an integral part of these consolidated financial statements.
82 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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
Impairment on property and equipment, investment property, and right-of-use assets
Income taxes (Note 16)
Net finance costs (Note 32)
Amortization of intangible assets (Note 31)
(Gain) loss on disposal of property and equipment, investment property, assets held for sale
and right-of-use assets
Change in fair value of redeemable financial instrument (Note 34)
Non-cash loss on exit of Helly Hansen operations in Russia
Non-cash charge related to fire at A.J. Billes Distribution Centre (Note 2)
Total except as noted below
Interest paid
Interest received
Income taxes paid
Change in loans receivable
Change in operating working capital and other1
Cash generated from operating activities
Investing activities
Additions to property and equipment and investment property1
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
Change in Franchise Trust loans receivable
Cash used for investing activities
Financing activities
Dividends paid
Distributions paid to non-controlling interests
Net issuance 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 relating to long-term debt
Purchase of Class A Non-Voting Shares
Repurchase of Scotiabank’s 20 percent interest in CTFS Holdings Limited
Net receipts (payments) on financial instruments
Change in deposits
Cash used for financing activities
Cash generated (used) in the period
Cash and cash equivalents, net of bank indebtedness, beginning of period
Cash and cash equivalents, net of bank indebtedness, end of period (Note 7)
1 Certain prior year figures have been restated to conform to the current year presentation.
The related notes form an integral part of these consolidated financial statements.
December 30, 2023 December 31, 2022
$
339.1 $
1,182.8
675.2
6.3
233.7
321.5
127.0
(2.7)
328.0
—
53.2
2,081.3
(366.1)
38.8
(210.5)
(289.3)
99.5
1,353.7
(580.9)
(87.7)
(668.6)
(210.9)
269.9
0.1
19.8
(110.9)
(47.2)
(747.8)
(360.8)
(142.1)
389.6
270.5
(223.3)
1,750.0
(1,040.1)
(425.2)
(6.0)
(376.1)
(904.5)
53.5
393.5
(621.0)
(15.1)
326.3
311.2 $
$
621.0
3.1
401.0
231.0
122.5
(22.1)
—
20.8
—
2,560.1
(254.6)
21.3
(529.3)
(657.1)
(673.9)
466.5
(612.5)
(122.6)
(735.1)
(166.9)
713.1
5.2
16.3
(17.4)
(45.6)
(230.4)
(325.8)
(143.0)
468.0
267.8
(222.2)
700.0
(720.1)
(357.2)
(3.7)
(425.4)
—
32.6
(932.5)
(1,661.5)
(1,425.4)
1,751.7
326.3
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 83
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 Retained
income (loss) earnings
Equity
attributable to
shareholders
of Canadian
Tire
Corporation
Equity
attributable
to non-
controlling
interests
Total
equity
Balance at December 31, 2022
$ 587.8 $
2.9 $
132.9 $
(175.3) $
(42.4) $ 5,070.2 $
5,618.5 $
1,420.7 $ 7,039.2
Net income (loss)
Other comprehensive income (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)
27.9
Purchase of Class A Non-Voting Shares (Note 26)
(376.1)
Change in automatic share purchase plan commitment
(Note 26)
8.1
Excess of purchase price over average cost (Note 26)
351.0
Dividends
Extinguishment of Redeemable Financial Instrument
(Note 34)
Change in interests in subsidiary, including
transaction costs (Note 15)
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
—
—
—
—
—
10.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
213.3
213.3
125.8
339.1
(16.5)
(16.5)
(89.9)
—
—
—
—
—
—
—
—
—
(89.9)
(51.1)
(51.1)
(67.6)
(6.4)
(74.0)
10.2
(63.8)
(67.6)
206.9
139.3
136.0
275.3
—
—
—
—
—
—
—
—
—
—
—
(89.9)
—
(89.9)
—
(89.9)
—
—
—
—
—
—
—
—
98.6
(351.0)
(386.2)
27.9
(376.1)
106.7
—
(386.2)
895.0
895.0
—
—
—
—
—
—
27.9
(376.1)
106.7
—
(386.2)
895.0
18.1
(405.3)
(387.2)
(517.3)
(904.5)
—
—
—
—
—
—
(0.5)
(0.5)
(142.1)
(142.1)
(71.8)
(148.9)
(209.8)
(659.9)
(869.7)
Balance at December 30, 2023
$ 598.7 $
2.9 $
26.5 $
(226.4) $
(181.8) $ 5,128.2 $
5,548.0 $
896.8 $ 6,444.8
Total accumulated other comprehensive
income (loss)
(C$ in millions)
Share Contributed Cash flow
hedges
surplus
capital
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 1, 2022
$ 593.6 $
2.9 $
(19.9) $
(149.3) $
(169.2) $ 4,696.5 $
5,123.8 $
1,387.0 $ 6,510.8
Net income (loss)
Other comprehensive income (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)
19.8
Purchase of Class A Non-Voting Shares (Note 26)
(425.4)
Change in accrued liability for automatic share
purchase plan commitment (Note 26)
2.1
Excess of purchase price over average cost (Note 26)
397.7
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
—
—
—
(5.8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,044.1
1,044.1
138.7
1,182.8
235.3
235.3
(82.5)
—
—
—
—
—
—
—
(82.5)
(26.0)
(26.0)
209.3
39.9
249.2
18.8
268.0
209.3
1,084.0
1,293.3
157.5
1,450.8
—
—
—
—
—
—
—
—
—
(82.5)
—
(82.5)
—
(82.5)
—
—
—
—
—
—
—
—
—
54.3
(397.7)
(366.9)
19.8
(425.4)
56.4
—
(366.9)
—
—
—
—
—
19.8
(425.4)
56.4
—
(366.9)
—
—
—
—
19.4
19.4
(143.2)
(143.2)
(82.5)
(710.3)
(798.6)
(123.8)
(922.4)
Balance at December 31, 2022
$ 587.8 $
2.9 $
132.9 $
(175.3) $
(42.4) $ 5,070.2 $
5,618.5 $
1,420.7 $ 7,039.2
The related notes form an integral part of these consolidated financial statements.
84 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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 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 2023 and 2022 are the 52-
week periods ended December 30, 2023 and December 31, 2022, 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 14, 2024.
Basis of Presentation
These consolidated financial statements have been prepared on a historical cost basis, except for the following
items, which are measured at fair value:
• financial instruments at fair value through profit or loss (“FVTPL”);
• financial instruments at fair value through other comprehensive income (“FVOCI”);
• 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 amounts of revenue and expenses recognized during the reporting periods.
Actual results may differ from estimates made in these consolidated financial statements.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 85
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 that are believed to be reasonable
under the circumstances. Judgments and estimates are often interrelated. The Company’s judgments and
estimates are continually re-evaluated to assess whether they remain appropriate. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in future periods affected.
The duration and long-term effects on CTC from macroeconomic conditions remain uncertain and Management
continues to monitor and assess the impact on the business and on certain judgments and estimates, including
the recoverable amount of goodwill and intangible assets.
Details of the accounting policies 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
The Company uses judgment in determining the grouping of assets to identify its Cash Generating Units (“CGU”)
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.
The Company’s estimate of a CGU’s or group of CGUs’ recoverable amount, based on value in use (“VIU”),
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 is 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 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 estimates 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.
Merchandise Inventories
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.
A.J. Billes Fire Insurance Estimates
On March 15, 2023, a fire occurred at the A.J. Billes Distribution Centre. While the Company is virtually certain its
claim is eligible under its insurance policy for recognition purposes, and preliminary recoveries have been
recognized, the measurement of the recovery remains uncertain. Ongoing measurement uncertainty over the
recovery includes eligible cost structures, such as replacement costs, construction estimates, and business
interruption. The actual results of the recovery may differ from the estimates made.
86 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Income and Other Taxes
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
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 investees’ 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
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 several factors, including
changes in interest and unemployment rates and program design changes.
Post-Employment Benefits
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
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.
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 relating 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.
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 relating to the valuation of assets and liabilities acquired in a business
combinations, share-based payments, and financial instruments.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Standards, Amendments and Interpretations Issued and Adopted
Insurance Contracts
In May 2017, the International Accounting Standards Board (“IASB”) issued IFRS 17, which replaced IFRS 4 –
Insurance Contracts and established 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. The Company adopted IFRS 17 on January 1, 2023 and
determined there to be no material impact on the consolidated financial statements.
As a result of adopting IFRS 17, the Company updated its accounting policies for Reinsurance revenue and the
measurement of insurance contracts as follows:
Reinsurance revenue in each reporting period represents the changes in liabilities for remaining coverage that
relate to services for which the Company expects to receive consideration, and an allocation of premiums that
relate to recovering insurance acquisition cash flows.
IFRS 17 allows the optional simplification of the measurement of reinsurance contracts by applying the Premium
Allocation Approach (“PAA”). When measuring liabilities for remaining coverage, the PAA is similar to the
Company’s previous accounting treatment. However, when measuring liabilities for incurred claims, the Company
now discounts the future cash flows and includes an explicit risk adjustment for non-financial risk.
Clarifying Distinction Between Accounting Policies and Accounting Estimates
In February 2021, the IASB issued narrow-scope amendments to IAS 8 – Accounting Policies, Changes in
Accounting Estimates and Errors (“IAS 8”). 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 applied retroactively to past transactions and other past events. The Company
assessed the impact of the amendment and determined there to be no material impact on the consolidated
financial statements.
International Tax Reform
The Organisation for Economic Co-operation and Development published the Pillar Two model rules designed to
address the tax challenges arising from the digitalization of the global economy. It is unclear if the Pillar Two
model rules create additional deferred taxes.
In response to this uncertainty, in May 2023, the IASB issued
amendments to IAS 12 – Income Taxes introducing a mandatory temporary exception from the recognition and
disclosure of deferred taxes related to the implementation of Pillar Two model rules. The amendments also
require that the Company separately disclose the current tax expense/income related to Pillar Two income taxes
effective for the annual reporting period beginning on or after January 1, 2023. The Company does not expect a
material exposure to Pillar Two income taxes. The Company has retrospectively adopted the amendments and
applied the temporary mandatory exception.
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 ended December 30, 2023 and, accordingly, have not been applied in preparing these financial statements.
Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued amendments to IFRS 16 – Leases (“IFRS 16”) relating to sale leaseback
transactions for seller-lessees. The amendment adds a requirement that measuring lease payments or revised
lease payments shall not result in the recognition of a gain or loss that relates to the right-of-use asset retained by
the seller-lessee. The amendments are effective for annual reporting periods beginning on or after January 1,
2024, with early adoption permitted. The Company assessed the impact of the amendments and determined there
to be no material impact on the consolidated financial statements.
88 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Non-current Liabilities with Covenants
In October 2022, the IASB issued amendments to IAS 1 – Presentation of Financial Statements, which specifies
that covenants whose compliance is assessed after the reporting date do not affect the classification of debt as
current or non-current at the reporting date. Instead, the amendments require disclosure of information about
these covenants in the notes to the financial statements. The amendments are effective for annual reporting
periods beginning on or after January 1, 2024, with early adoption permitted. The Company assessed the impact
of the amendments and determined there to be no material impact on the consolidated financial statements.
Supplier Finance Arrangements
In May 2023, the IASB issued amendments to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial
Instruments: Disclosures. The amendments add requirements to disclose information that allows users to assess
how supplier finance arrangements affect an entity’s liabilities, cash flows, and exposure to liquidity risk. The
amendments are effective for annual reporting periods beginning on or after January 1, 2024, with early adoption
permitted. The Company assessed the impact of the amendments and determined there to be no material impact
on the consolidated financial statements.
Lack of Exchangeability
In August 2023, the IASB issued amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates in
relation to Lack of Exchangeability. The amendments require entities to apply a consistent approach in assessing
whether a currency can be exchanged into another currency, and in determining the exchange rate to use and the
disclosures to provide when it cannot. These amendments are effective for annual reporting periods beginning on
or after January 1, 2025, with early adoption permitted. The Company assessed the impact of the amendments
and determined there to be no material impact on the consolidated financial statements.
3. Material Accounting Policy Information
The following accounting policies have been applied consistently to all periods presented in these consolidated
financial statements, except as noted below.
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 December 30, 2023 and December 31, 2022. 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.
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, even if this results in the non-controlling interests having a
deficit balance on consolidation.
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. Any difference between the amount by which the non-controlling interests are adjusted and the fair
value of the consideration paid or received are recognized directly in equity and attributed to the shareholders of
the Company.
Business Combinations
The Company applies the acquisition method in accounting for business combinations by allocating the purchase
price to the fair value of the assets acquired at the acquisition date, with any difference recognized as goodwill.
The purchase price, or the consideration transferred, includes the recognized amount of any non-controlling
interests in the acquiree, the fair value of the assets transferred (including cash), liabilities incurred by the
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Company on behalf of the acquiree, the fair value of any contingent consideration and equity interests issued by
the Company.
The Company determines the fair value of assets acquired by applying either the cost, market or income
approach that provides the most reliable support for the specific asset. Market approaches are applied to property
and securities that are available in the public market. The cost approach is applied to other major asset classes.
The income approach is applied in calculating the fair value of intangible assets.
Transaction costs that the Company incurs in connection with a business combination are expensed immediately.
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’s
interest in a joint operation includes assets, liabilities, revenues, and expenses in relation to the joint operation,
along with its share of any assets and liabilities jointly held, and its share of revenue and expenses earned or
incurred jointly.
CT REIT has a one-half interest in Canada Square, a mixed-use commercial property in Toronto, Ontario (“the Co-
Ownership”), pursuant to a Co-Ownership arrangement. The Co-Ownership is a joint arrangement as the material
decisions about relevant activities require unanimous consent of the co-owners. This joint arrangement is a joint
operation as each co-owner has rights to the assets and obligations for the liabilities related to the Co-Ownership.
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 in the Consolidated Balance Sheets. 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 Statements of Income.
Functional and Presentation Currency
Each of the Company’s foreign subsidiaries determines its own functional currency with transactions of each
foreign subsidiary measured using that functional currency. Assets and liabilities of foreign operations having a
functional currency other than the Canadian dollar are translated to the Canadian dollar presentation currency at
the rate of exchange prevailing at the reporting date, and revenues and expenses are translated at average rates
during the period. Exchange differences 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 expense (income) or Cost of
producing revenue as applicable in the Consolidated Statements of Income.
90 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments
Recognition, Derecognition and Initial Measurement
Financial instruments can include cash, derivatives, or any contract that gives rise to a financial asset of one entity
and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are
recognized in the Consolidated Balance Sheets when the Company becomes a party to the contractual provisions
of a financial instrument. A financial asset is derecognized when the contractual rights to the cash flows from the
asset expire or when the Company transfers substantially all the risks and rewards of ownership in the financial
asset to another party. 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. 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 at Initial Recognition and Subsequent Measurement
At initial recognition the Company classifies financial assets 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 one
of the following measurement categories: (i) amortized cost, (ii) fair value through OCI, and (iii) fair value through
profit or loss. Financial liabilities are classified and subsequently measured at amortized cost except for financial
liabilities at FVTPL, which are those that either meet the definition of held for trading or are designated as FVTPL.
Financial Instruments at Amortized Cost, including Impairment
Financial liabilities are subsequently 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, except for financial liabilities
classified as FVTPL.
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.
Gains and losses are recognized in profit or loss when the asset is derecognized, modified, or impaired.
Financial assets are subsequently measured at amortized cost using the effective interest method, and are
subject to impairment, with a loss allowance, ECL, recognized on either a 12-month or a lifetime ECL basis.
A 12-month ECL represents the loss expected from default events that are possible within 12-months of the
reporting date. This 12-month ECL is recognized in the same reporting period as the initial recognition. The
following types of financial assets are measured at 12-month ECL:
• investments 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.
All other financial assets measured at amortized cost are impaired using a lifetime ECL model, which represents
credit losses from all probable default events over the expected life of a financial instrument.
The loss allowance is measured at lifetime ECL if there is a significant increase in credit risk, which 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
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
default when they are 90 days past due or there is sufficient doubt regarding the collectability of principal and/or
interest. Where a customer has initiated the consumer proposal insolvency process, the estimated credit card
loans receivable is based on the present value of expected future cash flows outlined in the terms of the
consumer proposal agreement received. Credit card loans 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
macroeconomic factors will affect ECLs, such as current and forecast unemployment rates. The methodologies
and assumptions, including any forecasts of future economic conditions, are reviewed regularly.
Financial Instruments at Fair Value Through Other Comprehensive Income
Financial assets are classified as FVOCI when the financial asset meets the business model objective by both
collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give
rise on specific dates to cash flows that are solely payments of principal and interest. Financial assets, in the form
of equity instruments, can be designated as FVOCI or otherwise default as FVTPL.
Financial instruments classified as FVOCI are measured at fair value, with changes in fair value recorded in Other
comprehensive income in the period in which they arise. Investments in equity instruments designated as FVOCI
are accumulated in Other comprehensive income and are not reclassified to the Consolidated Statements of
Income, while distributions received from these investments are recognized in the Consolidated Statements of
Income.
Financial Instruments at Fair Value Through Profit or Loss
All financial assets not classified as amortized cost, or designated as FVOCI, are measured at FVTPL. This
includes derivative financial assets that are not part of a designated hedging relationship. Financial liabilities,
including derivative liabilities, 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.
Financial instruments classified as FVTPL are measured at fair value, with changes in fair value recorded in Net
income in the period they arise, to the extent they are not part of the effective portion of a designated hedging
relationship.
Derivative Financial Instruments
The Company enters into various derivatives as part of a strategy to manage its foreign currency and interest rate
exposures. The Company also enters into equity derivative contracts to hedge a portion of future share-based
payment expenses. The Company does not enter into derivatives for trading purposes.
All derivative instruments are measured at fair value including embedded derivatives contained within financial or
non-financial contracts that are not closely related to the host contract. The gain or loss that results from
remeasurement at each reporting period is immediately recognized in Net income unless the derivative qualifies
and is designated as a hedging instrument, in which case the timing of the recognition in Net income depends on
the nature of the hedge relationship.
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. When a forecast 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 to the initial measurement
of the cost of the non-financial asset or liability.
92 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
When hedge accounting is discontinued, there is no further deferral of changes in market value of the derivative to
OCI. The amounts previously deferred remain in AOCI until the cash flows relating to underlying exposure affects
Net income; at this time the related AOCI is reclassified to Net income. If hedge accounting is discontinued due to
the hedged item no longer expected to occur, the amount previously deferred in AOCI is immediately reclassified
to Net income.
The Company enters into foreign currency derivative contracts to hedge its exposure against foreign currency risk
on future payments of foreign-currency-denominated inventory purchases and expenses. The critical terms of the
foreign currency derivative contracts align with the hedged item on a 1:1 basis. 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 and swaption contracts to hedge and manage the exposure against
interest rate risk on the future interest payments of certain debt issuances.
The critical terms of the interest rate swap and swaptions contracts align with the hedged item and have a 1:1
hedge ratio. In accordance with IFRS 9, the Company designates the change in fair value of the intrinsic value of
the instrument as the hedging instrument. Change in the fair value of the time value of the option is also deferred
in OCI and is amortized to the Consolidated Statements of Income as a component of Net finance cost on a
systematic and rational basis over the period during which the underlying interest of the underlying debt affects
profit or loss. Hedge ineffectiveness may arise if the timing of the hedged transactions changes from the original
estimate. When the interest expense is incurred, the Company reclassifies the related AOCI amount to Net
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. The Company’s exposure to credit, currency and interest rate risks relating to other investments is
disclosed in Note 5.
Trade and Other Receivables
The Company recognizes a loss allowance based on lifetime ECL for trade and other receivables. It is estimated
based on the Company’s historical loss experience, adjusted for factors specific to the debtors and an
assessment of both the current and forecast direction of conditions at the reporting date. The loss and any
subsequent recoveries of amounts written off, are recognized in Selling, general and administrative expenses in
the Consolidated Statements of Income.
Loans Receivable
Loans receivable consists of credit card loans, as well as loans to certain Dealers, who are independent third-
party operators of Canadian Tire stores. Impairment losses are recorded in Cost of producing revenue in the
Consolidated Statements of Income.
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 relating
to other investments is disclosed in Note 5.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
Merchandise Inventories
Merchandise inventories are carried at the lower of cost and net realizable value. Net realizable value is the
estimated selling price of inventory during the normal course of business less estimated selling expenses.
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.
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.
Intangible Assets
Intangible assets include goodwill, indefinite life and finite life intangible assets.
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.
Intangible assets with indefinite useful lives are measured at cost, less any accumulated impairment and are not
amortized. Intangible assets with finite useful lives are recognized when the asset is identifiable (either separable
or resulting from contractual or legal rights), the Company controls the asset, there are expected future economic
benefits which will flow to the Company, and costs can be measured reliably. 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 Company capitalizes implementation costs associated with software as a
service activities where the activities create and meet the criteria of an intangible asset.
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 properties as they
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 are measured at cost less accumulated depreciation and any accumulated impairment
except for land and properties during construction which are measured at cost less any accumulated impairment.
The cost of an item of property or equipment includes initial estimates of the cost of dismantling and removing the
item and restoring the site on which it is located. Depreciation is calculated on a straight-line basis over the
following estimated useful lives, after adjusting the cost for the asset’s estimated residual value:
Asset Category
Buildings
Fixtures and equipment
Leasehold improvements
Estimated Useful Lives
10 – 45 years
3 – 25 years
Shorter of term of lease or estimated useful life
94 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
Leases
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.
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 on 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 if 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.
Lease liabilities are measured at the present value of fixed payments (including in-substance fixed payments),
variable lease payments that depend on an index or a rate, amounts expected to be payable by the lessee under
residual value guarantees, and where the lessee is reasonably certain to exercise an option, the exercise price of
that purchase option and payments of penalties for terminating the lease. 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 Company’s incremental borrowing rate. The period over which the lease payments
are discounted is the 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. Each lease payment draws down the
lease liability while the unwinding of the discount is reflected as a finance cost. The finance cost is recognized in
Net finance costs in the Consolidated Statements of Income over the lease period to produce a constant periodic
rate of interest on the remaining balance of the liability for each period.
Payments associated with short-term leases, with a lease term of 12 months or less, 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. 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.
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. When the Company is an intermediate lessor, it accounts for the head lease and the sublease as two
separate contracts. 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.
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 in the
Consolidated Statements of Income. The net investment in the sublease is recognized in Trade and other
receivables and Long-term receivables and other assets in the Consolidated Balance Sheets, for the current and
non-current portions respectively.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment of Assets
Property and equipment, investment property, right-of-use assets and intangible assets with finite useful lives are
assessed for indicators of impairment at the end of each reporting period. If indicators exist, then the recoverable
amount of the asset is estimated.
Goodwill, 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. These assets do not generate their own cashflows, as a result goodwill, intangible assets with indefinite
useful lives, and intangible assets not yet available for use are allocated to the CGUs, or groups of CGUs (such
as the Company’s banners identified in Note 6 Operating Segments), to which they relate. A CGU is 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. Once allocated, the recoverable amount of the CGU is estimated
for impairment testing.
The recoverable amount of an asset or CGU is defined as the higher of its fair value less cost to sell and its VIU.
In assessing VIU, the estimated future cash flows are discounted to their present value, using a discount rate that
includes a risk premium specific to each line of business. The Company estimates cash flows which are
extrapolated over a period of up to five years adding 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 item being tested.
An impairment loss is recognized when the carrying amount of an asset, or of the CGU to which it belongs,
exceeds the recoverable amount and is 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; however, the resulting carrying amount may not exceed the carrying
amount that would have been determined had no impairment been recognized in prior periods.
Employee Benefits
Short-Term Benefits
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.
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 prorated on length of service and Management’s best
estimate of retirement ages of employees, employee turnover, life expectancy, and expected health and dental
care costs. The costs are discounted at a rate based on market rates as at the measurement date. Actuarial
gains and losses are recorded in OCI.
The Company also provides post-employment benefits with respect to contributions to a Deferred Profit-Sharing
Plan (“DPSP”).
Share-Based Payments
Stock options are granted to employees allowing the recipient 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 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. The corresponding expense
and liability are recognized over the respective vesting period.
96 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of the amount payable to employees with respect to share unit plans and trust unit plans, 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 recognized in Selling, general and administrative expenses in
the Consolidated Statements of Income.
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. 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.
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 in the Consolidated Statements of
Income.
Site restoration and decommissioning provisions arise from 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. The obligations are initially measured using an
expected value approach and are discounted to present value.
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. 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 allocated to Retained earnings.
Revenue
Sale of Goods
Revenue from the sale of goods includes merchandise sold to Dealers, Mark’s, SportChek1 and Party City2
franchisees, the sale of gasoline through agents, the sale of goods to the general public by Mark’s, PartSource,
SportChek, Helly Hansen as well as the sale of goods through Helly Hansen’s wholesale channels. Revenue from
the sale of goods is recognized when the goods are delivered, 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 result 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 that could be redeemed and
based on the estimated probability of their redemption.
Interest Income on Loans Receivable
Interest income, including interest charged on loans receivable, is determined using the effective interest method
and recognized in Revenue in the Consolidated Statements of Income.
1
“SportChek” refers to the retail business carried on by FGL Sports Ltd., including stores operated under the SportChek, Sports Experts, Atmosphere, Sports
Rousseau and Hockey Experts names and trademarks.
2 “Party City” refers to the party supply business that operates under the Party City name and trademarks in Canada.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Services Rendered
Service revenue includes merchant, interchange and processing fees, cash advance 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 revenue in each reporting period represents the changes in liabilities for remaining coverage that
relate to services for which the Company expects to receive consideration and an allocation of premiums that
relate to recovering insurance acquisition cash flows.
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 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 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 in the Consolidated Statements of Income. 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 in the Consolidated Statements of Income.
The Company recognizes rebates that are at the vendor’s discretion when the vendor either pays the rebates or
agrees to pay them.
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 comprise 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,
for which the income tax expense is recognized in OCI or in equity, respectively.
The income tax expense is calculated based on the tax laws enacted or substantively enacted at the reporting
date 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.
However, deferred income tax is not recognized 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
98 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
transaction, affects neither accounting nor taxable income, and does not give rise to equal taxable and deductible
temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted at the reporting date 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 from 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. The Company has applied the temporary mandatory exception from the
recognition and disclosure of deferred tax related to the implementation of Pillar Two model rules.
Earnings per Share
Basic earnings per share 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 is calculated by dividing the Net income attributable to the shareholders of the
Company by the weighted average number of shares outstanding adjusted for the effects of all potentially dilutive
equity instruments, which comprise employee stock options.
4. Capital Management
The Company’s objectives when managing capital are:
• Ensuring sufficient liquidity to meet its financial obligations when due and executing its operating and strategic
plans;
• Maintaining healthy liquidity reserves with the ability to access additional capital from multiple sources, if
required; and
• Minimizing the after-tax cost of capital while taking into consideration current and future industry, market, and
economic risks and conditions.
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
because it is a legal liability of the Dealers:
(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
Total capital under management
2023
% of total
2022
% of total
$
1,041.7
$
965.7
560.5
4,404.0
2,322.6
9,294.5
—
598.7
2.9
5,128.2
$
15,024.3
7.0 % $
6.4 %
3.7 %
29.3 %
15.5 %
61.9 % $
— %
4.0 %
— %
34.1 %
100.0 % $
1,226.3
576.2
1,040.2
3,217.5
1,739.4
7,799.6
567.0
587.8
2.9
5,070.2
14,027.5
8.8 %
4.1 %
7.4 %
23.0 %
12.4 %
55.7 %
4.0 %
4.2 %
— %
36.1 %
100.0 %
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 that approximate the methodologies of credit
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
rating agencies and other market participants on a current and prospective basis. To assess its effectiveness in
managing leverage, Management monitors these ratios against targeted ranges.
The Company has a policy 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, repurchase the Company’s Class A Non-Voting Shares, adjust the amount of dividends paid to
shareholders, monetize various assets, and engage in 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 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
December 30, 2023 and December 31, 2022.
Helly Hansen is required to comply with covenants established under its bank overdraft agreement, and was in
compliance with all financial covenants thereunder as at December 31, 2023 and December 31, 2022.
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, 2023 and
December 31, 2022.
Canadian Tire Bank (“CTB” or “the Bank”), a federally chartered Schedule I bank, is required to comply with
regulatory requirements for capital, and 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. Basel III is a global
regulatory accord that was introduced to enhance the regulation, supervision, and risk management practices
within the banking sector. The Bank has implemented several capital policies, procedures, and controls, including
an annual Internal Capital Adequacy Assessment Process (“ICAAP”). These measures support the Bank in
achieving its goals and objectives.
The Bank’s objectives include maintaining capital to:
• meet all applicable regulatory requirements;
• maintain and reinforce confidence in the safety and soundness of the Bank;
• support growth in assets and liabilities; and
• offset possible operating and investment losses.
OSFI’s regulatory capital guidelines under Basel III allow for two tiers of capital. Common Equity Tier 1 (“CET1”)
and Tier 2. 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.
Capital ratios are calculated as regulatory capital divided by risk-weighted assets (“RWA”). The leverage ratio is
calculated as Tier 1 capital divided by the leverage exposure.
100 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RWA includes 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 the
trailing 3-year annual average adjusted gross income and a market-risk component for assets held for trade. For
the purposes of calculating RWA, securitized assets are considered off-balance sheet and, therefore, except for
the Bank’s retained exposure, are not included in the RWA 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 total Tier 1 capital divided by the leverage exposure. The
leverage exposure is the sum of on-balance sheet exposures, derivative exposures, securities financing
transaction exposures, subordinate loans, and a portion of unused credit limits, with a reduction for off-balance
sheet items, which include securitized assets.
As at December 31, 2023 and December 31, 2022, the Bank 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 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, 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 manages its exposure to counterparty
credit risk by transacting only with well-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 (“LCs”) issued by highly-rated
financial institutions and guaranteed by the Company to achieve the required “AAA” equivalent credit rating of the
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 35).
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
2023
12,033.7
2022
11,647.5
12,399.0 $
12,019.0
365.3
371.5
$
$
$
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 obligations associated with 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 with the ability to react under
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.
It is CTB’s objective to ensure the availability of
In addition, CTB has an Asset Liability Management Policy.
adequate funds by maintaining a strong liquidity management framework and 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, expiring in June
2027.
Due to the Company’s repurchase of Scotiabank’s 20% interest in CTFS Holdings Limited, during the fourth
quarter of 2023, the Company decided to enter into an additional unsecured committed bank line of credit for $1.0
billion with five Canadian financial institutions, expiring in May 2025.
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.
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 2027.
Scotiabank has provided CTB with a $400.0 million unsecured committed bank line of credit and a $700.0 million
committed securitized note purchase facility for the purchase of senior and subordinated credit card asset-backed
notes issued by GCCT, each expiring in April 2025.
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 credit card asset-backed commercial paper (“ABCP”)
program, expiring in June 2025.
In addition to the unsecured 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, the unsecured
committed bank line 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
102 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
[“HIS”] accounts). CTB also holds high quality liquid assets, as required by regulators, which are available to
address any funding disruptions.
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:
2024
2025
2,160.1
636.1 $
$ 1,053.2 $
(C$ in millions)
Non-derivative financial liabilities
Deposits1,2
Trade and other payables (Note 18)
Short-term borrowings
Loans
Long-term debt
Mortgages
Interest payments3
Total
1 Deposits exclude the GIC broker fee discount of $11.5 million.
2 The average remaining term of the GIC deposits is 30 months as at December 30, 2023.
3
1,080.0
Includes interest payments on deposits, short-term borrowings, loans, and long-term debt.
560.0
311.5
519.9
965.7
281.7
0.5
0.4
—
—
—
2026
480.5 $
2027
2028 Thereafter
Total
609.0 $
597.0 $
— $ 3,375.8
—
—
—
—
—
—
—
—
—
—
—
—
2,160.1
965.7
519.9
400.0
825.1
900.0
1,200.0
4,965.1
8.0
—
—
—
8.9
253.9
203.8
135.4
350.8
1,537.1
$ 5,570.9 $ 1,998.2 $ 1,142.4 $ 1,637.9 $ 1,632.4 $ 1,550.8 $ 13,532.6
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 to manage volatility in its Net income.
5.5.1 Foreign Currency Risk
CTC sources merchandise globally. In 2023, approximately 51 percent, 22 percent and 35 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 forecast
purchases, a change in foreign currency rates will not materially impact that portion of the cost relating 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 foreign currency purchases over the entirety of its
hedging horizon. This ensures that the cost of foreign currency 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 foreign 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
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
5.5.2 Interest Rate Risk
The Company may use interest rate derivatives or exercise its contractual early redemption options for Medium-
Term Notes and Debentures to manage interest rate risk. The Company has a policy 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 variable rate long term debt (the bank term loan
and the Series H Medium-term note) 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 2024 to 2028. 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 City in Canada, 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 brand 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 HIS account deposits, Tax-Free Savings Accounts
and GIC deposits, both directly and through third-party brokers. Financial Services also includes GCCT, a
structured entity established to purchase co-ownership interests in the Company’s credit card loans
receivable, and CTFS Bermuda Ltd., a Bermuda reinsurance company. 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 in Canada, mainly comprising Canadian Tire banner stores, Canadian Tire
anchored retail developments, mixed-use commercial property, and industrial properties.
104 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Performance is measured based on segment income before income taxes, as included in 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:
2023
2022
(C$ in millions)
External revenue
Retail
Financial
Services CT REIT
$ 15,167.1 $ 1,455.5 $
58.5 $
Eliminations
and
adjustments
Total
Retail
(24.6) $ 16,656.5 $ 16,431.4
Financial
Services CT REIT
56.9
$
$ 1,335.6
$
Eliminations
and
adjustments
Total
(13.3) $ 17,810.6
Intercompany revenue
4.2
51.8
494.3
(550.3)
—
4.9
54.1
475.9
(534.9)
—
Total revenue
15,171.3
1,507.3
552.8
(574.9) 16,656.5 16,436.3
1,389.7
532.8
(548.2) 17,810.6
Cost of producing revenue
10,324.6
723.9
—
(95.6) 10,952.9
11,198.3
585.8
—
(71.4) 11,712.7
Gross margin
4,846.7
783.4
552.8
(479.3)
5,703.6
5,238.0
803.9
532.8
(476.8)
6,097.9
Other expense (income)
(115.3)
5.5
—
144.2
34.4
(84.0)
4.3
—
141.3
61.6
Selling, general and
administrative expenses1
Depreciation and
amortization1
3,320.9
394.7
130.7
(170.6)
3,675.7
3,191.5
349.9
125.6
(164.5)
3,502.5
958.2
9.7
—
(196.7)
771.2
897.2
13.3
—
(191.5)
719.0
Net finance costs (income)
275.9
(11.5)
114.0
—
—
(56.9)
328.0
321.5
328.0
185.3
—
(5.2)
110.4
(59.5)
231.0
—
—
—
—
—
Change in fair value of
redeemable financial
instrument
Fair value loss (gain) on
investment properties
Income (loss) before income
taxes
Items included in the above:
Interest income
Interest expense
—
78.6
(78.6)
—
—
—
(27.8)
27.8
$ 407.0 $ 385.0 $ 229.5 $
(448.7) $ 572.8 $ 1,048.0 $ 441.6 $ 324.6 $
(230.4) $ 1,583.8
110.6
1,277.0
0.5
(70.5)
1,317.6
89.7
1,158.8
0.3
(69.2)
1,179.6
354.6
202.4
114.5
(203.9)
467.6
260.5
153.8
110.7
(191.4)
333.6
—
—
1
Certain prior year figures have been restated to conform to the current year presentation.
Transactions among reportable operating segments are carried out at arm's length prices. The eliminations and
adjustments include the following items:
• reclassifications of certain revenues and costs in the Financial Services segment to net finance costs
(income);
• conversion from CT REIT’s fair value investment property measurement 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 $770.6 million for the year ended December 30,
2023 (December 31, 2022 – $710.7 million). Property and equipment, intangible assets (brand and goodwill) and
right-of-use assets located outside of Canada was $917.4 million as at December 30, 2023 (December 31, 2022 –
$976.9 million).
Capital expenditures by reportable operating segment are as follows:
(C$ in millions)
Capital expenditures1
$
Financial
Retail Services CT REIT
610.1 $
5.2 $
68.1 $
2023
Total
683.4 $
Financial
Retail Services CT REIT
732.5 $
15.1 $
101.1 $
2022
Total
848.7
1
Capital expenditures are presented on an accrual basis and include software additions, but exclude right-of-use asset additions, acquisitions relating to
business combinations and intellectual property additions.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Right-of-use asset additions by reportable operating segment are as follows:
(C$ in millions)
Right-of-use asset additions
$
Retail Services CT REIT
378.6 $
— $
4.0 $
Financial
2023
Total
382.6 $
Financial
Retail Services
501.2 $
— $
CT REIT
27.0 $
2022
Total
528.2
Total assets by reportable operating segment are as follows:
(C$ in millions)
Retail
Financial Services
CT REIT
Eliminations and adjustments
Total assets1
$
2023
17,883.7 $
7,289.6
6,966.3
(10,161.3)
$
21,978.3 $
2022
17,729.6
7,060.4
6,844.8
(9,532.5)
22,102.3
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.
Total liabilities by reportable operating segment are as follows:
(C$ in millions)
Retail
Financial Services
CT REIT
Eliminations and adjustments
Total liabilities1
$
2023
10,828.4 $
6,165.3
3,118.5
(4,578.7)
$
15,533.5 $
2022
10,395.5
5,883.4
3,017.6
(4,233.4)
15,063.1
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.
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, net of bank indebtedness, comprise the following:
(C$ in millions)
Cash
Cash equivalents
Restricted cash and cash equivalents1
Total cash and cash equivalents2
Bank indebtedness
Cash and cash equivalents, net of bank indebtedness
1 Restricted cash and cash equivalents of $19.8 million (December 31, 2022 – $14.3 million) relates to GCCT and is restricted for the purpose of paying principal
2023
258.1 $
2022
229.1
311.2 $
311.2 $
331.3
326.3
(5.0)
24.0
29.1
17.5
84.7
—
$
$
$
2
and interest to note holders and additional funding costs. $4.2 million (December 31, 2022 – $3.2 million) represents Helly Hansen’s operational items.
Included in cash and cash equivalents are amounts held in reserve in support of CTB’s liquidity and regulatory requirements (refer to Note 33.1).
106 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. Trade and Other Receivables
Trade and other receivables include the following:
(C$ in millions)
Trade receivables
Other receivables
Net investment in subleases
Derivatives (Note 34.2)
$
$
2023
843.7 $
212.9
18.0
76.7
2022
865.1
237.2
17.7
189.9
1,151.3 $
1,309.9
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 180 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
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 $447.4 million (December 31, 2022
Includes line of credit loans and are expected to be recovered within one year of the reporting date.
2023
6,495.6
6,568.3 $
7,017.5
6,681.0
6,271.1
474.7
521.9
409.9
449.2
$
$
$
Total principal amount of receivables1
2022
6,206.3
– $408.2 million).
For the year ended December 30, 2023, cash received from interest earned on credit cards and loans was
$1,165.9 million (December 31, 2022 – $1,070.9 million).
Loans to Dealers are secured by the Canadian Tire store assets of the respective Dealers’ corporations. The
Company’s exposure to loans receivable credit risk resides at Franchise Trust and at the Bank. No allowances
have been made for Dealer loans given the historical performance and the nature of the collateral. Credit risk at
the Bank is influenced mainly by the individual characteristics of each credit card customer. The Bank uses
sophisticated credit scoring models, monitoring technology and collection modelling techniques to implement and
manage strategies, policies, and limits that are designed to control risk. Loans receivable are generated by a
large and geographically-dispersed group of customers in Canada. Current credit exposure is limited to the loss
that would be incurred if all of the Bank’s counterparties were to default at the same time.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A continuity of the Company’s allowances for loans receivable is as follows:
(C$ in millions)
Balance at December 31, 2022
Increase (decrease) during the period
Write-offs
Recoveries
New loans originated
Transfers
to Stage 1
to Stage 2
to Stage 3
Net remeasurements
(C$ in millions)
Balance at January 1, 2022
Increase (decrease) during the period
Write-offs
Recoveries
New loans originated
Transfers
to Stage 1
to Stage 2
to Stage 3
Net remeasurements
12-month ECL not credit-impaired
(Stage 2)
Lifetime ECL – Lifetime ECL –
credit-impaired
(Stage 3)
(Stage 1)
$
423.9 $
197.4 $
275.8 $
2023
Total
897.1
(33.9)
(496.7)
(544.2)
—
—
(40.3)
41.7
(33.2)
103.1
91.6
—
(31.8)
(6.1)
64.5
432.1
91.6
36.0
—
—
—
445.8
926.3
2022
Total
841.5
85.4
27.2
—
—
—
362.4
897.1
(21.1)
(387.6)
(419.4)
—
—
(29.6)
25.9
(20.1)
68.0
85.4
—
(40.7)
(5.2)
46.1
346.5
(13.6)
—
36.0
72.1
(35.6)
(31.3)
(89.4)
(10.7)
—
27.2
70.3
(20.7)
(26.0)
(52.1)
Balance at December 30, 2023
$
362.1 $
234.8 $
329.4 $
12-month ECL
(Stage 1)
Lifetime ECL –
not credit-impaired
(Stage 2)
Lifetime ECL –
credit-impaired
(Stage 3)
$
435.9 $
174.3 $
231.3 $
Balance at December 31, 2022
$
423.9 $
197.4 $
275.8 $
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 of 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.
108 CANADIAN TIRE CORPORATION 2023 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
3,615.3 $
$
1,717.5
924.3
6,257.1
362.1
Stage 2
Stage 3
28.5 $
98.5
402.4
529.4
234.8
— $
—
635.4
635.4
329.4
2023
Total
3,643.8
1,816.0
1,962.1
7,421.9
926.3
$
5,895.0 $
294.6 $
306.0 $
6,495.6
Stage 1
3,069.3 $
2,154.1
911.9
6,135.3
423.9
5,711.4 $
$
$
Stage 2
Stage 3
58.9 $
109.2
260.4
428.5
197.4
231.1 $
— $
—
539.6
539.6
275.8
263.8 $
2022
Total
3,128.2
2,263.3
1,711.9
7,103.4
897.1
6,206.3
Transfers of Financial Assets
Glacier Credit Card Trust
GCCT is a structured entity 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 December 30, 2023 and
December 31, 2022, 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
1
2023
Carrying amount
$
2,283.3 $
Fair value Carrying amount
2,283.3 $
2,125.3 $
2,277.8
2,277.2
2,120.4
$
5.5 $
6.1 $
4.9 $
2022
Fair value
2,125.3
2,045.7
79.6
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
34.2.
For legal purposes, the co-ownership interests in the Bank’s credit card loans receivable owned by GCCT have
been legally sold 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 the risks and rewards relating to these Dealer loans, the transfers are accounted for
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 109
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 (Note 22)
Net position
Carrying amount
$
520.2 $
$
520.2
— $
2023
Fair value
Carrying amount
520.2 $
520.2
— $
472.9 $
472.9
— $
2022
Fair value
472.9
472.9
—
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 34.2
The Dealer loans have been legally sold and are not available to the creditors of the Company. Loans are not
legal liabilities of the Company.
If 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 such Dealer’s assets, subject to certain prior ranking statutory claims.
In most cases, the Company expects 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 35 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 34.2)
Other receivables
Total long-term receivables
Other
$
2023
449.2
$
87.6
44.8
12.1
593.7
52.1
$
645.8 $
2022
409.9
88.7
107.9
10.7
617.2
59.5
676.7
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 $40
million in addition to adjustments required under the equity method of accounting.
110 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Goodwill and Intangible Assets
The following table presents the changes in cost and accumulated amortization and impairment of the Company’s
goodwill and intangible assets:
(C$ in millions)
Cost
Balance, beginning of year
Additions
Disposals/retirements
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
(C$ in millions)
Cost
Balance, beginning of year
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
Disposals/retirements
Balance, end of year
Net carrying amount, end of year
Indefinite-life intangible assets and
goodwill
Finite-life intangible assets
Goodwill
Banners and
trademarks
Franchise
agreements
and other
intangibles
Software
Other
intangibles
867.2 $
—
—
(18.4)
901.6 $
3.4
—
(24.6)
167.7 $
0.2
—
—
1,515.2 $
80.0
(1.9)
—
11.7 $
—
—
—
2023
Total
3,463.4
83.6
(1.9)
(43.0)
848.8 $
880.4 $
167.9 $
1,593.3 $
11.7 $
3,502.1
(4.0) $
—
—
—
(4.0) $
844.8 $
(16.6) $
—
(0.4)
—
(17.0) $
863.4 $
— $
—
(1,089.5) $
(127.0)
(11.7) $
—
—
—
— $
167.9 $
—
1.8
(1,214.7) $
378.6 $
—
—
(11.7) $
— $
Indefinite-life intangible assets and
goodwill
Finite-life intangible assets
Goodwill
Banners and
trademarks
Franchise
agreements
and other
intangibles
Software
Other
intangibles
880.8 $
—
917.5 $
—
167.7 $
—
—
—
—
—
(13.6)
(15.9)
—
—
—
1,396.6 $
120.1
(2.8)
1.3
—
11.7 $
—
—
—
—
(1,121.8)
(127.0)
(0.4)
1.8
(1,247.4)
2,254.7
2022
Total
3,374.3
120.1
(2.8)
1.3
(29.5)
867.2 $
901.6 $
167.7 $
1,515.2 $
11.7 $
3,463.4
(4.0) $
—
—
(4.0) $
863.2 $
(16.6) $
—
—
(16.6) $
885.0 $
— $
—
—
— $
167.7 $
(969.8) $
(122.5)
2.8
(1,089.5) $
425.7 $
(11.7) $
—
—
(11.7) $
— $
(1,002.1)
(122.5)
2.8
(1,121.8)
2,341.6
$
$
$
$
$
$
$
$
$
$
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the details of the Company’s goodwill and indefinite-life intangible assets:
(C$ in millions)
Helly Hansen
SportChek
Canadian Tire
Mark’s
Total
2023
2022
Goodwill
353.7
Indefinite-life
Intangible Assets
443.2
$
$
Goodwill
372.1
$
Indefinite-life
Intangible Assets
467.3
362.5
71.9
56.7
340.0
171.6
76.5
362.5
71.9
56.7
340.4
168.6
76.4
844.8 $
1,031.3 $
863.2 $
1,052.7
$
$
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 2024 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.
Borrowing costs capitalized were $3.2 million (December 31, 2022 – $4.5 million). The capitalization rate used to
determine the amount of borrowing costs capitalized during the year was 5.9 percent (December 31, 2022 – 4.9
percent).
Amortization expense of software and other finite-life intangible assets is included in Depreciation and
amortization 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.
For all goodwill and intangible assets except those noted, the estimated recoverable amount is based on VIU,
which exceeds the carrying amount. The cash flow projections included specific estimates for up to five years and
terminal growth rates to extrapolate cash flow projections beyond the period covered by the most recent
forecasts, except as noted below.
During 2023, the recoverable amount of goodwill and intangible 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 and the market
multiple approach, under the Guideline Public Company (“GPC”) multiples. The fair value measurement was
categorized as a Level 3 fair value based on the inputs in the valuation technique. The cash flow projections
included specific estimates for six years, taking into account a terminal value calculated by discounting the final
year in perpetuity.
The key assumptions used in the estimation of the recoverable amount for all CGUs are set out below.
Discount rate
Terminal growth rate
2023
8.3 to 11.5 %
2022
8.0 to 11.5 %
2.0 to 3.0 %
2.0 to 3.0 %
A change in the assumptions used in testing SportChek and Helly Hansen goodwill and intangible assets could
cause the carrying amount to exceed the estimated recoverable amount. As SportChek and Helly Hansen are the
banners most sensitive to changes in assumptions, the following mutually exclusive changes in the assumptions
112 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
would result in the carrying value being equal to the recoverable amount:
SportChek
Helly Hansen
Increases in Discount Rate
1.0 %
1.8 %
Decreases in Terminal
Growth Rate
1.4 %
2.7 %
In addition, changes in assumptions for revenue and EBITDA growth could also cause the carrying amount to
exceed the estimated recoverable amount.
There was an impairment charge of $0.4 million for indefinite-life intangible assets (December 31, 2022 – nil).
There were no impairment charges nor reversal of impairments for finite-life intangible assets (December 31,
2022 – nil). There were no impairment charges for goodwill (December 31, 2022 – nil).
12. Investment Property
The following table presents changes in the cost and the accumulated depreciation and impairment on the
Company’s investment property:
$
2022
2023
(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. The Company had no reclassifications in 2023 (December 31, 2022 - $131.4
508.1 $
542.8 $
(99.1) $
(86.6) $
(131.5)
(86.6)
(73.9)
(11.8)
(10.8)
443.7
105.0
534.6
421.5
508.1
(1.7)
(0.9)
34.7
—
$
$
$
$
$
2
million of property and $0.9 million in accumulated depreciation reclassified to property and equipment).
Investment property includes $5.9 million (December 31, 2022 – $7.0 million) right-of-use assets related to operating subleases where the Company is an
intermediate lessor.
The investment properties generated rental income of $61.5 million (December 31, 2022 – $61.0 million). Direct
operating expenses (including repairs and maintenance) arising from investment property recognized in Net
income were $24.1 million (December 31, 2022 – $22.1 million).
The estimated fair value of investment property was $616.9 million (December 31, 2022 – $567.8 million). This
recurring fair value measurement is categorized within Level 3 of the fair value hierarchy (refer to Note 34.2 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 4.75 percent to 8.46
percent (December 31, 2022 – 4.25 percent to 8.71 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. There was an impairment loss of $1.7 million for investment property (December 31, 2022
– nil). There was no reversal of impairments for investment property (December 31, 2022 – nil).
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 113
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:
2023
Total
8,997.7
568.4
(92.7)
0.2
(29.1)
(4,003.6)
(306.8)
(2.0)
69.5
17.9
(4,225.0)
Land
Buildings
Fixtures and
equipment improvements
Leasehold Construction
in progress
1,100.7 $
41.1
—
—
(6.6)
3,915.6 $
209.5
(1.2)
—
(5.1)
1,135.2 $
4,118.8 $
1,904.1 $
394.4
(69.5)
0.2
13.5
2,242.7 $
1,430.3 $
121.4
(6.9)
—
(19.5)
647.0 $
(198.0)
(15.1)
—
(11.4)
1,525.3 $
422.5 $
9,444.5
(C$ in millions)
Cost
Balance, beginning of year
Additions
Disposals/retirements1, 3
Currency translation adjustment
Other2
Balance, end of year
Accumulated depreciation and
impairment
Balance, beginning of year
Depreciation for the year
Net impairment (loss) reversal
Disposals/retirements1, 3
Other2
$
$
$
(C$ in millions)
Cost
Balance, beginning of year
Additions
Disposals/retirements1
Currency translation adjustment
Other2
Balance, end of year
Accumulated depreciation and
impairment
Balance, beginning of year
Depreciation for the year
Net impairment (loss) reversal
Disposals/retirements1
Other2
$
$
$
(6.0) $
—
(1,942.7) $
(80.5)
(1,256.8) $
(151.3)
(798.1) $
(75.0)
—
0.3
—
—
(2.1)
0.9
10.8
(2,011.5) $
2,107.3 $
63.3
6.1
(1,340.8) $
901.9 $
0.1
5.0
1.0
(867.0) $
658.3 $
— $
—
—
—
—
Balance, end of year
Net carrying amount, end of year
1 Current year disposals includes $59.0 million of assets no longer in use with a net book value of nil.
2 Other includes reclassifications, transfers and tenant allowances. The Company reclassified $33.1 million of property including $17.5 million in accumulated
(5.7) $
1,129.5 $
— $
422.5 $
5,219.5
$
$
amortization to assets held for sale.
3 Disposals/retirements include amounts derecognized due to the fire at the AJ Billes Distribution Centre. Reimbursements from third parties of $19.4 million were
accrued and recognized in Other expense (income) in the Consolidated Statements of Income.
Land
Buildings
Fixtures and
equipment
Leasehold
improvements
Construction in
progress
1,071.9 $
13.9
(0.5)
3,683.8 $
106.0
(6.4)
—
—
15.4
1,100.7 $
132.2
3,915.6 $
1,808.0 $
153.1
(49.9)
(0.2)
(6.9)
1,342.7 $
112.5
(10.2)
(0.5)
(14.2)
424.6 $
238.1
—
(0.2)
(15.5)
1,904.1 $
1,430.3 $
647.0 $
2022
Total
8,331.0
623.6
(67.0)
(0.9)
111.0
8,997.7
(7.0) $
—
(1,863.7) $
(78.7)
(1,171.5) $
(130.9)
0.4
0.5
0.1
(6.0) $
1,094.7 $
0.3
5.2
(5.8)
0.1
45.3
0.2
(1,256.8) $
647.3 $
(739.5) $
(70.5)
(1.1)
9.3
3.7
(798.1) $
632.2 $
— $
—
(3,781.7)
(280.1)
—
—
—
(0.3)
60.3
(1.8)
Balance, end of year
Net carrying amount, end of year
1 Disposals includes $40.5 million of assets no longer in use with a net book value of nil.
2 Other includes reclassifications, transfers and tenant allowances. The Company reclassified $131.4 million of investment property to property and equipment.
(1,942.7) $
1,972.9 $
— $
647.0 $
$
$
4,994.1
(4,003.6)
The Company capitalized borrowing costs of $14.6 million (December 31, 2022 – $19.3 million) relating to
property and equipment under construction. The rate used to determine the amount of borrowing costs
capitalized during the year was 5.2 percent (December 31, 2022 – 4.8 percent).
114 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment of Property and Equipment and Subsequent Reversal
There was a net impairment of $2.0 million (December 31, 2022 – net impairment of $0.3 million). Any
impairment or reversal of impairment is reported in Other expense (income) in the Consolidated Statements of
Income.
14. Leases
14.1 As a Lessee
Extension and termination options are included in a number of leases across the Company, particularly for
property related leases. These terms are used to maximize the operational flexibility of managing contracts. The
majority of the extension and termination options held are exercisable only by the Company and not by the
respective lessor.
14.1.1 Right-of-use Assets
The following table presents changes to the carrying amount of the Company’s right-of-use assets at the end of
the reporting period:
(C$ in millions)
Balance, beginning of year
Additions
Depreciation for the year
Impairment
Property
Non-property1
$
1,868.0 $
64.0 $
359.0
(329.6)
(3.9)
(21.0)
23.6
(26.5)
—
0.2
2023
Total
1,932.0
382.6
(356.1)
(3.9)
(20.8)
Disposals/retirements and other
Balance, end of year
1 Non-property leases consist of leased IT equipment, supply chain and transportation related assets.
$
1,872.5 $
61.3 $
1,933.8
(C$ in millions)
Balance, beginning of year
Additions
Depreciation for the year
Impairment
Disposals/retirements and other
Balance, end of year
$
Property
1,727.0 $
499.5
(304.8)
(1.3)
(52.4)
Non-property1
59.1 $
28.7
(23.8)
—
—
2022
Total
1,786.1
528.2
(328.6)
(1.3)
(52.4)
$
1,868.0 $
64.0 $
1,932.0
1
Non-property leases consist of leased IT equipment, supply chain and transportation related assets.
Impairment of Right-of-use Assets and Subsequent Reversal
There was an impairment charge of $3.9 million (December 31, 2022 – impairment charge of $1.3 million). Any
impairment or reversal of impairment is reported in Other expense (income) in the Consolidated Statements of
Income.
14.1.2 Undiscounted Cash Flows
The annual lease payments for property and non-property leases are as follows:
(C$ in millions)
Less than one year
One to five years
More than five years
Total undiscounted lease obligation1
1 Excludes $280.1 million (December 31, 2022 – $451.8 million) commitment for lease agreements signed but not yet commenced.
$
$
1,493.9
1,174.7
2023
454.8 $
3,123.4 $
2022
483.0
1,481.8
1,125.6
3,090.4
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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 years
More than five years
Total undiscounted lease payments receivable
Unearned finance income
Net investment in subleases
$
$
2023
22.5 $
23.7
21.0
17.3
12.1
21.6
118.2
(12.6)
105.6 $
2022
21.9
21.1
21.2
16.8
13.3
24.8
119.1
(12.7)
106.4
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 years
More than five years
Total
$
2023
37.7 $
34.6
31.0
25.0
19.7
69.0
2022
34.3
31.3
28.7
25.2
19.5
68.9
$
217.0 $
207.9
116 CANADIAN TIRE CORPORATION 2023 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 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. 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
Canadian Tire Real Estate Limited
Principal activity
Banking, processing credit card transactions at
Canadian Tire Retail Banners, marketing of
insurance products, and reinsurance
Real estate
CT Real Estate Investment Trust
Real estate
FGL Sports Ltd. (“SportChek”)
Franchise Trust2
Glacier Credit Card Trust3
Mark’s Work Wearhouse Ltd.
Helly Hansen Group AS
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
Retailer of clothing and footwear
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
2023
100.0 %
2022
80.0 %
100.0 %
100.0 %
68.4 %
68.7 %
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
of insurance products and processing credit card transactions at the Company’s stores. CTFS Bermuda Ltd.’s principal activity is reinsurance.
2 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.
3 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.
On October 31, 2023, the Company repurchased Scotiabank’s 20 percent stake in CTFS Holdings Limited for
$895.0 million. The transaction increased the Company’s controlling interest from 80 percent to 100 percent with
the difference between the consideration paid and the derecognition of the non-controlling interest being
recognized in equity and attributed to the shareholders of the Company as described in Note 3 Material
Accounting Policy Information. The transaction also extinguished the Company’s redeemable financial instrument
through retained earnings.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the information relating to non-controlling interests:
(C$ in millions)
Non-controlling interests
CTFS
Holdings
Limited1
0.0 %
CT REIT2
31.6 %
Other3
50.0 %
2023
Total
$
$
28.6
17.5
6,937.7
N/A
N/A
N/A
N/A
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
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, until October 31, 2023, when the Company reacquired the 20% interest. As a result, the net assets of CTFS Holdings
Limited are not attributable to non-controlling interests as at December 30, 2023.
1,632.6
3,847.8
2,785.9
2,470.9
3,878.6
6,990.4
(142.1)
2,821.6
(73.8)
(65.5)
884.4
332.6
552.8
285.5
896.8
336.3
125.8
(2.8)
72.5
48.4
12.4
35.7
52.7
30.8
46.1
4.9
3.7
—
—
$
$
$
$
$
$
$
$
$
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.
(C$ in millions)
Non-controlling interests
CTFS
Holdings
Limited1
20.0 %
CT REIT2
31.3 %
Other3
50.0 %
2022
Total
$
$
$
10.0
269.8
6,790.6
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
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
1,512.7
3,827.2
6,834.9
2,626.2
1,177.0
2,739.0
3,257.2
1,420.7
2,328.0
6,032.1
5,028.9
7,151.8
6,824.0
2,914.8
(143.2)
(62.4)
(76.4)
877.9
532.6
532.8
282.5
278.7
138.7
(4.4)
68.6
64.3
10.2
24.7
23.4
35.9
47.1
5.8
9.9
$
$
$
$
$
$
$
$
$
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.
118 CANADIAN TIRE CORPORATION 2023 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:
95.5
(120.8)
(285.2)
42.1
(16.2)
128.0
45.1
8.9
(102.6)
2022
Balance,
end of year
209.3
(82.9)
(273.0)
38.6
(50.8)
133.2
32.9
4.0
11.3
(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
Recognized in
other
in profit or comprehensive
income
loss
2023
Recognized
in equity
Balance,
end of year
$
$
209.3 $
(82.9)
(273.0)
38.6
(50.8)
133.2
32.9
4.0
11.3 $
(113.7) $
(37.6)
(17.2)
1.1
—
(5.4)
14.0
4.1
(154.7) $
— $
—
—
2.4
3.1
—
—
—
5.5 $
(0.1) $
(0.3)
5.0
—
31.5
0.2
(1.8)
0.8
35.3 $
1
Includes the net amount of deferred tax assets of $79.5 million and deferred tax liabilities of $182.1 million.
(C$ 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 Recognized in
profit or loss
year
Recognized in
other
comprehensive Recognized in
equity
income
$
$
206.8 $
(76.5)
(282.2)
52.0
10.6
142.4
39.5
0.2
92.8 $
2.4 $
(6.7)
5.5
1.3
—
(9.2)
(4.8)
2.4
(9.1) $
— $
—
—
(14.7)
(90.8)
—
—
—
(105.5) $
0.1 $
0.3
3.7
—
29.4
—
(1.8)
1.4
33.1 $
1
Includes the net amount of deferred tax assets of $143.4 million and deferred tax liabilities of $132.1 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 December 30, 2023 (December 31, 2022 – $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 to use the unused tax losses and tax
credits. The amount of these deductible temporary differences was approximately $187.8 million at December 30,
2023 (December 31, 2022 – $178.8 million).
The Company has applied the temporary mandatory exception from the recognition and disclosure of deferred
taxes related to the implementation of Pillar Two model rules.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16.2 Income Tax Expense
The following are the major components of income tax expense:
(C$ 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 (benefit) resulting from change in tax rate
Total income tax expense
2023
103.0 $
(24.0)
79.0 $
129.7 $
25.0
—
154.7
2022
402.3
(10.4)
391.9
4.8
9.6
(5.3)
9.1
233.7 $
401.0
$
$
$
$
Income tax (benefit) expense 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 (losses) gains on hedging instruments entered into for cash flow
hedges subject to basis adjustment
Actuarial (losses) gains
Total income tax (benefit) expense
2023
$
(14.9) $
15.0
0.3
(3.5)
(2.4)
(5.5) $
$
2022
28.7
1.6
2.2
58.3
14.7
105.5
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% (December 31,
2022 – 26.42%)
Adjustment to income taxes resulting from:
Non-deductibility of change in fair value of redeemable financial instrument
Income attributable to non-controlling interests in flow-through entities
Tax losses not benefitted
Non-deductible stock option expense
Non-taxable portion of capital gains
Changes in tax rates
Write off of Russia net assets not benefitted
Other
$
$
2023
572.8 $
2022
1,583.8
151.3 $
418.4
86.9
(20.3)
7.8
3.5
(0.1)
—
—
4.6
—
(19.5)
5.7
(6.4)
(1.6)
(5.3)
4.7
5.0
Income tax expense
$
233.7 $
401.0
The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent
(December 31, 2022 – 15.0 percent) and the Canadian provincial income tax rate of 11.42 percent (December 31,
2022 – 11.42 percent).
120 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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, occasionally certain matters
are reviewed and challenged by the tax authorities.
The Company regularly reviews the potential for adverse outcomes with respect to tax matters. The Company
believes that their ultimate disposition 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 $3,364.3 million (December 31, 2022 - $2,965.7 million) consist of broker deposits and retail
deposits.
Cash from broker deposits is generated from GIC offerings through broker channels rather than direct receipts
from 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 rare circumstances). Total short-term and long-term
broker deposits outstanding at December 30, 2023, were $2,734.4 million (December 31, 2022 – $2,255.3
million).
Retail deposits consist of HIS deposits, retail GICs and TFSA deposits. Total retail deposits outstanding at
December 30, 2023, were $629.9 million (December 31, 2022 – $710.4 million).
For repayment requirements of deposits refer to Note 5.4. The following are the effective rates of interest:
GIC deposits
HIS account deposits
18. Trade and Other Payables
Trade and other payables include the following:
(C$ in millions)
Trade payables and accrued liabilities
Derivatives (Note 34.2)
Financial liabilities
Deferred revenue
Insurance reserve
Other
2023
3.42 %
3.22 %
2022
2.87 %
1.62 %
$
2023
2,160.1 $
63.5
2,223.6
342.4
—
123.4
2022
2,656.0
74.5
2,730.5
316.4
5.6
148.4
$
2,689.4 $
3,200.9
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.
$292.8 million included in deferred revenue at the beginning of the period was recognized as revenue in 2023
(December 31, 2022 – $266.7 million).
Other consists primarily of the short-term portion of share-based payment transactions and sales taxes payable.
The payment terms for trade payables range from due immediately to 180 days (December 31, 2022 – due
immediately to 180 days).
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Provisions
The following table presents the changes to the Company’s provisions:
(C$ 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
$
200.8 $
36.5 $
26.0 $
600.9
(619.8)
6.2
29.4
(8.6)
0.1
26.0
(17.8)
—
$
188.1 $
57.4 $
34.2 $
175.2
12.9
20.2
37.2
24.5
9.7
2023
Total
263.3
656.3
(646.2)
6.3
279.7
219.9
59.8
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.
Insurance Recoveries
The Company has notified its insurers of a loss caused by the fire at the A.J. Billes Distribution Centre on March
15, 2023. The Company continues to assess contingent assets in relation to claim categories beyond remediation,
inventory and property and equipment. Any additional recoveries will be recognized when the losses are
estimable, and receipt is virtually certain, however, the financial effect is not practicable to disclose. Refer to Note
2 for information regarding ongoing estimation uncertainty.
21. Short-Term Borrowings
Short-term borrowings include commercial paper notes issued by the Company and GCCT, note purchase facility
borrowings issued by GCCT, and borrowings on its committed bank lines of credit. 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 U.S. CP at interest rates fixed at the time of each renewal
and are recorded at amortized cost. As at December 30, 2023, GCCT had $293.1 million of ABCP outstanding
(December 31, 2022 – $51.2 million) and the Company had $365.6 million of C$ equivalent U.S. CP outstanding
(December 31, 2022 – $21.7 million).
As at December 30, 2023, the Company (excluding Helly Hansen) had $160.0 million on its unsecured committed
bank lines of credit (December 31, 2022 – nil), Helly Hansen had no borrowings on its secured committed
overdraft facility (December 31, 2022 – nil) , CT REIT had no borrowings under its unsecured committed bank line
of credit (December 31, 2022 – $99.9 million), and CTB had $147.0 million of borrowings under its unsecured
committed bank line of credit and note purchase facilities (December 31, 2022 – $403.4 million).
122 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. Loans
Franchise Trust, a special purpose entity, is a legal entity sponsored by a third-party bank that originates loans to
certain Dealers. Loans are what Franchise Trust incurs to fund Dealer loans, which are secured by such Dealers’
store assets. These loans are not direct legal liabilities of the Company but have been consolidated in the
accounts of the Company as the Company effectively controls the silo of Franchise Trust containing the Canadian
Tire Dealer Loan Program (refer to note 15.1). Loans, which are initially recognized at fair value and are
subsequently measured at amortized cost, are due within one year.
23. Long-Term Debt
Long-term debt includes the following:
(C$ in millions)
Medium-term notes (CTC)
Series F, 3.167%, due July 6, 2023
Series 2, 6.375%, due April 13, 2028
Series 2, 6.445%, due February 24, 2034
Series B, 5.610%, due September 4, 2035
Series G, 5.372%, due September 16, 2030
Series H, CORRA + 1.00%, due September 14, 2026
Debentures (CT REIT)
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%, due January 6, 2031
Series H, 3.029%, due February 5, 2029
Series I, 5.828%, due June 14, 2028
Senior asset-backed term notes (GCCT)
Series 2018-1, 3.138%, due September 20, 20231
Series 2019-1, 2.280%, due June 6, 20241
Series 2020-1, 1.388%, due September 22, 20251
Series 2022-1, 4.958%, due September 20, 20271
Series 2023-1, 5.681%, due September 20, 20281
Subordinated asset-backed term notes (GCCT)
Series 2018-1, 4.138%, due September 20, 20231
Series 2019-1, 3.430%, due June 6, 20241
Series 2020-1, 2.438%, due September 22, 20251
Series 2022-1, 6.108%, due September 20, 20271
Series 2023-1, 6.881%, due September 20, 20281
Mortgages
Term Loan, CDOR + 1.25%, due April 30, 2025
Total debt
Current
Non-current
1 The expected repayment date as defined in the series supplemental indenture.
$
Face value
2023
Carrying
amount
Face value
2022
Carrying
amount
$
— $
— $
400.0 $
150.0
200.0
200.0
400.0
200.0
200.0
200.0
175.0
200.0
150.0
250.0
250.0
—
523.6
448.8
420.8
467.5
—
36.4
31.2
29.3
32.5
8.9
151.1
201.8
199.8
398.6
199.6
199.8
199.7
174.6
199.5
149.3
248.9
248.6
—
523.2
447.9
418.9
465.0
—
36.4
31.2
29.3
32.5
9.1
400.0
399.7
150.0
200.0
200.0
—
—
200.0
200.0
175.0
200.0
150.0
250.0
—
546.0
523.6
448.8
420.8
—
38.0
36.4
31.2
29.3
—
64.9
—
399.8
150.9
201.7
199.7
—
—
199.6
199.5
174.5
199.3
149.2
248.7
—
545.6
522.8
447.6
418.6
—
38.0
36.4
31.2
29.3
—
65.3
—
4,974.0 $
4,964.5 $
4,264.0 $
560.5
4,413.5
560.5
4,404.0
1,040.2
3,223.8
4,257.7
1,040.2
3,217.5
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The carrying amount of long-term debt is net of debt issuance costs of $14.4 million (December 31, 2022 – $11.7
million).
Senior and Subordinated Credit Card 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 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 2019-1, 2020-1, 2022-1 and 2023-1 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 after 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 30, 2023 and 2022.
Medium-Term Notes and Debentures
Medium-term notes and debentures are unsecured and those issued by the Company (except Series H) 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. The $200.0 million Series H medium-term note is redeemable by the Company, in whole or in part, at
any time on or after September 14, 2024, at par.
Term Loan
During the fourth quarter, to partially fund the repurchase of Scotiabank’s 20% interest in CTFS Holdings Limited,
the Company entered into a $400 million term loan from Desjardins Capital Markets, due April 2025.
Mortgages
Mortgages payable as at December 30, 2023 had a weighted average interest rate of 3.24 percent and a maturity
date of March 1, 2026.
124 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Other Long-Term Liabilities
Other long-term liabilities include the following:
(C$ in millions)
Redeemable financial instrument1
Employment benefits (Note 25)
Derivatives (Note 34.2)
Other
$
$
2023
— $
160.1
16.3
13.6
190.0 $
2022
567.0
146.7
4.4
16.5
734.6
1
A financial liability; refer to Note 34 for further information on the redeemable financial instrument.
Other primarily includes the long-term portion of share-based payment transactions.
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 2023, the Company contributed $31.1 million (December 31, 2022 – $28.0 million) under the terms of the
DPSP.
Defined Benefit Plan
The Company provides certain health care, dental care, life insurance and other benefits to certain retired
employees pursuant to the Company’s policies. The Company does not have a pension plan. Information about
the Company’s defined benefit plan is as follows:
(C$ in millions)
Change in the present value of defined benefit obligation
Defined benefit obligation, beginning of year
Current service cost
Interest cost
Actuarial loss (gain) arising from changes in financial assumptions
Actuarial loss (gain) arising from changes in experience assumptions
Benefits paid
2023
$
146.7 $
1.4
7.4
10.7
(1.9)
(4.2)
Defined benefit obligation, end of year1
$
160.1 $
1
The accrued benefit obligation is not funded because funding is provided when benefits are paid. Accordingly, there are no plan assets.
2022
198.8
2.3
5.9
(54.5)
(1.5)
(4.3)
146.7
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Significant actuarial assumptions used:
Defined benefit obligation, end of year:
Discount rate
Net benefit plan expense for the year:
Discount rate
2023
2022
4.60 %
5.10 %
5.10 %
3.00 %
For measurement purposes, a 3.26 percent weighted average health care cost trend rate is assumed for 2023
(December 31, 2022 – 3.33 percent). The rate is assumed to decrease gradually to 1.91 percent for 2040 and
remain at that level thereafter.
The December 30, 2023 actuarial valuation was extrapolated from the actuarial valuation performed as of January
1, 2022.
The cumulative amount of actuarial losses before tax recognized in equity at December 30, 2023, was $30.6
million (December 31, 2022 – $21.8 million).
Sensitivity Analysis:
The Company’s defined benefit plan is exposed to actuarial risks such as the health care cost trend rate, the
discount rate and the life expectancy assumptions. The following table provides the sensitivity of the defined
benefit obligation to these assumptions. For each sensitivity test, the impact of a reasonably possible change in a
single factor is shown with other assumptions left unchanged.
(C$ 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
$
2023
Accrued benefit obligation
Decrease
11.9
(10.7) $
Increase
14.9
3.8
(12.8)
(3.8)
The weighted-average duration of the defined benefit plan obligation at December 30, 2023 is 14.3 years
(December 31, 2022 – 13.6 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
2023
2022
3,423,366 Common Shares (2022 – 3,423,366)
52,197,823 Class A Non-Voting Shares (2022 – 54,276,998)
$
$
0.2 $
598.5
598.7 $
0.2
587.6
587.8
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 Class A Non-Voting Shares have a par value.
During 2023 and 2022, the Company issued and repurchased Class A Non-Voting Shares. The Company’s share
repurchases were made pursuant to its Normal-Course Issuer Bid (“NCIB”) program, in connection with its anti-
dilutive policy and announced share repurchase intention.
126 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following transactions occurred with respect to Class A Non-Voting Shares during 2023 and 2022:
2023
$
587.6
2022
$
593.4
(C$ in millions)
Shares outstanding at beginning of the year
Issued under the dividend reinvestment plan
Repurchased1
Change in accrued liability for ASPP commitment
Excess of repurchase price over average cost
Shares outstanding at end of the year
1 Repurchased shares, pursuant to the Company’s NCIB program, have been restored to the status of authorized but unissued shares. The Company records
Number
56,723,758 $
Number
54,276,998 $
54,276,998 $
52,197,823 $
(2,257,730)
(2,567,769)
121,009
178,555
(376.1)
(425.4)
598.5
397.7
351.0
587.6
27.9
19.8
8.1
2.1
—
—
—
—
shares repurchased on a transaction date basis.
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 repurchase 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 repurchase both Class A Non-Voting Shares and Common
Shares at the same price per share and on the same terms and conditions.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.sedarplus.ca.
As of December 30, 2023, the Company had dividends declared and payable to holders of Class A Non-Voting
Shares and Common Shares of $97.3 million (December 31, 2022 – $99.5 million) at a rate of $1.7500 per share
(December 31, 2022 – $1.7250 per share).
On February 14, 2024 the Company’s Board of Directors declared a dividend of $1.7500 per share payable on
June 1, 2024 to shareholders of record as of April 30, 2024.
Dividends per share declared were $6.9250 in 2023 (December 31, 2022 – $6.2750).
The dilutive effect of employee stock options is 228,770 (December 31, 2022 – 353,555).
27. Share-Based Payments
The Company’s share-based payment plans are described below.
Stock Options
The Company granted stock options to certain employees that enable such employees to exercise those 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 December 30, 2023, and December 31, 2022, the
aggregate number of Class A Non-Voting Shares authorized for issuance under the stock option plan was
3,387,702.
Stock option transactions during 2023 and 2022 were as follows:
Outstanding at beginning of year
Granted
Exercised and surrendered1
Forfeited
Outstanding at end of year
Stock options exercisable at end of year
1
Number of
2023
Weighted
average
options exercise price
132.26
1,293,009 $
Number of
2022
Weighted
average
options exercise price
118.91
1,323,987 $
256,735
(336,595)
(62,552)
1,150,597 $
314,529
167.31
102.62
174.87
146.44
226,744
(210,564)
(47,158)
1,293,009 $
310,215
187.25
108.17
129.53
132.26
The weighted average market price of the Company's shares when the options were exercised in 2023 was $170.50 (December 31, 2022 – $183.44).
128 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about stock options outstanding and exercisable at December 30,
2023:
Range of exercise prices
$ 187.25
177.09
173.14
167.80
156.29
144.35
80.49
$ 80.49 to 187.25
Options outstanding
Options exercisable
Number of
outstanding
options
195,478
85,838
178,577
236,976
41,805
97,394
314,529
1,150,597
Weighted
average
remaining
contractual
life1
5.24 $
Weighted
average
exercise
price
187.25
1.16
4.21
6.24
0.16
2.16
3.23
3.99 $
177.09
173.14
167.80
156.29
144.35
80.49
146.44
Number of
exercisable
options
— $
—
—
—
—
—
Weighted
average
exercise
price
—
—
—
—
—
—
314,529
314,529 $
80.49
80.49
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.
Restricted Share Units and Restricted Units
The Company grants Restricted Share Units (“RSUs”) to certain of its employees that generally vest on a
graduated basis, with one-third vesting each year on the anniversary date of the grant. Each RSU 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 Restricted Share 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.
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.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
All Plans
The fair value of stock options, PSUs and RSUs at the end of the year was determined using the Black-Scholes
option pricing model with the following inputs:
Stock options
PSUs
2023
RSUs Stock options
PSUs
$
$
$
$
140.72
145.09
140.72
140.72
Share price at end of
year (C$)
Weighted average
exercise price1(C$)
Expected remaining life
(years)
Expected dividends
Expected volatility2
Risk-free interest rate
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.
7.9 %
27.4 %
4.9 %
5.1 %
26.4 %
4.0 %
6.8 %
24.2 %
5.2 %
5.0 %
23.0 %
5.0 %
6.0 %
30.1 %
4.1 %
131.93
141.50
141.50
N/A
N/A
N/A
0.6
0.6
1.0
3.1
3.3
$
$
$
$
2022
RSUs
141.50
N/A
1.9
5.7 %
31.1 %
4.6 %
Service and non-market performance conditions attached to the transactions are not taken into account in
determining fair value.
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 (recovery) arising from share-based payment transactions
Effect of hedging arrangements
Total expense included in Net income
$
$
2023
47.3 $
(5.7)
41.6 $
2022
(18.3)
70.9
52.6
The total carrying amount of liabilities for share-based payment transactions at December 30, 2023, was $66.2
million (December 31, 2022 – $112.1 million).
The intrinsic value of the liability for vested benefits at December 30, 2023, was $36.2 million (December 31, 2022
– $32.2 million).
28. Revenue
External revenue by reportable operating segment is as follows:
(C$ in millions)
Sale of goods
Interest income on loans
receivable
Royalties and licence fees
Services rendered
Rental income
Adjust-
Retail Services CT REIT ments
Financial
Total
Retail Services CT REIT
Financial
$14,573.1 $
— $
— $
— $14,573.1 $15,834.8 $
— $
— $
2023
2022
Adjust-
ments
Total
— $15,834.8
31.9
64.4
17.1
480.6
1,265.0
—
190.5
—
$15,167.1 $ 1,455.5 $
—
—
—
58.5
58.5 $
—
(19.1) 1,277.8
64.4
202.1
539.1
(5.5)
—
14.6
64.0
19.9
498.1
1,153.0
—
182.6
—
(24.6) $16,656.5 $16,431.4 $ 1,335.6 $
—
—
—
56.9
56.9 $
—
(8.9) 1,158.7
64.0
198.1
555.0
(13.3) $17,810.6
(4.4)
—
130 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Retail revenue breakdown is as follows:
(C$ in millions)
Canadian Tire
SportChek
Mark’s
Helly Hansen1
Petroleum
Other and intersegment eliminations1
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
$
2023
8,699.3 $
1,952.3
1,532.0
837.2
2,131.1
15.2
2022
9,647.9
2,099.2
1,561.2
781.2
2,341.5
0.4
$
15,167.1 $
16,431.4
$
2023
10,324.0 $
449.6
106.3
73.0
2022
11,197.9
366.4
81.7
66.7
$
10,952.9 $
11,712.7
1
Inventory cost of sales includes depreciation for the year ended December 30, 2023 of $31.0 million (December 31, 2022 – $24.5 million).
Inventory write-downs, as a result of net realizable value being lower than cost, recognized in the year ended
December 30, 2023 were $127.1 million (December 31, 2022 – $71.8 million).
Inventory write-downs recognized in prior periods and reversed in the year ended December 30, 2023 were $8.9
million (December 31, 2022 – $12 million). The reversal of write-downs was the result of actual losses being
lower than previously estimated.
The write-downs and reversals are included in Inventory cost of sales, with the exception of the write-downs
resulting from the fire at the A.J. Billes Distribution Centre which were recognized in Other expense (income) in
the Consolidated Statements of Income.
30. Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the following:
(C$ in millions)
Personnel expenses
Occupancy
Marketing and advertising
Information systems
Other
$
2023
1,677.1
$
523.9
398.2
348.2
728.3
2022
1,577.5
486.8
429.1
290.9
718.2
$
3,675.7 $
3,502.5
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. Depreciation and Amortization
(C$ in millions)
Depreciation of property and equipment and investment property1
Depreciation of right-of-use assets
Amortization of intangible assets
1 Refer to Note 29 for depreciation included in Cost of producing revenue.
32. 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
2023
288.1 $
356.1
127.0
771.2 $
2023
(35.2) $
(4.6)
259.8
101.5
321.5 $
2022
267.6
328.9
122.5
719.0
2022
(16.0)
(4.9)
164.3
87.6
231.0
$
$
$
$
33. 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:
Payment of lease liabilities (principal portion)
Change in deposits
Long-term debt issuance
Long-term debt repayment
Mortgage repayment
Payment of transaction costs related to long-term debt
Total changes from financing cash flows
Non-cash and other changes:
New leases, interest accretion, currency translation
adjustment and other
Amortization of broker commission
Amortization of debt issuance costs
Balance, end of year
Lease liabilities
Deposits
$
2,407.6 $
2,965.7 $
2023
Long-term debt
4,257.7
(425.2)
—
—
—
—
—
—
393.5
—
—
—
—
(425.2)
393.5
382.1
—
—
—
5.1
—
—
—
1,750.0
(984.0)
(56.1)
(6.0)
703.9
(0.6)
—
3.5
$
2,364.5 $
3,364.3 $
4,964.5
132 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C$ in millions)
Balance, beginning of year
Cash changes:
Payment of lease liabilities (principal portion)
Change in deposits
Long-term debt issuance
Long-term debt repayment
Mortgage repayment
Payment of transaction costs related to long-term debt
Total changes from financing cash flows
Non-cash and other changes:
New leases, interest accretion, currency translation
adjustment and other
Amortization of broker commission
Amortization of debt issuance costs
Balance, end of year
Lease liabilities
$
2,275.8 $
Deposits
3,893.7 $
2022
Long-term debt
4,278.5
(357.2)
—
—
—
—
—
—
(932.5)
—
—
—
—
(357.2)
(932.5)
489.0
—
—
—
4.5
—
—
—
700.0
(710.0)
(10.1)
(3.7)
(23.8)
(0.3)
—
3.3
$
2,407.6 $
2,965.7 $
4,257.7
33.1 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 December 30, 2023, reserves held by Financial Services totalled
$404.5 million (December 31, 2022 – $323.0 million) and includes restricted cash disclosed in Note 7 as well as
short-term investments.
34. Financial Instruments
34.1 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 approximates 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 approximates their fair value either
because the interest rates applied to measure their carrying amount approximates 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).
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 CTFS Holdings Limited 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 the interest owned by
Scotiabank at any time during the six-month period following the tenth anniversary of the transaction. This
obligation gave rise to a liability for the Company (“redeemable financial instrument”) and was recorded on the
Company’s Consolidated Balance Sheets in Other long-term liabilities through Q3 2023.
The redeemable financial instrument was initially recorded at $500.0 million. During the third quarter of 2023, the
Company remeasured the redeemable financial instrument, resulting in a $328.0 million charge in the
Consolidated Statements of Income. On October 31, 2023, the Company repurchased Scotiabank’s 20 percent
interest in CTFS Holdings Limited for $895.0 million. The transaction extinguished the Company’s redeemable
financial instrument through retained earnings.
34.2 Fair Value of Financial Assets and Financial Liabilities Classified Using the Fair Value
Hierarchy
The Company uses a fair value hierarchy to categorize the inputs used to measure the fair value of financial
assets and financial liabilities, the levels of which are:
Level 1 – Inputs are unadjusted quoted prices of identical instruments in active markets;
Level 2 – Inputs are other than quoted prices included in Level 1 but are observable for the asset or liability, either
directly or indirectly; and
Level 3 – Inputs are not based on observable market data.
The following table presents the financial instruments measured at fair value classified by the fair value hierarchy:
(C$ in millions)
Trade and other receivables
Trade and other receivables
Long-term receivables and other assets
Trade and other payables
Trade and other payables
Redeemable financial instrument
Other long-term liabilities
Other long-term liabilities
Category
FVTPL1
Effective hedging instruments
Effective hedging instruments
FVTPL1
Effective hedging instruments
FVTPL
FVTPL1
Effective hedging instruments
1
Relates to derivatives not designated as hedging instruments.
$
Level
2
2
2
2
2
—
2
2
2023
2022
Level
2
2
2
2
2
3
2
2
14.0
62.7
44.8
34.9
28.6
—
0.8
15.5
$
35.5
154.4
107.9
73.4
1.1
567.0
3.9
0.5
There were no transfers in either direction between levels for the financial instruments remaining at the end of the
reporting period in 2023 or 2022.
Changes in Fair Value Measurement for Instruments Categorized in Level 3
As of December 30, 2023 the redeemable financial instrument had been extinguished; the fair value at
December 31, 2022 was $567.0 million.
134 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
34.3 Fair Value Measurement of Investments, Debt and Deposits
The fair value measurement of investments, debt and deposits is categorized within Level 2 of the fair value
hierarchy (refer to Note 34.2). The fair values of the Company’s investments, debt and deposits compared to the
carrying amounts are as follows:
As at
(C$ in millions)
Short-term investments
Long-term investments
Long-term debt1
Deposits
1
Includes current portion of Long-term debt.
December 30, 2023
December 31, 2022
Carrying
amount
Fair value
Carrying
amount
$
177.2 $
177.8 $
176.3 $
108.2
4,964.5
3,364.3
110.0
4,950.1
3,355.5
62.6
4,257.7
2,965.7
Fair value
176.8
63.1
4,085.3
2,910.7
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.
34.4 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:
2023
2022
Financial instruments designated and/or classified as FVTPL1
$
(320.0) $
113.4
Interest income (expense):
Total interest income calculated using effective interest method for financial
instruments that are not at FVTPL
Total interest 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
1,312.8
1,174.7
(357.0)
(241.7)
(18.9)
(20.3)
1
Excludes gains (losses) on cash flow hedges, which are effective hedging relationships and are reflected on the Consolidated Statements of Comprehensive
Income.
34.5 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
2023
Amounts reclassified to profit or loss
Current period
hedging gains
(losses)
recognized in OCI
Due to hedged
item affecting
profit or (loss)
(11.0)
0.5
(2.0)
3.1
Line item in profit or
loss affected by the
reclassification
Other expense
(income)
Net finance costs
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C$ in millions)
Foreign currency risk
Interest rate risk
2022
Amounts reclassified to profit or loss
(losses) recognized
in OCI1
227.1 $
Current period
Line item in profit or
hedging gains Due to hedged item
loss affected by the
affecting profit or
loss
reclassification
(1.6) Other expense (income)
Net finance costs
9.5
107.6 $
$
$
1
Certain prior year figures have been restated to conform to the current year presentation.
The Company has entered into the following derivatives to manage its foreign currency risk and interest rate risk.
(C$ in millions)
Foreign exchange derivatives
(domestic)1
FX forwards - USD domestic
inventory hedges
FX forwards - USCP debt
FX forwards - NOK intercompany
loan
Opening
OCI Gain/
Changes in
Effective
Earnings
Released Ending OCI
(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss)
Fair Value
$
(10.0) $
123.3 $
(25.7) $
108.1 $
(10.5)
(1.2)
n/a
n/a
n/a
n/a
(4.2)
(15.4) $
n/a
123.3 $
n/a
(25.7) $
n/a
108.1 $
n/a
(10.5)
$
1
Excluded from the foreign exchange derivatives are revenue and inventory hedges of FX risk between NOK and multiple currencies.
(C$ in millions)
Interest rate derivatives
Fair Value
Opening
OCI Gain/
Changes in
Effective
Earnings
Released Ending OCI
(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss)
Forward starting swaps
Interest rate swaptions (pay fixed /
receive float)
$
$
0.7 $
(17.9) $
(0.8) $
(7.1) $
(11.7)
73.4
74.1 $
71.4
53.5 $
1.3
0.5 $
3.8
(3.3) $
68.9
57.2
(C$ in millions)
Foreign exchange derivatives
(domestic)1
FX forwards - USD domestic
inventory hedges
FX forwards - USCP debt
FX forwards - NOK intercompany
loan
Opening
OCI Gain/
(Loss)
Changes in
Effective
Earnings
Gain/(Loss)
Fair Value
Released
Gain/(Loss)
Ending OCI
Gain/(Loss)
$
154.6 $
24.4 $
210.9 $
112.0 $
123.3
—
n/a
n/a
n/a
n/a
(13.0)
141.6 $
$
n/a
24.4 $
n/a
210.9 $
n/a
112.0 $
n/a
123.3
1 Excluded from the foreign exchange derivatives are revenue and inventory hedges of FX risk between NOK and multiple currencies.
(C$ in millions)
Interest rate derivatives
Fair Value
Opening
OCI Gain/
Changes in
Effective
Earnings
Released Ending OCI
(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss)
Forward starting swaps
Interest rate swaptions (pay fixed /
receive float)
$
$
1.6 $
(29.1) $
3.4 $
(7.8) $
(17.9)
125.8
127.4 $
(35.3)
(64.4) $
104.2
107.6 $
(2.6)
(10.4) $
71.4
53.5
136 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
2023
Location
Cash Flow
Hedge (OCI)
FVTPL
FVTPL
2023
Location
Cash Flow
Hedge (OCI)
Cash Flow
Hedge (OCI)
2022
Location
Cash Flow
Hedge (OCI)
FVTPL
FVTPL
2022
Location
Cash Flow
Hedge (OCI)
Cash Flow
Hedge (OCI)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table shows a reconciliation of cash flow hedges, in total Accumulated other comprehensive income
(loss):
(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
35. Guarantees and Commitments
$
2023
132.9 $
2022
(19.9)
(10.7)
(0.3)
(53.0)
53.5
(2.0)
3.1
(121.4)
34.6
(10.2)
$
26.5 $
224.1
3.0
102.8
5.7
(1.6)
9.5
(111.9)
(61.4)
(17.4)
132.9
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 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 December 30, 2023 under the LCs was $119.4 million (December 31, 2022 – $62.0 million).
The Company has obtained documentary and standby LCs aggregating $24.9 million (December 31, 2022 –
$27.5 million) relating to the importation of merchandise inventories and to facilitate various real estate activities.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 137
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 October 2033. The
maximum amount that the Company may be required to pay under these agreements is $5.4 million
In addition, the Company could be required to make payments for
(December 31, 2022 – $3.5 million).
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 loans 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 2026 and any
extension is at the Company’s discretion. The Company’s maximum exposure as at December 30, 2023 under
these financial guarantees was $7.2 million (December 31, 2022 – $5.5 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
December 30, 2023 under these buy-back agreements was $19.1 million (December 31, 2022 – $24.6 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 relating 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) and the arrangements with Franchise Trust noted. 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
138 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
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 and Other Commitments
As at December 30, 2023, the Company had capital commitments for the acquisition of property and equipment,
investment property and intangible assets for an aggregate cost of approximately $173.8 million (December 31,
2022 – $165.5 million).
As at December 30, 2023 the Company had other commitments of $3.9 million (December 31, 2022 – $145.8
million).
36. Related Parties
Martha Billes and Owen Billes, in aggregate, beneficially own, or control or direct approximately 61.4 percent of
the Common Shares of the Company through two privately held companies, Tire ‘N’ Me Pty. Ltd. and Albikin
Management Inc.
Transactions with Dealer members of the Company’s Board of Directors represented less than one percent of the
Company’s total revenue and were in accordance with established Company policy applicable to all Dealers.
Other transactions with related parties, as defined by IFRS, were not significant during the year.
The following outlines the compensation of the Company’s Board of Directors and key Management personnel
(the Company’s Chief Executive Officer, Chief Financial Officer and certain other Senior Officers):
(C$ in millions)
Salaries and short-term employee benefits
Share-based payments and other
$
$
2023
16.4 $
9.0
25.4 $
2022
16.0
(2.4)
13.6
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 139
2023 Quarterly Information
(C$ in millions, except where noted)
(Store numbers are cumulative at end of
period)
Retail segment
Revenue
Income before income taxes
Financial Services segment
Revenue
Income before income taxes
CT REIT segment
Revenue
Income before income taxes
$
Total
Revenue
Cost of producing revenue
Other expense (income)
Selling, general and administrative
expenses
Depreciation and amortization
Net finance costs
Change in fair value of redeemable
financial instrument
Income taxes
Net income
Net income attributable to shareholders of
Canadian Tire Corporation
Net income attributable to non-controlling
interests
Basic EPS1
Diluted EPS1
Canadian Tire
Retail sales growth2, 9
Comparable sales growth3, 9
Number of Canadian Tire stores
Number of Other Canadian Tire stores4
SportChek
Retail sales growth5
Comparable sales growth3
Number of SportChek stores
Canadian Tire Petroleum
Number of gas bars
Mark’s
Retail sales growth6
Comparable sales growth3
Number of Mark’s stores
Financial Services segment
Average number of accounts with a
balance (thousands)7
Average account balance($)7, 9
Gross average accounts receivable
(millions)8
First Quarter Second Quarter
Third Quarter
Fourth Quarter
(January 1, 2023
to April 1, 2023)
(April 2, 2023 to
July 1, 2023)
(July 2, 2023 to
September 30,
(October 1, 2023 to
2023) December 30, 2023)
Total
$
3,337.9
(79.3)
$
3,896.1
85.6
$
3,867.3
239.0
$
4,070.0
161.7
$
15,171.3
407.0
364.5
55.4
137.8
109.4
393.1
125.7
137.5
11.3
379.9
85.2
140.0
38.3
$
$
4,255.8
2,807.4
79.0
$
4,250.5
2,814.0
(126.8)
$
4,443.0
2,906.2
3.2
369.8
118.7
137.5
70.5
3,707.2
2,425.3
79.0
871.2
192.1
73.0
—
23.8
42.8
7.8
35.0
0.14
0.13
(4.9) %
(4.8) %
504
161
3.9 %
3.7 %
372
929.3
188.8
77.4
—
47.0
126.9
99.4
27.5
1.77
1.76
(0.1) %
0.1 %
503
161
(0.2) %
0.1 %
370
891.7
194.0
80.3
328.0
97.1
(27.8)
(66.4)
38.6
(1.19)
(1.19)
(0.9) %
(0.6) %
502
161
(7.6) %
(7.4) %
370
282
282
282
5.0 %
4.8 %
379
0.1 %
0.4 %
379
2,278
3,059
6,971
2,319
3,057
7,089
(0.1) %
0.2 %
379
2,338
3,084
7,212
1,507.3
385.0
552.8
229.5
16,656.5
10,952.9
34.4
3,675.7
771.2
321.5
328.0
233.7
339.1
213.3
125.8
3.79
3.78
(3.1) %
(2.9) %
(3.5) %
(3.2) %
(2.2) %
(1.9) %
983.5
196.3
90.8
—
65.8
197.2
172.5
24.7
3.10
3.09
(6.9) %
(6.8) %
502
161
(6.8) %
(6.4) %
371
281
(7.6) %
(7.2) %
380
2,340
3,118
7,294
2,319
3,080
7,141
140 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
2023 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 1, 2023
to April 1, 2023)
(April 2, 2023 to
July 1, 2023)
(July 2, 2023 to
September 30,
(October 1, 2023 to
2023) December 30, 2023)
$
$
176.84 $
142.72
176.37
17,615
336.00 $
249.99
327.00
13
185.89 $
162.51
181.12
13,722
327.00 $
288.00
288.00
5
189.82 $
143.64
146.05
11,232
300.00 $
254.80
285.00
14
148.61 $
131.46
140.72
13,499
288.08 $
250.00
280.00
11
Total
189.82
131.46
140.72
56,068
336.00
249.99
280.00
43
1 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.
2 Retail sales growth includes sales from Canadian Tire, PartSource, PHL, Party City and the labour portion of Canadian Tire’s auto service sales.
3 Comparable sales growth excludes Petroleum. The Canadian Tire banner includes PartSource, PHL and Party City. Refer to section 10.2 in this MD&A for
additional information on Comparable sales growth.
4 Other Canadian Tire banners include PartSource, PHL and Party City.
5 Retail sales include sales from both corporate and franchise stores.
6 Retail sales growth includes Retail sales from Mark’s corporate and franchise stores but excludes revenue relating to alteration and embroidery services.
7 Credit card portfolio only.
8 Total portfolio of loans receivable.
9 For further information about this measure see section 10.2 (Supplementary Financial Measures) of the Company’s MD&A included in this document.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 141
2022 Quarterly Information
(C$ in millions, except where noted)
(Store numbers are cumulative at end of
period)
Retail segment
Revenue
Income before income taxes
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
1
expenses
Depreciation and amortization1
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 growth3, 10
Comparable sales growth4, 10
Number of Canadian Tire stores
Number of Other Canadian Tire stores5
SportChek
Retail sales growth6
Comparable sales growth4
Number of SportChek stores
Canadian Tire Petroleum
Number of gas bars
Mark’s
Retail sales growth7
Comparable sales growth4
Number of Mark’s stores
Financial Services segment
Average number of accounts with a
balance (thousands)8
Average account balance ($)8, 10
Gross average accounts receivable
(millions)9
First Quarter Second Quarter
Third Quarter
Fourth Quarter
(January 2, 2022
to April 2, 2022)
(April 3, 2022 to
July 2, 2022)
(July 3, 2022 to
October 1, 2022)
(October 2, 2022 to
December 31, 2022)
Total
$
3,504.5
148.8
$
4,067.2
123.8
$
3,873.7
133.0
$
4,990.9
642.4
$
16,436.3
1,048.0
331.7
125.3
131.9
93.1
340.4
90.0
132.6
79.8
360.4
139.6
133.1
77.0
357.2
86.8
135.2
74.7
1,389.7
441.6
532.8
324.6
$
3,837.4
$
4,404.0
$
4,228.8
$
5,340.4
$
17,810.6
2,526.0
(1.3)
3,021.2
48.9
2,843.5
13.8
3,322.0
11,712.7
0.2
61.6
794.9
168.3
54.6
77.3
217.6
182.1
35.5
3.05
3.03
4.5 %
4.5 %
504
161
4.5 %
10.2 %
375
862.1
178.8
54.9
60.5
177.6
145.2
32.4
2.45
2.43
3.8 %
3.9 %
504
161
0.6 %
4.1 %
376
833.5
183.8
55.6
73.6
225.0
184.9
40.1
3.15
3.14
0.6 %
0.7 %
504
161
(1.5) %
(1.0) %
375
292
292
290
17.4 %
17.1 %
380
21.1 %
20.9 %
380
2,182
2,892
6,313
2,236
2,931
6,553
3.9 %
3.6 %
380
2,279
2,975
6,781
1,012.0
188.1
65.9
189.6
562.6
3,502.5
719.0
231.0
401.0
1,182.8
531.9
1,044.1
30.7
9.13
9.09
(0.1) %
0.0 %
504
161
(1.6) %
(1.7) %
375
284
4.4 %
4.3 %
380
138.7
17.70
17.60
2.0 %
2.0 %
0.0 %
1.8 %
9.8 %
9.6 %
2,313
3,012
6,970
2,253
2,953
6,654
142 CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS
2022 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 2, 2022
to April 2, 2022)
(April 3, 2022 to
(July 3, 2022 to
July 2, 2022) October 1, 2022)
(October 2, 2022 to
December 31, 2022)
$
$
196.75 $
170.88
185.80
12,376
361.50 $
312.15
361.50
15
195.00 $
159.36
162.40
14,055
425.00 $
300.15
320.00
8
173.46 $
145.22
147.05
15,674
320.00 $
259.80
266.92
12
157.40 $
139.24
141.50
16,111
298.89 $
243.18
249.99
15
Total
196.75
139.24
141.50
58,216
425.00
243.18
249.99
50
1 Certain prior-year figures have been restated to conform to the current-year presentation.
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 includes the sales from stores which were temporarily closed during 2021. Refer to section 10.2 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 10.2 (Supplementary Financial Measures) of the Company’s MD&A included in this document.
CANADIAN TIRE CORPORATION 2023 REPORT TO SHAREHOLDERS 143
CO NTACT
HE AD 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: corp.canadiantire.ca
INVESTOR RE LAT IO N S CON TAC T
Karen Keyes
Head of Investor Relations
karen.keyes@cantire.com
Investor Relations:
investorrelations@cantire.com
MED IA CON TACT
Stephanie Nadalin
Vice-President, Communications
stephanie.nadalin@cantire.com
Media Inquiries:
mediainquiries@cantire.com
REGIST RAR 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
PAG E 07
2023 REPORT TO SHAREHOLDERS