Canadian Tire Corporation, Limited. April 2008

Transcription

1 Canadian Tire Corporation, Limited April 2008

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

3 Unique Business Model, Delivering Long-term Shareholder Value Canadian Tire offers a range of goods and services that meet life s everyday needs, including general merchandise, clothing, petroleum and financial services Synergies between our five businesses enhance our customer value proposition while increasing overall operating effectiveness Delivering value for our shareholders through sustainable double-digit earnings growth 3

4 Five Distinct, Yet Interrelated, Businesses CTR 473 stores Financial Services >4.6 million MasterCard accounts Mark s 358 stores Petroleum 266 gas bars PartSource 71 stores Canadian Tire Retail is Canada s most shopped general merchandise retailer and a leader in each of its three core product categories Automotive, Leisure, and Home. Canadian Tire Financial Services offers Canadian Tire-branded credit cards, personal loans, insurance and warranty products, as well as residential mortgages and high-rate savings accounts, and is the 2 nd largest MasterCard franchise in Canada. Mark s Work Wearhouse is a leading clothing and footwear retailer the largest Canadian industrial apparel and footwear retailer and the 2 nd largest casual pants and jeans retailer in Canada. Canadian Tire Petroleum is one of Canada s largest independent gasoline retailers, creating customer loyalty to drive growth for Canadian Tire Retail and Canadian Tire Financial Services. PartSource is a chain of specialty automotive stores catering to serious do-it-yourselfers and professional installers. Canadian Tire s products and services provide the essentials of everyday living for people of all ages 4

5 Business Models CTR - Unique Franchise Model CTR stores are operated by Associate Dealers who are independent business owners CTC owns or leases land and building; Dealer owns store inventory and fixtures CTC benefits from Dealer Mobility - Dealer drives growth & success of store to acquire bigger/better store Petroleum - Agency Model Substantially all Petroleum sites operated by independent Agents CTC owns the site; Agent operates the site and sells gasoline and convenience items for the corporation Mark s - Primarily Corporate Model 308 Corporate stores; 50 Franchise stores Corporate model due to smaller store size/land requirements; Franchises run by most capable Franchisees PartSource - Initially Franchise but moving to primarily Corporate Model 38 Franchise stores; 33 Corporate stores and growing Increased rollout of corporate stores to benefit from improved consistency of execution and +50% EBIT Financial Services Canadian Tire Corporation owns and finances all receivables 5

6 THE POWER OF INTERRELATEDNESS Sum is Greater than the Parts Gross Operating Revenue 1 Earnings Before Taxes 1 Petroleum 19% Financial Services 9% CTR 63% Financial Services 31% CTR 49% Mark's 9% Petroleum 3% Mark's 17% 1) As of year-end

7 Canadian Tire Enjoys Distinct Competitive Advantages Platform of interrelated businesses Brand recognition and trust Canadian Tire Money Marketing/advertising reach and scale Innovative formats, products and services Real estate Competitive advantage is created through trust in the Canadian Tire brand, market leadership, deep-rooted customer relationships and our integrated business model 7

8 Enterprise Marketing and Operational Synergies Brand equity National reach and scale Real estate Supply chain Marketing and advertising Merchandising Canadian Tire Retail Mark s Work Wearhouse Petroleum Financial Services PartSource We are leveraging each of our customer relationships to firmly entrench our brand in the everyday lives of Canadians 8

9 Interrelationships Generate Higher Overall Sales and Profits 30% of Petroleum (CTP) purchases are made on Canadian Tire credit cards CTR shopping frequency increases more than 25% when customers gas up at Petroleum OMC 1 customers who shop at CTR and fill-up at Petroleum are Canadian Tire s best customers Indexed share of wallet at CTR Average CTR customer CTR only CTR/CTP CTR/OMC CTR/OMC/CTP 1) Options MasterCard 2) Universe of all CTR customers (based on customer survey data) 9

10 Strong Track Record: Consolidated Financial Performance Gross Operating Revenue ($ Billions) Canadian Tire s performance has been consistent through many economic cycles due in part to its everyday needs offering '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Basic EPS from Continuing Operations ($) Earnings before Income Taxes and Minority Interest ($ Millions) '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 10

11 Strong Track Record $80 Share Price versus EPS 10 yr. TRS 155% $6 $5 CTC.a share price ($) $60 $40 EPS CAGR 11.2% Share Price CAGR 9.1% $4 $3 $2 Earnings per share $20 $1 $0 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 $0 11

12 Strong Track Record Store Network Growth CTR Stores Petroleum Sites PartSouce Stores Mark s Stores '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 12

13 A Bigger Canadian Tire Growth Runway Current Network Size Growth Available Completion of Concept 20/20 rollout new stores Development of next version of CTR store Potential for 60+ new sites Refurbish 100 older sites Room for 100+ new stores Ongoing relocations, concept renewal and store expansions 100+ new stores, including 22 Hub Stores >4.6 million MasterCard accounts New credit cards and other financial services 13

14 Strategic Aspirations 5-year average Store network growth +5% Revenue growth 6-8% Productivity EPS + Double-digit ROIC +10% 14

15 Canadian Tire Retail (CTR): Canada s Most Shopped General Merchandise Retailer 85-year-old retail chain 473 CTR Stores 80% of Canadians have shopped at Canadian Tire in the last year, 50% 60% every month Flyer distributed to 11 million homes every week Annual catalogue since 1928 #1 seller of bikes, camping, hockey and fire safety equipment Iconic brand in Canada 15

16 Historical Performance CTR s Retail Sales ($ Billions) CTR s Earnings Before Income Taxes and Minority Interest 1 ($ Millions) '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 CTR s Store Count '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 1) Excluding non-operating items (gain on disposal of property and equipment, stock option modification and loss on MTN redemption) for 2001 and onwards CTR 16

17 Three Broad Product Categories Retail Sales by Product Category Automotive Leisure 27% 30% 43% Home CTR 17

18 A Bigger and Better Canadian Tire More stores Concept 20/20 rollout; network expansion in small markets Concept renewal New concept testing and refinement Higher volume per store New categories and updated product lines Innovative and exclusive products > demand creation More browsing; cross shopping; higher transaction value Focused on Getting Better Leverage for Future Growth New Dealer agreement Revitalized automotive infrastructure Growing global sourcing Improved customer experience People Process - Technology PARTSOURCE 18

19 Bigger 20/20 Showcases Full Breadth and Depth of CTR s Offering CTR 19

20 Bigger 20/20 Stores Perform Better Average Retail Store Square Footage Average Transaction Value * ($) Average Increase in Customer Count * 1 (Index) +12% +20% Concept 20/20 Store 53, Stores New Format Store (Class-of/Next Gen.) 32, Stores Traditional CTR Store 16, Stores Year 0 (pre 20/20) Year 1 (post 20/20) Year 0 (pre 20/20) Year 1 (post 20/20) * As of end of Q ) Includes new stores (total of 126 stores); excluding new stores, increase is 11% CTR 20

21 Significant Opportunity for Future Growth Store Network Growth Traditional Stores New Format Stores Concept 20/ Next Format to follow C20/20 Small Market Store '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F CTR 21

22 Bigger New Mark s-inside-a-ctr store Our largest 95,000 retail sq. ft. store in Dartmouth, Nova Scotia, features a full-sized, 13,000 sq.ft. Mark s inside the CTR store CTR 22

23 Bigger Next Format to Follow C20/20 Two pilot stores opening in 2008: Not a radical, bigger redesign Focus is on enhancing productivity of current assortment, merchandising and use of space Working goals: More efficient store operations with faster, inexpensive remerchandizing Increased emphasis on better-performing product lines A more engaging shopping experience, adding more of what customers expect, such as self-service checkouts and easier navigation, and removing what they don t need Higher investment returns through increased sales 23

24 Bigger Small Market Store Identified over 100 markets (trade areas) which: Are under serviced by existing stores Have sufficient population base Represent acceptable sales transfer risk Includes new markets/traditional store opportunities Can make smaller market economics work with three retail concepts (CTR, Mark s, Petroleum whenever appropriate) supported by credit card returns Four pilot stores opening in 2008: Low-cost design (pre-engineered building) Sales potential of $5 to $9 million 14,000 to 18,000 retail square feet Assortment tailored to the market CTR 24

25 Bigger Innovative Products Create new customer demand Introduce new products Create excitement using innovative marketing Utilize global sourcing capabilities Store displays and in-store TV demos designed to support growth CTR 25

26 Better Amended Dealer Contract Sharing in Dealer profits (over 2008 base level) Shifted the balance of cost of marketing expenses Sharing of energy and lighting costs and savings Agreement to invest in Automotive Infrastructure $15 million - $20 million in pre-tax earnings + 7 Years of Relationship Certainty $80 million - $100 million in pre-tax earnings We expect to improve pre-tax earnings by $400 million through the new Dealer agreement CTR 26

27 Better - Revitalized Automotive Infrastructure Total investment of approximately $120 million $75 million in fixed assets $45 million in working capital Will generate an estimated $120-$130 million in incremental auto parts sales by 2010, increasing to over $200 million by 2014 Pre-tax earnings are estimated to be $15 to $20 million by 2010, growing to $45 to $50 million by 2014 Growth in our automotive business will also benefit Dealers High rate of return project CTR 27

28 Better Revitalized Automotive Infrastructure Assortment Management Broader Increasing CTR in-store assortments 10-15% on average (7,500-8,550 SKUs) More than doubling our assortment in regional distribution centres Supply Chain Faster Building at least 22 PartSource Hub stores across Canada in support of 75-80% of Canadian Tire stores Building the PartSource chain to 200+ stores Technology Better New Automotive Management System to improve Canadian Tire s auto service capabilities New industry standard data catalogue New warehouse management technology to enhance distribution capabilities CTR 28

29 Future Operating Model Prime Distribution Centres 3 Primes Overnight Deliveries Hubs 35,000 SKUs PartSource Routed and Shotgun Deliveries CTR Stores Third Party Customers CTR 29

30 Better Global Sourcing CTR is a North American leader Provides margin protection 2007 Percentage of Products Sourced Offshore Provides stronger retail sales results Breakthrough price points 2009F Access to innovative products Promotional program Domestic 61% Offshore 39% 50% CTR 30

31 Better Customer Service and Improved Productivity Customer Service: Better Understanding Customer service tracking; all stores, monthly Customer segmentation analysis a key driver of category strategies Better Experience New product lines Better stores (brighter, wider isles) More convenient (better locations) Productivity: Improved marketing and merchandising processes Energy savings Technology renewal Streamlined organizational design and internal processes CTR 31

32 PartSource: Chain of Specialty Automotive Stores Unique business model in Canada Canadian Tire Retail (CTR) Opportunity to leverage Canadian Tire infrastructure: real-estate, buying, technology and supply chain Emergency parts supplier for CTR stores Strong customer response 85% of customers very satisfied with level of service 91% of customers very likely to recommend the store 32

33 Appeals to Automotive Do-It-Yourselfers and Professional Installers PARTSOURCE 33

34 Our Business Today The Parts National Brands Industry leading guarantees More than 15,000 SKUs in store The Pros Employees are trained automotive professionals The Price Competitively priced, 10% price guarantee PARTSOURCE 34

35 A Bigger and Better PartSource Continued high single-digit same store sales, particularly in commercial sector Further acquisitions of competitors Further rollout of corporate stores Grow network by 100+ stores Significant investments planned in technology and supply chain to: Enhance parts assortment Improve supply chain delivery to CTR and PartSource stores Provide better customer service PARTSOURCE 35

36 Bigger Potential to Grow to 200+ Stores Currently represents only 2.4% of Canadian outlets Operate with limited coverage from Ontario to Alberta Opportunity to grow via Adding new builds Acquisition of independents as consolidation occurs Hub Stores Canadian Auto Part Store Mix Auto Parts Outlets 2,750 Locations PartSource PARTSOURCE 36

37 Bigger Network Expansion Plans PartSource Stores Corporate Franchise '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F PARTSOURCE 37

38 Petroleum: Largest Independent Gasoline Retailer in Canada Pumps double industry average litres per site 266 gas bars, 258 convenience stores, and 74 car washes Petroleum s interrelated benefits Canadian Tire Money (CTM)/ Money on the Card $40 million in CTM issued, redeemable at CTR Cross-merchandising Gas Advantage MasterCard 38

39 Historical Performance Petroleum s Gasoline Sales Volume (Billions of Litres) Petroleum s Number of Gas Bars '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Petroleum s Earnings Before Income Taxes 1 ($ Millions) '98 '99 '00 '01 '02 '03 '04 '05 '06 '07-5 1) Excluding non-operating items (gain on disposal of property and equipment) for 2001 and onwards PETROLEUM 39

40 A Bigger and Better Petroleum Selected investment in new sites at store locations Significant commitment to renovate up to 100 sites to improve customer experience and increase revenues Key focus is to drive traffic to CTR and Financial Services Emphasis on driving higher margin convenience store sales Emphasis on reducing expenses to lower breakeven point in the event of any future margin volatility PETROLEUM 40

41 Bigger Grow Network and Drive Growth to SBUs Mandate is to: Build loyalty to Canadian Tire branded businesses Drive traffic to CTR stores Grow Financial Services card usage and receivables Add 10+ new sites per year in high-potential, strategic markets Modernize older existing sites (20-25 per year) PETROLEUM 41

42 Bigger Network Expansion Plans Petroleum Sites '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F PETROLEUM 42

43 Better Rebuild, Renew, Grow Before Modernization Strathroy, Ont Portage, Man Kirkland, Que After Modernization Strathroy, Ont Portage, Man Kirkland, Que PETROLEUM 43

44 Canadian Tire Financial Services: 2nd Largest MasterCard Franchise in Canada In business for 40+ years 2nd largest MasterCard franchise in Canada Own a chartered bank Low cost acquisition through CTR stores One in five households has a Canadian Tire MasterCard CTR marketing channels (instore, flyer, online) Sophisticated credit risk management systems Award-winning Call Centre 44

45 Historical Performance Gross Average Receivables Growth ($ Millions) Operating EBT Growth ($ Millions) 10 Yr. GAR Growth 16.0% CAGR 10 Yr. CAGR 15.8% '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 FINANCIAL SERVICES 45

46 Financial Services Business Today Canadian Tire Options MasterCard Gas Advantage Card Credit insurance Extended warranties Life / accident / disability insurance Canadian Tire Roadside Assistance Personal loans and lines of credit One-and-Only account FINANCIAL SERVICES 46

47 The Financial Services Business Model (Percentage Of Average Receivables) YIELD 25.00% OPEX 7.50% DEBT 4.05% LOYALTY AND OTHER 2.00% WRITE-OFF RATE (including provision of.30%) ROR % ~ 5.50% FINANCIAL SERVICES 47

48 Bigger Credit Card Average Balances Have Room to Grow $/Card 1,899 2,750 Growth Opportunity Including Premium Cards Balance Transfer Offers and New Product Introductions Including Premium Cards CTFS Industry Rolling 12 months as of December ) Source: Canadian Bankers Association (CBA), September Includes gold, platinum, low rate and standard cards FINANCIAL SERVICES 48

49 Bigger Increasing Share of a Large, Growing Market Bank and Market Size 1 ($ Billion) % CAGR 5.1% Market Share '03 '04 '05 '06 '07 Ending Receivables $ Volume 1) Source: Canadian Bankers Association (CBA) FINANCIAL SERVICES 49

50 Bigger - Retail Banking Potential Channel for Growth Pilot retail banking in three markets for up to two years: High interest savings accounts 3.8% interest no minimum deposit, no monthly fees GICs varying interest rates and terms, competitive offering Residential mortgages variety of traditional terms and competitive rates prime and super-prime customers One-and-Only account combines mortgage, chequing/savings account, loans or credit card balances into one account Leveraging brand and strong customer relationships to grow into retail banking FINANCIAL SERVICES 50

51 CTC Competitive Advantages vs. Mainstream Banks Store network: Low-cost acquisition channel Physical branch network World class call centres: named Best Call Centre in North America 5 of last 8 years Slightly higher up risk curve Trust in the Canadian Tire brand Operating leverage through scale Loyalty program Canadians have a high propensity to deal with a non-traditional bank FINANCIAL SERVICES 51

52 Better Decreasing Operating Expense Percentage Operating Expenses as a Percentage of Gross Average Receivables 1 (%) '01 '02 '03 '04 '05 '06 '07 1) Excludes gains (losses) on sales of loans receivable on the total managed portfolio and the impact of a stock option modification in Q Calculated on a rolling 12-month basis and includes total managed portfolio of loans receivable FINANCIAL SERVICES 52

53 Attractive Return on Receivables of 4.5% to 5.0% Net Write-Off Rates (%) Target: 5.0% - 6.0% Return on Receivables 1 (%) Target: 4.5% - 5.0% '03 '04 '05 '06 '07 '03 '04 '05 '06 '07 1) Earnings before income taxes, gains (losses) on sales of loans receivable, the impact of a stock option modification (2006) and redemption of an investment (2006), as a percentage of gross average loans receivable FINANCIAL SERVICES 53

54 Risk Management Expertise managing higher risk credit from 40 years of experience as a exproprietary card issuer Innovative approaches to better understand customer risk profiles i.e. SKUbased scorecards Higher credit utilization than most other credit card portfolios, due to tighter credit limits Over the past two years, we have taken approximately 500 bps out of our higher risk category to reduce volatility through: Better upfront scorecards Tight credit line management Enhanced collections procedures Write-off rates are now declining vs. previous year s performance FINANCIAL SERVICES 54

55 Financial Services Funding Financial Services financed through a combination of: Corporate financing % Securitized debt % Securitized debt through Glacier Credit Card Trust A single purpose trust only containing Financial Services credit card receivables Structure was established in 1995 very stable history Securitization in an important funding program, in the past and future, but we do have alternatives Glacier Credit Card Trust Update In February 2008, Glacier completed an offering of $634.9 million 5-year notes at the weighted average interest rate of 5.08 per cent, resulting in net proceeds of approximately $631 million. Commercial paper currently represents less than 7% of total Glacier funding Glacier commercial paper continues to roll over at bank conduit spreads Considering obtaining a second credit rating for Glacier commercial paper FINANCIAL SERVICES 55

56 Financial Services Funding Glacier Credit Card Trust Attributes: Transparency of assets and performance (Canadian Tire branded credit card receivables) Global style liquidity for commercial paper program (not restricted to market disruption ) Confirmed by DBRS in January 2008 Long successful track record in underwriting management and collection of credit card receivables since 1961 Have done 13 term deals (7 matured and paid out) Commercial paper issuance used to bridge to term deals Term deals, typically for 5 years and executed once per year Filed $3 billion Short Form Shelf Prospectus for Asset-Backed Notes to increase flexibility in accessing the market High percentage of funding cost is fixed, so exposure to increasing interest rates is low in the short to mid term FINANCIAL SERVICES 56

57 Financial Services Funding Glacier Credit Card Trust Attributes: Canadian Tire Bank is a Schedule I Canadian Chartered Bank governed by the Bank Act (Canada) and is engaged primarily in the financing and managing credit card accounts CTFS is a wholly owned subsidiary of CTC and Canadian Tire Bank is an indirect wholly owned subsidiary of Canadian Tire Corporation Excess Spread and Enhancement Account will provide credit support for all classes of notes Excess Spread averages over 9% for outstanding series Traditional Enhancement Amount of about 5.5% (represents enhancement provided by CT Bank so that losses are first allocated to the retained interest rather than the coownership interest) Subordinated Notes issued to serve as credit support for Senior Notes Subordinated Notes were 5.5% of total notes issued in 2008 FINANCIAL SERVICES 57

58 Mark s Work Wearhouse: Acquired in 2002 and has Grown Significantly Scale: #1 Industrial apparel and footwear* 1 #2 Casual pants and jeans* 1 #3 Men s apparel* 1 #5 Ladies apparel* 2 80% private label merchandise Customer service: 75% very satisfied Leverage Canadian Tire s capabilities: real estate, cross promotions, co-locations *) Retail sales in dollars 1) Trendex ) NPD

59 Historical Performance Mark s Retail Sales ($ Millions) % CAGR Mark s Adjusted Earnings Before Income Taxes 1 ($ Millions) % CAGR '03 '04 '05 '06 '07 '03 '04 '05 '06 '07 1) Excluding non-operating items (gain on disposal of property and equipment and stock option modification) for 2005 and onwards MARK S 59

60 Gain Operating Leverage from Growth Earnings as a Percentage of Gross Operating Revenue (%) Mark s Same Store Sales Growth 1 (%) '03 '04 '05 '06 '07 '03 '04 '05 '06 '07 MARK S 60

61 Mark s Business Today 2007 Sales Blend Industrial 41% Men s 34% Women s 25% Mark s offers business casual, weekend, work wear and accessories for men and women, ages MARK S 61

62 Focus on Quality and Functionality at Reasonable Prices MARK S 62

63 Mark s Strengths Clothes that Work Armour-Flex Industrial Footwear Flextech Collar, Pant and Belt Curvetec Shape Enhancing Designs Focus on Quality and Functionality at Reasonable Prices MARK S 63

64 Bigger Network Expansion Plans More Mark s Work Wearhouse Stores Mark s Other Formats '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F MARK S 64

65 Bigger More Formats Expand existing stores Larger stores Smaller stores Evolved combo and integrated stores Mobile Mark s MARK S 65

66 Better Broader Enhanced Assortment Clothes that Work Women s Wear Imagewear Super Branding Evolving Mark s Brand Clothes That Work Private Labels Enhanced margins via: Offshore sourcing Clothes That Work and private label margin opportunities More precise pricing management Investment in infrastructure to support growth Inventory management Assortment optimization IT Infrastructure investment Supply chain MARK S 66

67 Key Highlights 67

68 Funding Requirements Funding requirements over Credit card / loan receivables growth $1.9 Billion Capital expenditures (PP&E) $2.8 Billion Canadian Tire Retail Bank Still to be determined: Requires minimal commitment initially Corporate debt maturities $0.6 Billion Securitization debt maturities $1.9 Billion Net funding requirements after securitization are minimal Forecasted activity Securitization $3.8 Billion Sales/leaseback of DCs and other real estate To be determined 68

69 Debt Maturities are Manageable Corporate Debt 1 Glacier Credit Card Trust ($ Millions) Long Term Debt Maturities: $634.9 million Glacier MTN due 2013 $300 million Corporate MTN due 2015 $252.5 million Glacier MTN due 2014 $150 million Corporate MTN due 2028 $200 million Corporate MTN due 2034 $200 million Corporate MTN due NIL '08F '09F '10F '11F '12F 1) Corporate debt excludes capital lease obligations and promissory notes 69

70 Real Estate Continued commitment to owning core real estate holdings to support CTR store growth Book value in excess of $2 billion Sale/Leaseback opportunities over next 2 years Montreal distribution centre Urban properties in Toronto, Vancouver and Ottawa $300 to $320 million of inflows Continue to dispose of redundant property - $10 to $15 million of gains, $30 to $35 million of proceeds Strategic site at Dundas and Kipling 1 million square feet yet to be developed 70

71 Cash Flow Utilization Main focus remains investment in growth agenda Anti-dilutive share buy back program continues Dividend policy in place 2003: 40 per share 2007: 74 per share Growth based on 15-20% of prior year s normalized basic net earnings per share During the later years of the plan, opportunities may exist to enhance the share buy back and/or dividend policy as free cash flow grows 71

72 2008 Plan for EPS of $5.15 $5.40 More than 140 store projects planned across retail banners Continued testing of new store design concepts Continued growth of CTR/PartSource automotive business Re-launch of the Canadian Tire Options MasterCard Continued testing of Financial Services Retail Banking pilot Targeted investments in productivity-enhancing initiatives Balanced plan for growth and enhanced productivity Contact Information: Karen Meagher Manager, Investor Relations Telephone: (416)