Canadian Tire Corporation, Limited November 2007
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 2006 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
Unique Business Model, Delivering Long-term Shareholder Value Canadian Tire offers a range of goods and services that meet life s everyday needs, including general merchandise, clothing, petroleum and financial services Synergies between our five businesses enhance our customer value proposition while increasing overall operating effectiveness Delivering value for our shareholders through sustainable double-digit earnings growth 3
Five Distinct, Yet Interrelated, Businesses CTR 468 stores Financial Services >4 million MasterCard accounts Mark s 348 stores Petroleum 265 gas bars PartSource 68 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 casual pant and jean retailer and the 2 nd largest outerwear 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
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 297 Corporate stores; 51 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 43 Franchise stores; 25 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
THE POWER OF INTERRELATEDNESS Sum is Greater than the Parts Gross Operating Revenue 1 Earnings Before Taxes 1, 2 Petroleum 18% Financial Services 9% CTR 64% Financial Services 30% CTR 54% Mark's 9% Mark's 16% 1) As of year-end 2006 2) Petroleum incurred a loss in fiscal 2006 6
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
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
Loyalty, Cross-marketing Synergies Increase Customer Value Proposition Multiplier coupons Spend and Save coupons Flyer-within-a-flyer Merchandise discount coupons Money on the Card 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 OMC2 customers who shop at CTR and fill-up at Petroleum are Canadian Tire s best customers Indexed share of spending at CTR Indexed share of wallet at CTR 1 115 118 130 83 Average CTR customer CTR only CTR/CTP CTR/OMC CTR/OMC/CTP 1) Universe of all CTR customers (based on customer survey data) 2) Options MasterCard 10
Strong Track Record: Consolidated Financial Performance Gross Operating Revenue ($ Billions) 4.1 4.3 4.7 5.2 5.4 5.9 6.6 7.2 7.7 8.3 Canadian Tire s performance has been consistent through many economic cycles due to its everyday needs offering '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 Basic EPS from Continuing Operations ($) 1.77 2.09 1.85 1.85 2.21 2.54 2.99 3.60 4.04 4.35 Cash Generated from Operations 1 ($ Millions) 307 316 324 350 362 460 535 630 701 697 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 1) Cash generated from operating activities before changes in other working capital components 11
Strong Track Record Share Price versus EPS $80 10 yr. TRS 231% $5 $60 $4 CTC.a share price ($) $40 $20 EPS CAGR 11.3% Share Price CAGR 12.0% $3 $2 $1 Earnings per share $0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 $0 12
Strong Track Record Store Network Growth CTR Stores Petroleum Sites PartSouce Stores Mark s Stores 1002 1045 1090 1112 1130 333 334 339 322 306 623 630 642 675 683 47 57 63 39 28 30 33 193 195 202 206 203 212 232 253 259 260 430 430 432 441 450 451 452 457 462 468 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 13
A Bigger Canadian Tire 2008-2012 Growth Runway Current Network Size Growth Available 468 265 Completion of Concept 20/20 rollout 70-80 new stores Development of next version of CTR store Potential for 70+ new sites Refurbish 100 older sites 348 68 Room for 100+ new stores Ongoing relocations, concept renewal and store expansions 100+ new stores, including 22 Hub Stores >4 million MasterCard accounts New credit cards and other financial services 14
Strategic Aspirations 5-year average Store network growth +5% Revenue growth 6-8% Productivity EPS + Double-digit ROIC +10% 15
Canadian Tire Retail (CTR) 16 16
CTR: Canada s Most Shopped General Merchandise Retailer 85-year-old retail chain 468 CTR Stores 80% of Canadians have shopped at Canadian Tire in the last year, 50% 60% every month Flyer distributed to 10 million homes every week, making it the most widely read advertising in Canada Annual catalogue since 1928 #1 seller of bikes, camping, hockey and fire safety equipment Iconic brand in Canada CTR 17
Historical Performance CTR s Retail Sales ($ Billions) 4.1 4.7 5.0 5.2 5.6 5.8 6.3 6.5 6.9 7.2 CTR s Earnings Before Income Taxes and Minority Interest 1 ($ Millions) 160 189 154 169 162 180 197 256 283 279 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 CTR s Store Count 430 430 432 441 450 451 452 457 462 468 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 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 18
Three Broad Product Categories Retail Sales by Product Category Automotive Leisure 30% 28% 42% Home CTR 19
Bigger 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 CTR 20
Bigger 20/20 Showcases Full Breadth and Depth of CTR s Offering CTR 21
Bigger 20/20 Stores are 50% Bigger Average Retail Store Square Footage No. of Stores 2007F Concept 20/20 Store 52,000 192 New Format Store (Class-of/Next Gen.) 34,000 190 Traditional CTR Store 16,000 91 CTR 22
Bigger 20/20 Stores Perform Better Concept 20/20 Stores Year 1 1 Sales Growth Replacement 69% Internal Retrofit 10% Retrofit Expansion 18% 1) As of end of Q3 2007 CTR 23
Bigger 20/20 Stores Perform Better Average Transaction Value 1 * ($) Average Increase in Customer Count* 1 (Index) +13% +22% 34.62 39.05 100 122 Year 0 (pre 20/20) Year 1 (post 20/20) Year 0 (pre 20/20) Year 1 (post 20/20) 1) Includes new stores (total of 93 stores); excluding new stores, increase is 13% * As of end of Q3 2007 CTR 24
Significant Opportunity for Future Growth Store Network Growth Traditional Stores New Format Stores Concept 20/20 423 424 35 426 67 430 430 103 137 188 New Concept Network Expansion Strategy 432 441 450 451 452 457 25 462 53 468 126 473 477 192 232 495 19 35 513 34 97 531 49 159 549 64 221 233 270 290 242 305 302 292 217 415 389 359 327 293 244 208 180 161 237 190 143 130 117 105 91 169 139 114 69 60 51 42 33 192 89 167 64 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07F '08F '09F '10F '11F '12F CTR 25
Bigger Concept Renewal: Unique Combo Store Format CTR 26
Bigger Network Expansion Strategy Identified over 100 markets (trade areas) which: Are under serviced by existing stores Have sufficient population base Represent acceptable sales transfer risk Can make smaller market economics work with three retail concepts (CTR, Mark s, Petroleum whenever possible) supported by credit card returns Four pilot stores opening in 2008: Low-cost design (pre-engineered building) Sales potential of $5 to $9 million 18,000 to 20,000 retail square feet Assortment tailored to the market New markets/traditional store opportunities CTR 27
Bigger Innovative and Exclusive Products Create new customer demand Introduce new products Create excitement using innovative marketing Utilizing global sourcing capabilities to grow ENE products Store displays and in-store TV demos designed to support growth CTR 28
Better Focused on Getting Better Leverage for Future Growth New Dealer agreement Revitalized automotive infrastructure Growing global sourcing Improved customer experience People - Process - Technology CTR 29
Better New Dealer Contract 2008 $15 million - $20 million in pre-tax earnings 2014 $80 million - $100 million in pre-tax earnings + 7 Years of Relationship Certainty We expect to improve pre-tax earnings by $400 million through the new Dealer agreement CTR 30
Better - Principles of Dealer Agreement 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 CTR 31
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 32
Better Revitalized Automotive Infrastructure Assortment Management Supply Chain Technology Broader Faster Better Increasing CTR in-store assortments 10-15% on average (7,500-8,550 SKUs) More than doubling our assortment in regional distribution centres from 35,000 to 75,000 SKUs Building at least 22 PartSource Hub stores across Canada in support of 75-80% of Canadian Tire stores Building out the PartSource chain to over 200 stores 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 33
Future Operating Model Prime Distribution Centres 3 Primes 75,000 SKUs Overnight Deliveries Hubs 35,000 SKUs 15,000 SKUs PartSource Routed and Shotgun Deliveries CTR Stores 8,500 SKUs Third Party Customers CTR 34
Better Global Sourcing CTR is a North American leader Provides margin protection 2006 Percentage of Products Sourced Offshore Provides stronger retail sales results Breakthrough price points 2009F Access to innovative products Promotional program Domestic 63% Offshore 37% 50% (Increased from 35% in 2005) CTR 35
Better 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) CTR 36
Better Improved Productivity Improved marketing and merchandising processes Energy savings Technology renewal Streamlined organizational design and internal processes CTR 37
Canadian PartSourceTire Retail (CTR) 38 38
PartSource Chain of Specialty Automotive Stores Unique business model in Canada 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 PARTSOURCE 39
Appeals to Automotive Do-It-Yourselfers and Professional Installers PARTSOURCE 40
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 41
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 42
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 43
Bigger Network Expansion Plans PartSource Stores Corporate Franchise 175 143 117 63 57 3 17 71 25 83 39 99 57 77 105 139 28 30 33 39 47 54 46 46 44 42 40 38 36 5 8 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07F '08F '09F '10F '11F '12F PARTSOURCE 44
Petroleum 45
Petroleum: Largest Independent Gasoline Retailer in Canada Pumps double industry average litres per site 265 gas bars, 257 convenience stores, and 75 car washes Petroleum s interrelated benefits Canadian Tire Money (CTM) / Money on the Card Cross-merchandising Gas Advantage MasterCard $40 million in CTM issued, redeemable at CTR PETROLEUM 46
Historical Performance Petroleum s Gasoline Sales Volume (Billions of Litres) 1.0 1.1 1.2 1.3 1.3 1.3 1.5 1.5 1.6 1.7 Petroleum s Number of Gas Bars 253 259 260 232 193 195 202 206 203 212 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 Petroleum s Earnings Before Income Taxes 1 ($ Millions) 22 23 4 7 12 10 14 4 7-5 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 1) Excluding non-operating items (gain on disposal of property and equipment) for 2001 and onwards PETROLEUM 47
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 48
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 49
Bigger Network Expansion Plans Petroleum Sites 193 195 202 206 203 212 232 253 259 260 273 284 295 310 330 345 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07F '08F '09F '10F '11F '12F PETROLEUM 50
Better Rebuild, Renew, Grow Before Modernization Strathroy, Ont Portage, Man Kirkland, Que After Modernization Strathroy, Ont Portage, Man Kirkland, Que PETROLEUM 51
Canadian Tire Financial Services 52 52
Financial Services: 2nd Largest MasterCard Franchise in Canada In business for more than 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 (in-store, flyer, online) Sophisticated credit risk management systems Award-winning Call Centre FINANCIAL SERVICES 53
Financial Services has Significant Competitive Advantages Low-cost acquisition channel World class call centres In-store marketing Sophisticated credit risk management systems Operating leverage through scale Extensive customer database Brand trust and loyalty FINANCIAL SERVICES 54
Historical Performance Gross Average Receivables Growth ($ Millions) 10 Yr. GAR Growth +15.6% CAGR 831 880 918 1058 1211 1583 2066 2573 3042 3409 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 FINANCIAL SERVICES 55
Historical Performance Operating EBT Growth ($ Millions) 10 Yr. CAGR +13.9% 179 126 145 43 52 56 57 64 82 99 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 Excluding non-operating items [gain on disposal of property and equipment, gains (and losses) on sales of loans receivables, stock option modification and redemption of MasterCard shares] for 2005 and onwards, and excluding non-operating items [gains (and losses) on sales of loans receivables and gain on sale of subsidary] for 2001 and onwards FINANCIAL SERVICES 56
Our 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 57
Bigger Average Balances Have Room to Grow $/Card 1,736 2,525 Growth Opportunity Including Premium Cards Balance Transfer Offers and New Product Introductions Including Premium Cards CTFS Industry Rolling 12 months as of December 2006 1) Source: Canadian Bankers Association (CBA), November 2006. Includes gold, platinum, low rate and standard cards FINANCIAL SERVICES 58
Bigger Increasing Share of a Large, Growing Market Bank and Market Size 1 ($ Billion) 2002-2006 10% CAGR 5.1% Market Share 50 51 57 62 66 '02 '03 '04 '05 '06 Ending Receivables $ Volume 1) Source: Canadian Bankers Association (CBA) FINANCIAL SERVICES 59
Bigger - Retail Banking is a Potential New Channel for Growth Leveraging strong customer relationships to grow into retail banking Pilot in three markets for up to two years High interest savings accounts 3.8% interest no minimum deposit, no monthly fees bonus Canadian Tire gift card for new accounts GICs varying interest rates and terms, competitive offering Residential mortgages variety of traditional terms and competitive rates prime and super-prime customers first mortgages; owner-occupied no 35-year terms or interest-only One-and-Only account Combines mortgage, chequing/savings account, loans or credit card balances into one account www.mortgageinyourway.com FINANCIAL SERVICES 60
Bigger New Card Tests Higher balances More customers FINANCIAL SERVICES 61
CTC Competitive Advantages vs. Mainstream Banks Trust in the Canadian Tire brand Loyalty program Store network very low account acquisition costs physical branch network Quality of customer service: Named Best Call Centre in North America 5 of last 7 years Innovative marketing approach to dealing with our customers Slightly higher up risk curve Canadians have a high propensity to deal with a non-traditional bank FINANCIAL SERVICES 62
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 63
Financial Services Funding Financial Services financed through a combination of: Corporate financing - 20-30% Securitized debt - 70-80% Securitized debt through Glacier Credit Card Trust A single purpose trust only containing Financial Services 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 FINANCIAL SERVICES 64
Financial Services Funding Glacier Credit Card Trust Attributes: Transparency of assets and performance (Canadian Tire branded credit card receivables) Liquidity (not restricted to market disruption ) Long successful track record in underwriting management and collection of credit card receivables since 1961 Have done 12 term deals (6 matured and paid out) Commercial paper issuance used to bridge to term deals Term deal, typically for 5 years, currently executed once per year High percentage of funding cost is fixed, so exposure to increasing interest rates is low in the short to mid term FINANCIAL SERVICES 65
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 average over 9% Traditional Enhancement Amount of 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 2006 FINANCIAL SERVICES 66
Financial Services Funding Glacier Credit Card Trust Update November 2007: Commercial paper currently represents less than 7% of total Glacier funding Glacier Commercial paper continues to roll over at bank conduit spreads CTC will conform liquidity credit line to DBRS and S&P Global Style standard by end of 2007, with no major changes expected based upon DBRS press release FINANCIAL SERVICES 67
Better Decreasing Operating Expense Percentage Operating Expenses as a Percentage of Gross Average Receivables 1 (%) 15.05 11.45 10.28 9.29 8.37 7.83 '01 '02 '03 '04 '05 '06 1) Excludes gains (losses) on sales of loans receivable on the total managed portfolio and the impact of a stock option modification in Q4-2006. Calculated on a rolling 12-month basis and includes total managed portfolio of loans receivable FINANCIAL SERVICES 68
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% 5.90 5.82 5.99 6.01 5.17 5.23 5.03 4.81 4.89 4.77 '02 '03 '04 '05 '06 '02 '03 '04 '05 '06 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 69
Mark s Work Wearhouse 70 70
Mark s was Acquired in 2002 and has Grown Significantly Scale: #1 Industrial apparel and footwear* 1 #2 Men s casual apparel* 1 #1 Casual pants and jeans* 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 Mark s offers business casual, weekend, work wear and accessories for men and women, ages 25-60 * ) Retail sales in dollars 1) Trendex 2006 2) NPD 2006 MARK S 71
Historical Performance Mark s Retail Sales ($ Millions) 2002 2006 17% CAGR Mark s Earnings Before Income Taxes and Minority Interest 1 ($ Millions) 2002 2006 43% CAGR 480.4 558.3 657.4 790.7 903.0 21.7 25.0 37.1 66.3 94.0 '02 '03 '04 '05 '06 '02 '03 '04 '05 '06 1) Excluding non-operating items (gain on disposal of property and equipment and stock option modification) for 2005 and onwards MARK S 72
Gain Operating Leverage from Growth Earnings as a Percentage of Sales (%) Mark s Same Store Sales Growth 1 (%) 4.3 5.5 6.8 9.8 11.8 5.0 15.1 17.4 13.0 '02 '03 '04 '05 '06 '02 '03 '04 '05 '06 1) Figures for 2002 and 2003 are comparable store sales MARK S 73
Our Business Today 2006 Sales Blend Industrial 39% Men s 36% Women s 25% MARK S 74
Focus on Quality and Functionality at Reasonable Prices MARK S 75
Our Strengths Clothes that Work Armour-Flex Industrial Footwear Flex-Tech Collar, Pant and Belt Curvetec Shape Enhancing Designs MARK S 76
Bigger Network Expansion Plans More Mark s Work Wearhouse Stores Mark s Other Formats 306 116 322 32 290 333 334 339 16 10 317 324 333 6 360 379 391 406 421 440 190 '02 '03 '04 '05 '06 '07F '08F '09F '10F '11F '12F MARK S 77
Bigger More Formats Expand existing stores Larger stores Smaller stores Evolved combo and integrated stores Mobile Mark s MARK S 78
Better Broader Enhanced Assortments Clothes That Work Women s Wear Imagewear Super Branding Evolving Mark s Brand Clothes That Work Private Labels MARK S 79
Better 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 80
Key Highlights 81
Funding Requirements Funding requirements over 2008-2012 Credit card / loan receivables growth $1.6 Billion Capital expenditures (PP&E) $2.7 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 $3.5 Billion Sales/leaseback of DC s and urban centres $300 Million - $320 Million 82
Debt Maturities are Manageable Corporate Debt Glacier Credit Card Trust ($ Millions) 150.0 450.0 Long Term Debt Maturities: $300 Million Corporate MTN due 2014 $252.5 Million Glacier MTN due 2014 $150 Million Corporate MTN due 2028 $200 Million Corporate MTN due 2034 $200 Million Corporate MTN due 2035 472.5 570.0 625.0 365.0 317.5 '07F '08F '09F '10F '11F '12F 83
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 84
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 85
2007 Plan for EPS of $4.65 $4.85 More than 135 retail store projects planned across three retail banners Test larger-format combination Canadian Tire Mark s store Begin development of CTR s next retail concept Expansion of Gas Advantage Card pilot into additional markets Introduction of at least one new credit card product Continued investment in retail banking pilot, with new products to be launched in late 2007 Targeted investments in productivity-enhancing initiatives Balanced plan for growth and enhanced productivity 86 86
Contact Information Karen Meagher Manager, Investor Relations Telephone: (416) 480-8058 Email: karen.meagher@cantire.com 87