Canadian Tire Plans to Triple PartSource Count

Canadian Tire Corporation, Limited has announced a strategic plan that will, among other things, see its PartSource chain triple in size.
The new strategic plan is for the 2005 – 2009 period and follows a similar plan for the past four years.
“Over the past four years we have successfully implemented our business strategy and, in the process, enhanced our core capabilities,” said Wayne Sales, president and chief executive officer. “The work we initiated in 2001 helped us develop a number of exciting business opportunities with growth potential. For example, we introduced the Concept 20/20 store-merchandising format, improving sales and enhancing our customers’ shopping experience. We established the Canadian Tire Bank and made the transition from a retail credit card company to a bank credit card company, more than doubling our gross average receivables. We also acquired and successfully integrated Mark’s Work Wearhouse, expanded the PartSource network, and increased our brand presence in gasoline retailing across Canada.
“As we look at the goals that we have set for the next five years, we believe there are further opportunities to unlock value from our existing businesses. We have a strong balance sheet, a unique and successful mix of businesses and a team that is completely focused on implementing our plans to deliver long-term value for both our customers and our shareholders,” added Sales.
The growth plan could be termed aggressive.
These consolidated financial aspirations are: comparable store sales growth of 3-4% annually (CTR); gross operating revenue growth of 7-9% (Compound Annual Growth Rate – CAGR); EBITDA growth – earnings before interest, income taxes, depreciation and amortization and minority interest – of 10-15% (CAGR); basic earnings per share growth of 12- 15% (CAGR); and after-tax return on invested capital of 10% annually.
Specific to the PartSource chain, currently with under 50 outlets, the company says efforts will focus on building new stores and pursuing small-scale acquisitions to nearly triple the size of the chain to approximately 130 stores by the end of 2009.
The plan is also to continue the company’s program to replace traditional stores with larger, more modern, new-format stores, many of which feature the new Concept 20/20 format. In total, Canadian Tire’s incremental store count will increase by 24 from 457 to 481 by the end of 2009.