Canadian Tire Corporation, Limited has completed the assessment of strategic alternatives for Canadian Tire Financial Services (CTFS or the Bank). CTC will retain 100% ownership of the Bank.
In a news release, the company said it explored options with a range of interested parties, including several of Canada’s leading financial services companies, and has chosen a path which builds upon the Bank’s strong return profile and meaningful earnings stream, and maximizes its contribution to CTC’s retail portfolio.
As CTC scales the Triangle Rewards loyalty program, CTFS will continue to add value through its relationship with Triangle credit card holders and its lens on the Canadian consumer, it said.
“The review underscored that Canadian Tire is uniquely positioned to maximize the Bank’s long-term financial and strategic potential,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “Having reviewed the alternatives, we have gained insights that will make us an even better bank owner, with confidence that this is the optimal path for shareholder value creation, including through a scaled loyalty program.
“Retaining the Bank cements our flexibility to drive value to our retail businesses and pursue partnerships that will make Triangle Rewards membership more rewarding every day, in our stores and beyond. We are actively engaged in conversations with several of Canada’s largest brands about loyalty partnerships that are expected to broaden the value of Triangle Rewards – giving more Canadians more reasons to shop with us.”
The company said it is expanding its retail ecosystem around Triangle Rewards, powered by its store banners and bank, as well as strategic loyalty partners like Petro-Canada – which allows Triangle members to earn eCTM outside CTC channels, every day.
“Triangle Rewards is the cornerstone of the Company’s customer-focused retail strategy. The program uses insights, strategic offers and Canadian Tire Money (eCTM) to reward and engage more than 11 million loyalty members. CTFS distributes approximately 75% of all eCTM through its relationship with 2.3 million members who carry Triangle credit cards. Engaged Triangle Rewards members spend more than twice as much as non-members on average. Triangle credit card holders represent some of CTC’s most engaged customers,” said Canadian Tire.
“Canadian Tire Financial Services has been integrated with CTC’s retail business and customers for nearly three decades. It provides a competitive advantage – acquiring new accounts and issuing eCTM to loyal customers. The Company’s strategic review highlighted CTFS’ differentiated capabilities for assessing and managing credit card risk.
Over the last 10 years, the number of Triangle credit card holders has increased from 1.8 million to 2.3 million, and average receivables have grown by more than 65% to approximately $7.3 billion at the end of Q3 2024. In 2023, the CTFS business ranked as Canada’s seventh largest issuer of credit cards by receivables outstanding, generating $385 million of income before income taxes.”
CTC also confirmed its intention to substantially reduce the borrowings associated with its October 2023 repurchase of 20% of the Canadian Tire Financial Services business through the significant improvement in cash from operations to the end of Q3 2024 and the $258 million proceeds from the sale of a Brampton industrial property announced on November 15, 2024.
CTFS’ existing committed credit facility of $1.1 billion remains in place until April 2025 and the company is exploring alternatives to replace the facility at maturity, it said.
Canadian Tire Corporation, Limited is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Its retail business is led by Canadian Tire, which was founded in 1922. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark’s, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The company’s close to 1,700 retail and gasoline outlets are supported and strengthened by CTC’s Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees and petroleum retailers. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway.
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