Canadian Tire Cuts 6% Of Full Time Positions While Announcing $200 Million In Buybacks

Canadian Tire Corporation (TSX: CTC) reported today that it will be cutting full-time staff by 3% via targeted headcount reductions, while cutting the majority of current job vacancies as well, resulting in total headcount reductions of 6% of full time equivalent roles.

The cuts are expected to result in annual run-rate savings of $50.0 million to the company, with charges from the reductions expected to amount to between $20.0 and $25.0 million.

And in a sign of just how much the company actually cares about its people, Canadian Tire at the same time indicated that it will repurchase up to an additional $200.0 million of its shares during 2024, following the repurchase of $470.0 million worth of shares in 2023. Combined, that figure ads up to about 13 years worth of the savings the company just made by cutting its headcount.

The company today also announced it would be increasing its dividend to $7.00 per share from $6.90, a 1.5% increase from last year.

The increase follows Canadian Tire reporting that comparable sales were down 1.6%, which the company blamed on consumers shifting to essentials. Canadian Tire retail comparable sales were down 0.6%, while SportChek sales were down 7.4%, and Mark’s sales were up 0.2%.

A big aspect of the story meanwhile was its Financial Services segment, which saw credit card sales growth decline 2.1%, while the average account balance jumped from $2,975 to $3,084. Perhaps most concerning, the net credit card write-off rate climbed from 4.5% to 5.9% on a year over year basis, while past due credit card receivables rate jumped from 2.8% to 3.3%.

Diluted earnings per share was negative $1.19, largely the result of a charge of $328 million from a transaction with Scotiabank at the end of October. On a normalized basis, EPS came in at $2.96.

Canadian Tire last traded at $264.94 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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