Mr. Greg Hicks reports

CANADIAN TIRE CORPORATION TO ACCELERATE THE GROWTH OF TRIANGLE REWARDS WITH STRATEGIC REPURCHASE OF FINANCIAL SERVICES BUSINESS STAKE FROM SCOTIABANK

Canadian Tire Corp. Ltd. has completed the repurchase of Scotiabank's 20-per-cent stake in Canadian Tire Financial Services (CTFS). This all-cash transaction, valued at $895-million, restores Canadian Tire's full ownership of its financial services arm. The transaction will enhance Canadian Tire's flexibility in delivering added value to its more than 11 million active loyalty members, including its 2.3 million credit cardholders. CTFS plays a pivotal role in the company's Triangle Rewards loyalty program, representing approximately 75 per cent of all Canadian Tire Money (eCTM) issued to members annually.

Triangle Rewards is a cornerstone of Canadian Tire's Better Connected strategy, driving significantly higher sales per member and sustained growth over time. Engaged Triangle Rewards members spend, on average, more than twice as much as non-members, and those with a Triangle credit card represent some of Canadian Tire's most valued and engaged customers.

"This move enables us to expedite key elements of our Triangle Rewards strategy to stay relevant to customers' changing needs and expand our credit card program to unlock even greater value for shareholders," said Greg Hicks, president and chief executive officer.

Mr. Hicks added: "Loyalty rewards programs and their integration with financial institutions have evolved significantly since our original deal with Scotiabank. We have invested heavily in Triangle Rewards, and Scotiabank has done the same with its coalition loyalty program. While we have appreciated partnering with Scotiabank over the past decade, with both Scotiabank and CTC having received significant strategic and financial benefits, concluding this partnership will give us much greater control and flexibility in building out our loyalty program. Accelerating issuance of eCTM, including through opportunities with new partners such as Petro-Canada, is key to driving value for members in a rapidly evolving loyalty marketplace."

Canadian Tire will evaluate strategic alternatives for its financial services business to be undertaken with Goldman Sachs as the company's financial adviser during 2024. Consideration will be given to the optimal ownership structure of the CTFS business and to driving sustainable value in the Triangle Rewards program and credit card portfolio, building on CTFS's strong record of long-term growth.

Since 2014, the number of Triangle credit cardholders has increased from 1.8 million to 2.3 million and receivables have grown by more than 60 per cent to approximately $7.1-billion at the end of Q2 2023. In 2022, the financial services business ranked as Canada's seventh-largest issuer of credit cards by receivables outstanding, generating $442-million of income before income taxes.

Scotiabank will continue to provide a committed credit facility of $1.1-billion to CTFS for the next 18 months.

Canadian Tire will record a charge of $328-million related to the transaction, equating to $5.88 per share, which will be reflected in the company's Q3 2023 results. The transaction will be accretive to normalized earnings in 2024.

The $895-million consideration will be financed by Canadian Tire's existing short-term financing channels, supplemented by a $400-million, 18-month term loan from Desjardins Capital Markets.

About Canadian Tire Corp. Ltd.

Canadian Tire is a group of companies that includes a retail segment, a financial services division and CT REIT. The company's retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its living, playing, fixing, automotive, and seasonal and gardening divisions. 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 activewear brands. The company's 1,700 retail and gasoline outlets are supported and strengthened by Canadian Tire's financial services division and the tens of thousands of people employed across Canada and around the world by Canadian Tire and its local dealers, franchisees and petroleum retailers. In addition, Canadian Tire owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway.

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