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.

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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.