In a recent announcement, Canadian Tire revealed its strategic plans to optimize operations ahead of the holiday season. The company will be implementing a series of measures, including job cuts and vacancy reductions, while simultaneously increasing its dividend and allocating funds for share repurchases.
Share Repurchases and Dividend Increase
To protect the value of its shares, Canadian Tire plans to repurchase up to CAD 200 million ($145 million) worth of additional shares by 2024. This move aims to counteract any potential dilution in the future. It is noteworthy that the company had previously announced repurchases of its class A nonvoting shares, totaling between CAD 550 million and CAD 700 million.
In addition to this, Canadian Tire has further enhanced shareholder value by increasing its annual dividend for the fourteenth year in a row. Shareholders will now receive CAD 7.00 per share, compared to the previous amount of CAD 6.90 per share. This represents a considerable increase of CAD 1.5 since last year.
As part of its ongoing optimization efforts, Canadian Tire plans to decrease its full-time equivalent headcount in the fourth quarter. This reduction is strategically aligned with the company’s targeted layoffs and will aid in achieving operational efficiency.
Furthermore, Canadian Tire aims to eliminate the majority of its current vacancies, resulting in a 3% reduction in full-time staff overall. These measures are intended to optimize workforce resources and ensure streamlined operations during the upcoming holiday season.
Financial Implications and Benefits
While implementing these initiatives, Canadian Tire expects to incur a charge of approximately CAD 20 million to CAD 25 million in the fourth quarter. However, the company anticipates significant annualized savings amounting to approximately CAD 50 million, following the successful implementation of these strategic measures.
As Canadian Tire proactively manages its operations, initiates share repurchases, and enhances shareholder value through increased dividends, the company is well-positioned to navigate the challenges of the upcoming holiday season and maintain its market standing.