As Consumer Spending Cools Canadian Tire to Lay off 3% of Staff
Canadian Tire Corp. Ltd. is set to reduce its workforce by approximately three percent in the fourth quarter due to weakening consumer demand. The company announced on Thursday that, in addition, most of the existing job vacancies will be eliminated, leading to an additional three percent reduction.
As a result of these workforce changes, Canadian Tire anticipates incurring a charge ranging between $20.0 million and $25.0 million in the fourth quarter. The expected annualized run-rate savings from these measures are estimated to be around $50.0 million.
“In a more challenging economic environment, we are accelerating efficiency initiatives, prioritizing investments within our Better Connected strategy, and actively managing our resource allocation,” Canadian Tire chief executive Greg Hicks said in a statement.
The announcement coincided with Canadian Tire’s decision to increase its quarterly dividend, despite reporting a loss in its latest quarter. The loss was influenced by a one-time charge related to the repurchase of Scotiabank’s 20 percent stake in Canadian Tire Financial Services.
Canadian Tire will now pay a quarterly dividend of $1.75 per share, marking a 2.5-cent increase per share. The net loss attributable to shareholders for the quarter ended Sept. 30 was $66.4 million, or $1.19 per diluted share, in contrast to a profit of $184.9 million, or $3.14 per diluted share, the previous year.
The reported results included a $328-million charge associated with the Scotiabank transaction, partly offset by a $131-million insurance recovery related to a fire at a distribution center in March.
On a normalized basis, Canadian Tire reported earnings of $2.96 per diluted share in the latest quarter, compared to $3.34 per diluted share in the same quarter the previous year. Despite a slight increase in revenue from $4.23 billion to $4.25 billion year-over-year, consolidated comparable sales experienced a 1.6 percent decline.
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