• Retail sales up 3.7% and basic earnings per share up 13.5% versus last year
• Revenue in Automotive, Apparel and Financial Services met expectations

TORONTO, May 12 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.a) today released its first quarter results for the period ended April 2, 2011, the first full set of consolidated financial statements prepared under International Financial Reporting Standards (IFRS).

Consolidated retail sales increased 3.7%, consolidated revenues increased 4.6% and consolidated net income increased 13.3% compared to Q1 2010. Basic earnings per share increased 13.5% to $0.72 per share.

"Our revenue performance in Automotive, Apparel and Financial Services met our expectations for the quarter and we are pleased with our overall consolidated earnings and growth," said Stephen Wetmore, President and CEO, Canadian Tire Corp.  "We saw strong Retail sales in January and February, however, unseasonable weather in March, and continuing into April, has reduced our customer traffic and sales in seasonal product categories.

"We are a strong business, executing well on all our key programs, so it's unfortunate to see how our seasonal business impacted our results this quarter," Wetmore said.

This quarter's financial statement presentation includes Canadian Tire's new segment reporting - Retail and Financial Services.

RETAIL

Total retail sales in the first quarter increased by 3.7% over the prior year. The Retail segment net income before taxes increased 16.1% primarily due to higher revenues, higher gross margin dollars and lower interest costs.

The lack of spring weather and the resulting decrease in customer traffic led to a 0.6% decrease in retail sales at Canadian Tire stores in Q1 2011 versus Q1 2010.  The cool weather later in the quarter impacted the Living, Fixing and Playing areas of the store, specifically in weather-related categories such as gardening, cycling and backyard.

The Automotive category in Canadian Tire stores increased year over year reflecting the Company's focus on this important business.  Various initiatives aimed at driving sales have provided sales growth in light automotive maintenance parts, tires and automotive maintenance fluids.

Retail sales at Mark's stores increased 6.2% over the prior year.  Growth was most prominent in the industrial wear category, with men's industrial footwear and workwear contributing to the sales growth.  Sales declined slightly in men's casual wear and women's wear.

Retail sales at Canadian Tire Gas (Petroleum) locations increased 15.8% over the prior year, driven by a 4.2% increase in gas volumes that are attributable primarily to the new petroleum sites located along the 400 series highways in Ontario and a significant increase in pump prices over the previous year.  A strong increase in ancillary sales through car washes and convenience stores also contributed to Petroleum's positive sales result.

FINANCIAL SERVICES

Gross average credit card receivables in the quarter were comparable to Q1 2010 levels.  Financial Services revenues increased 0.7% primarily due to higher interest income.

Financial Services net income before taxes increased 8.2% due to lower loan impairment expenses and reduced finance costs.  These were partially offset by increased operating expenses associated with sales tax changes and the migration to chip card technology.

The rolling 12-month net write-off rate on the credit card loan portfolio was 7.38%, down from 8.01% from Q1 2010.

The rolling 12-month return on receivables was 5.09% up from 3.93% in Q1 2010.  The return on receivables is slightly above our aspiration of 4.5-5.0%.

LIQUIDITY

Canadian Tire enters 2011 in a strong financial position with ready access to capital through diversified channels.  Since quarter end, the Company increased its committed lines of credit to $1.37 billion.

CAPITAL EXPENDITURES

Capital expenditures for the first quarter 2011 were $53.7 million, slightly lower than Q1 2010 spending of $54 million.

QUARTERLY DIVIDEND

Canadian Tire Corporation has declared a quarterly dividend of $0.275 per share on each Common and Class A Non-Voting share. The dividend is payable September 1, 2011 to Common and Class A shareholders of record as of July 29, 2011. The dividend is considered an "eligible dividend" for tax purposes.

Please refer to Management's Discussion and Analysis for further detail and information on the following charts.

To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: http://files.newswire.ca/116/Q1_2011_CTC.pdf

FORWARD-LOOKING STATEMENTS

This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our financial position, results of operation and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.

All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made.

By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions may not be correct and that the Company's expectations and plans will not be achieved. Although the Company believes that the forward-looking information in this document is based on information and assumptions which are current, reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information for a variety of reasons. Some of the factors - many of which are beyond our control and the effects of which can be difficult to predict - include (a) credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of Canadian Tire to attract and retain quality employees, Dealers, Canadian Tire Petroleum agents and PartSource and Mark's Work Wearhouse store operators and franchisees, as well as our financial arrangements with such parties; (c) the growth of certain business categories and market segments and the willingness of customers to shop at our stores or acquire our financial products and services; (d) our margins and sales and those of our competitors; (e) risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, competition, seasonality, commodity price and business disruption, our relationships with suppliers and manufacturers, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by Canadian Tire and the cost of store network expansion and retrofits and (f) our capital structure, funding strategy, cost management programs and share price. We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information.

For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the "Risk Factors" section of our Annual Information Form for fiscal 2010 and our 2010 Management's Discussion and Analysis, as well as Canadian Tire's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.

Statements that include forward-looking information do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities laws.

CONFERENCE CALL

Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 4:30 p.m. EDT on May 12, 2011. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://corp.canadiantire.ca/EN/investors, and will be available through replay at this website for 12 months.

ABOUT CANADIAN TIRE

Canadian Tire Corporation, Limited (TSX:CTC.a) (TSX:CTC) is one of Canada's most-shopped general retailers, offering everyday products and services to Canadians through more than 1,200 retail and gasoline outlets from coast-to-coast. Our primary retail business categories - Automotive, Living, Fixing, Playing and Apparel - are supported and strengthened by our Financial Services division, which offers such products and services as credit cards, retail deposits, in-store financing, product warranties, and insurance. Nearly 57,000 people are employed across the Canadian Tire enterprise, which was founded in 1922 and remains one of Canada's most recognized and trusted brands.