• Consolidated Retail sales up 5.1%
• CTR sales up 1.9% driven by Automotive, Kitchen and Backyard Living
• Basic EPS down versus Q2 2010 due to expenditures related to growth initiatives and Forzani acquisition

TORONTO, Aug. 11, 2011 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.a) today released its second quarter results for the period ended July 2, 2011, the second set of consolidated financial statements prepared under International Financial Reporting Standards (IFRS).

Consolidated retail sales increased 5.1% and consolidated revenues increased 4.1% compared to Q2 2010. Consolidated net income was $105.8 million and basic earnings per share were $1.30 compared to $122.8 million and $1.51 respectively last year.  Lower net income was largely due to planned increases in marketing and advertising expenditures, expenses related to strategic initiatives, lower than expected sales in certain seasonal categories and costs associated with the offer to purchase the Forzani Group Limited (FGL).

"Sales and revenue were strong this quarter and we are continuing to meet our expectations in key areas, such as Automotive, kitchen and backyard living," said Stephen Wetmore, President and CEO, Canadian Tire Corp. "In weather-related categories such as outdoor tools and gardening, we had a weak start to the quarter but finished with a strong June and with positive momentum continuing into July.

"Our earnings performance in the quarter reflected higher planned spending on growth initiatives, including Automotive Infrastructure and merchandising productivity, and were additionally impacted by lower than expected sales in certain seasonal categories and Forzani acquisition costs," said Wetmore.

Consolidated financial results
($ in millions except per share amounts)		Q2 2011		Q2 2010		Change			YTD 2011		YTD 2010		Change
Retail sales	$	3,005.3	$	2,859.6		5.1%		$	4,967.9	$	4,752.1		4.5%
Revenue		2,570.9		2,469.7		4.1%			4,547.1		4,358.7		4.3%
EBITDA		247.8		284.3		(12.8)%			429.9		465.8		(7.7)%
Net income		105.8		122.8		(13.9)%			164.2		174.4		(5.9)%
Basic earnings per share		1.30		1.51		(13.7)%			2.02		2.14		(5.7)%
Dilutive earnings per share		1.29		1.50		(13.7)%			2.01		2.13		(5.7)%

RETAIL

Retail sales grew 5.1% to $3.0 billion in Q2 2011 compared to the same period last year driven by increased revenues at Canadian Tire Gas (Petroleum) and higher sales at Canadian Tire Retail stores.

Retail sales at Canadian Tire Gas (Petroleum) locations increased 22.8% over the prior year, driven by a significant increase in pump prices over the previous year, and a 1.4% increase in gas volumes that are attributable primarily to the new petroleum sites located along the 400 series highways in Ontario.

Retail sales at Canadian Tire stores increased 1.9% in Q2 2011, an improvement versus the 1.3% increase recorded in Q2 2010.  Increased retail sales in the Canadian Tire banner were driven by solid growth in the Living category, which saw strong sales in backyard living, kitchen, and household cleaning.  Growth in Living was partially offset by a decline in sales in Fixing, where categories like outdoor tools and gardening were negatively impacted by cool, wet weather at the start of the quarter.

The Automotive category in Canadian Tire stores posted another quarter of increased retail sales, reflected in strong growth in tires, parts and pressure washers.  This trend reflects the results of the various initiatives aimed at driving growth in this heritage category.

Retail sales at Mark's stores increased 0.5% over the prior year.  Strong growth in the industrial wear category was offset by declines in men's and women's wear.  Men's and women's wear categories felt the impact of the cooler weather in the beginning of the quarter, but gained momentum in June.

Retail segment net income before taxes decreased by $22 million or 18.3%, primarily due to increases in marketing and advertising expenditures, expenses related to strategic initiatives and costs associated with the offer to purchase FGL.

FINANCIAL SERVICES

Financial Services revenue decreased 2.9% in the quarter to $234.8 million compared to the prior year. Auto club services revenue was included in Financial Services in 2010 and is now reported in Retail.  Adjusting for this change, revenue in Financial Services declined slightly, reflecting a slight decline in gross average credit card receivables compared to Q2 2010 levels.

Net income before taxes declined $9.7 million or 16.6% in the quarter compared to the prior year primarily due to higher loan impairment expenses and the change in reporting of Auto Club earnings to the Retail segment.  In the prior year, loan impairment expenses benefited from a favourable reduction of the credit card allowance of $8.2 million due to improved aging of the portfolio at that time.

The rolling 12-month net write-off rate on the credit card loan portfolio was 7.33%, down from 7.99% in Q2 2010.  The rolling 12-month return on receivables was 4.86%, up from 4.35% in Q2 2010.  The return on receivables is within our aspirational range of 4.5 to 5.0%.

CAPITAL EXPENDITURES

Capital expenditures for the second quarter 2011 were $58.9 million compared to Q2 2010 spending of $57.7 million.

FORZANI

On August 3, Canadian Tire announced it had received Competition Bureau clearance to proceed with the acquisition of FGL.  Canadian Tire continues to expect the transaction to close in the third quarter.

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 December 1, 2011 to Common and Class A shareholders of record as of October 31, 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.

Consolidated financial results
($ in millions except per share amounts)		Q2 2011		Q2 2010		Change			YTD 2011		YTD 2010		Change
Retail sales	$	3,005.3	$	2,859.6		5.1%		$	4,967.9	$	4,752.1		4.5%
Revenue		2,570.9		2,469.7		4.1%			4,547.1		4,358.7		4.3%
Gross margin		728.5		731.6		(0.4)%			1,341.3		1,318.6		1.7%
Operating expenses		548.8		519.4		5.6%			1,047.5		987.8		6.0%
EBITDA		247.8		284.3		(12.8)%			429.9		465.8		(7.7)%
Depreciation and amortization		68.0		68.4		(0.7)%			133.7		134.1		(0.3)%
Net finance costs		33.2		37.6		(11.3)%			67.2		79.2		(15.1)%
Net income		105.8		122.8		(13.9)%			164.2		174.4		(5.9)%
Basic earnings per share		1.30		1.51		(13.7)%			2.02		2.14		(5.7)%
Dilutive earnings per share		1.29		1.50		(13.7)%			2.01		2.13		(5.7)%
Retail Segment financial results
($ in millions)		Q2 2011		Q2 2010		Change			YTD 2011		YTD 2010		Change
Retail sales	$	3,005.3	$	2,859.6		5.1%		$	4,967.9	$	4,752.1		4.5%
Revenue		2,318.3		2,208.8		5.0%			4,044.8		3,848.2		5.1%
Gross margin		580.1		568.4		2.0%			1,045.3		1,010.6		3.4%
Operating expenses		463.7		430.8		7.6%			881.6		819.8		7.5%
EBITDA		182.0		208.2		(12.6)%			294.8		323.5		(8.9)%
Depreciation and amortization		65.3		66.5		(2.0)%			128.5		130.4		(1.6)%
Net finance costs		18.5		21.5		(13.5)%			36.5		45.6		(19.9)%
Income before income taxes		98.2		120.2		(18.3)%			129.8		147.5		(12.0)%

Retail Segment - by banner
	Q2 2011	Q2 2010		YTD 2011	YTD 2010
CTR retail sales growth	1.9%	1.3%		1.0%	1.6%
CTR same store sales growth	0.9%	0.8%		0.0	1.1%
Number of CTR stores	487	482		487	482
Mark's retail sales growth	0.5%	6.2%		3.0%	5.1%
Mark's same store sales growth	0.1%	3.4%		2.8%	2.2%
Number of Mark's stores	384	383		384	383
Canadian Tire Gas gasoline volume (litres) growth	1.4%	(1.0)%		3.1%	(0.8)%
Number of gas bars	290	273		290	273

Financial Services' financial results
($ in millions)		Q2 2011		Q2 2010		Change			YTD 2011		YTD 2010		Change
Total gross average receivables	$	4,025.6	$	4,051.1		(0.6)%		$	4,009.5	$	4,038.7		(0.7)%
Revenue		234.8		241.8		(2.9)%			468.6		474.0		(1.1)%
Gross margin		130.6		144.1		(9.3)%			262.3		271.5		(3.4)%
Operating expenses		67.3		69.5		(3.2)%			132.2		131.5		0.5%
EBITDA		65.8		76.1		(13.4)%			135.1		142.3		(5.0)%
Depreciation and amortization		2.7		1.9		44.5%			5.2		3.7		42.9%
Net finance costs		14.7		16.1		(8.4)%			30.7		33.6		(8.5)%
Income before income taxes		48.4		58.1		(16.6)%			99.2		105.0		(5.5)%

SUPPLEMENTARY FINANCIAL INFORMATION

Additional operating segment financial data restated for IFRS for the third and fourth quarters of 2010 has been posted on the Company's investor relations website as at the time of this release.

To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: http://files.newswire.ca/116/Q22011InterimRptCTC.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 August 11, 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.