Canadian Tire Q2 2026 Earnings Report

Canadian Tire EPS Results

• Actual EPS: C$3.94
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Canadian Tire Revenue Results

• Actual Revenue: $4.30 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Canadian Tire Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 8:00AM ET

Canadian Tire (TSE:CTC), (TSX: CTC.A) (TSX: CTC) or 'CTC', is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. The Company's 1,700 retail and gasoline outlets are supported and strengthened by CTC's Financial Services division and the tens of thousands of people employed across Canada and around the world by CTC and its local dealers, franchisees and petroleum retailers.

Canadian Tire Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 normalized diluted EPS rose 10% to CAD 3.94, supported by higher retail income, a lower share count and a favorable tax rate. Retail IBT increased 1.2%, while retail RRIC improved 80 basis points to 11.1%.
• Neutral Sentiment: Consolidated comparable sales increased 0.7%, led by Sport Chek at 8.0% and Mark’s at 4.2%, while Canadian Tire declined 0.8% as wet weather hurt gardening and summer climate-control categories. Management said non-weather-related businesses were up and early Q3 sales improved as summer weather arrived.
• Positive Sentiment: E-commerce sales grew 12% overall and 14% at Canadian Tire, aided by free shipping for Triangle members, stronger click-and-collect, expanded online-only assortment and cross-banner digital integration. Management expects online growth to continue outpacing brick-and-mortar sales.
• Positive Sentiment: Triangle loyalty sales rose 3.5%, with partnerships, personalized promotions and credit-card offers increasing engagement; active cardholders generated baskets 5% larger than non-credit customers. The company is also using AI-driven pricing and customer-occasion initiatives to expand its assortment and market share.
• Negative Sentiment: Canadian Tire Financial Services profit was flat year over year as planned investments lifted SG&A, which is expected to remain around 28% of revenue through the second half. Credit risk metrics were stable, but the company continues to monitor elevated insolvencies and a roughly 7.2% net write-off rate.

Presentation

[Operator]

Thank you for standing by. My name is Rivka, and I will be your conference operator today. Welcome to the Canadian Tire Corporation earnings call. All lines have been placed on mute to prevent any background noise. Following today's presentation, there will be a question-and-answer period. If you would like to ask a question, simply press star one one on your telephone keypad. To withdraw your question, please press star one one again. Now I will pass along to Karen Keyes, Head of Investor Relations for Canadian Tire Corporation. Karen?

[Karen Keyes, Head of Investor Relations at Canadian Tire Corporation]

Thank you, Rivka, and good morning, everyone. Welcome to Canadian Tire Corporation's second quarter 2026 results conference call. With me today are President and CEO, Greg Hicks, Executive Vice President and CFO, Darren Myers, and Executive Vice President and Chief Operating Officer, TJ Flood. Before we begin, I would like to remind you that today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws, including management's current expectations regarding future events and the company's True North strategy. Although the company believes that the forward-looking information in today's discussion is based on information, estimates and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties and other factors that could cause actual results to be from those expressed or implied in such forward-looking information.

[Karen Keyes, Head of Investor Relations at Canadian Tire Corporation]

For information on material risks, uncertainties, factors and assumptions, please see the company's MD&A, which is available on our website and filed on SEDAR+. The company does not undertake to update any forward-looking information, whether written or oral, except as required by applicable securities laws. I would also like to highlight that because last year had 53 weeks, comparable sales for Q2 are presented on a shifted basis, comparing weeks 14-26 of this year to weeks 15-27 of last year.

[Karen Keyes, Head of Investor Relations at Canadian Tire Corporation]

After our remarks today, the team will be happy to take your questions. We will try to get in as many questions as possible, but ask that you limit your time to one question plus a follow-up before cycling back into the queue, and please contact investor relations if we do not get through all the questions today. With that, I will turn the call over to Greg. Greg?

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thank you, Karen, and good morning, everyone. The agility and discipline of our team continued to be tested in Q2 in an operating environment that was substantially similar to Q1. Yet again, we faced uncooperative weather, with CTR hampered by wet spring and summer days, and consumer sentiment remained soft. Ultimately, we demonstrated our ability to deliver for discerning customers and achieve strong financial results. Consolidated retail sales increased while EPS jumped 10%, coming in at CAD 3.94. Importantly, we advanced in areas that matter to us strategically as we build a stronger retail system with growth and loyalty, digital and new concept stores all outpacing our broader retail sales. Both Mark's and SportChek delivered impressive comp sales, amplified by new and modern stores that are outperforming on all metrics and benefiting as Triangle loyalty members move around our enterprise retail system.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Mark's grew with existing and new customers, with NPS and sales up, including a record Father's Day. Our World Cup fan gear performance proved once again that SportChek is the undisputed destination for athletes and enthusiasts, with one store manager literally selling the Canada jersey right off his back. Shifting gears to customer sentiment. For a long while now, consumers have been living with the threat of trade wars and tariffs and managing the day-to-day pressure of higher food and gas prices. This was evident in Q2 as we saw our credit card holders spending significantly more on gas than they did last year, putting correlating pressure on our business. However, our best customers, Triangle members, showed up with sales, spend, and trips per member all outpacing non-loyalty equivalents. More broadly, we saw continued spending across all cohorts led by value-oriented and higher-debt members.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

To the extent that Q2 was a weather story, declines in major outdoor categories at CTR accounted for more than 100% of our sales challenge. Many other categories performed well, and even in our weather-challenged categories, we continue to see discretionary dollars in the market with strong sales of our new barbecue lines and innovative patio designs. As I reflect on Q2, the conclusion is clear. Weather pressured CTR, balanced by great sales at Mark's and Chek in an environment where customers are spending carefully. For our part, we continued to double down on strategies that work in a value-driven environment. We kept our value proposition sharp using our DaiVID AI analysis to drop prices on more than 5,000 products, and we saw strong customer response to lower prices on essentials like cleaning and storage.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

We issued significantly more Canadian Tire Money through Triangle bonuses and our growing list of partnerships. Personalized loyalty promotions hit the mark, attracting and re-engaging more Triangle members, driving loyalty sales up 3.5%. Exclusive offers for credit card holders gained traction, driving higher eCTM issuance at the bank. On average this year, credit card holders who activate offers are not only visiting us more, they are buying baskets that are 5% larger than non-credit customers. As I turn it over to Darren to dig into our numbers, it is clear our Q2 results did not come easily. They are a reflection of our discipline and a credit to our team. We have our hands firmly on the wheel, managing the right price margin balance in year OpEx and wise investments for the future of our retail and bank businesses.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Over to Darren, and I will return in a few minutes for a quick update on exciting True North advancements.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Thank you, Greg, and good morning, everyone. Delivered a strong financial quarter in Q2, with disciplined execution helping offset demand headwinds. Diluted normalized earnings per share was CAD 3.94, up 10% year-over-year. This reflected higher retail segment IBT, a lower share count, and a favorable blended tax rate. CTF was in line with last year as strong top-line growth offset planned investments. Let me walk you through the quarter starting with retail. Retail sales and revenue were up in the quarter, supported by petroleum, where higher gas prices more than offset lower volumes. Excluding petroleum, retail sales were up 2.5%. Retail revenue was down 1.1%, as growth at SportChek and Mark's was more than offset by lower sell-through and dealer restocking at CTR. Comparable sales were up 0.7% overall despite a tough prior-year comparison that benefited from favorable weather and patriotic purchasing.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

SportChek's 8% comparable sales increase was a very strong result, supported by strategic inventory investments ahead of major sporting events. World Cup sales accounted for roughly half of the growth, with Montreal Canadiens fan wear sales also contributing. Outside fan wear, athletic footwear performed well while categories like cycling were more muted. At Mark's, comparable sales were up 4.2%, benefiting from a rainier spring. Industrial footwear and workwear led growth. New format BBB stores outperformed, led by strong denim sales and strong sales in casual work categories. At CTR, comparable sales were down 0.8% versus 2025, while up 5.5% on a two-year stack basis. Despite a tough prior-year comparison, there were several positive highlights in the quarter. Promotional offers resonated well with consumers. Seasonal categories such as patio and barbecue were up.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Tire change activity picked up early in the quarter, supporting the 24th consecutive quarter of growth in automotive. Fixing and playing also outperformed overall CTR sales. These gains were offset by softer performance in gardening and summer climate control, particularly in Alberta and Ontario, where weather was inconsistent through the quarter. Slower sell-through had a knock-on effect on dealer restocking and CTR revenue, which was down 3.5% in the quarter. Although CTR revenue has outpaced sales over the last 12 months, the two are broadly aligned year-to-date, with sales slightly ahead of revenue and up 1% against a strong 2025 comparatives. As you know, these metrics tend to converge over time. At the end of Q2, CTR dealer inventory was up 1%, mainly in seasonal categories. Sell-through has improved since quarter-end as summer weather arrived more broadly across the country.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Across the banners, corporate inventory was up 7%. About 1/3 was in CTR seasonal categories, with the balance supporting growth at SportChek and Mark's, including World Cup sales demand that extended into July. Turning to margin now. Excluding petroleum, our gross margin rate was 35.1%. Our rate improved 33 basis points over last year, driven by positive contributions from SportChek and Mark's. We also continued to leverage our margin tools, including DaiVID, to target promotional investments. Turning to operating costs. We are seeing the benefits of stronger performance management and tighter cost discipline while continuing to invest in the business. While some quarter-to-quarter variability is inevitable, we were pleased with how this came together in Q2. Retail SG&A was CAD 10 million lower year-over-year. Excuse me. SG&A as a percentage of revenue excluding petroleum was stable at 23.3%.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Supply chain execution was solid, and savings from last year's restructuring, lower variable compensation, and the shift of some marketing expense to Q3 helped offset higher real estate and store operations costs. Depreciation and amortization costs were up 4% year-over-year, driven by lease renewals in our Vancouver area, B.C. Despite these factors and certain insurance recoveries last year, retail IBT was up 1.2% at CAD 201 million. Normalized retail EBITDA increased 2.2% to CAD 498 million. Retail RRIC was 11.1%, an improvement of 80 basis points year-over-year. Moving to financial services. We continue to deliver strong GAAR growth with a 4.2% increase in the quarter. Improved cardholder retention helped grow active accounts, and average balances were up, reflecting higher card spend. SG&A was up as planned, trending at a rate of approximately 28%, where we expect it to stay through the second half.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

The spend is supporting account acquisition, engagement, and ongoing project investments. Key risk metrics remain stable, with aging flat year-over-year at 3.3%. The net write-off rate held at around 7.2%, despite elevated insolvencies. This remains consistent with industry trends, and we continue to monitor closely. The allowance remained unchanged at CAD 935 million, and the allowance rate was 11.8%, reflecting higher ending receivables. Turning to capital allocation, our store refresh program continues to advance, with 30 projects completed in the first half. We expect that number to more than double by year-end, modestly below our original plan of 70 projects due to some shifts in timing. Our pipeline remains strong, and vacancies created by HBC exits are creating attractive future opportunities for our Destination Sport and BBB concepts.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Reflecting the change in phasing and continued focus on capital discipline, we now expect CapEx to fall into the range of CAD 450 million-CAD 500 million in 2026. Our buyback program is ongoing, with an additional CAD 85 million of shares repurchased in Q2. Before I wrap up, let me spend a moment on what we're seeing in Q3 and the balance of 2026. We're encouraged by the early Q3 sales growth as summer weather has arrived. That said, there's still more than half the quarter to go, and as it's been all year, the consumer environment remains dynamic. We continue to plan for growth in the back half of the year on a 52-week basis.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

At CTR, the prior-year comparison becomes less of a headwind, while at SportChek, we expect some moderation as we cycle a run-up to the Blue Jays' historic 2025 World Series run and favorable Q4 weather. We're pleased with the Q2 retail gross margin performance, with margin rate excluding petroleum at 35.1%. We continue to feel good about our full-year North Star target of 35%+, despite some expected Q3 headwinds from higher transportation fuel surcharges and targeted investments. We're pleased with the reduction in SG&A in the second quarter as we continue to manage our cost and pace of investments.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

We do expect some growth in Q3 dollars, in part due to timing shifts from Q2 and to support growth in the business. Overall, we are pleased with the team's execution, and we're seeing the benefits of greater discipline, stronger performance management, and a sharper focus on execution.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

We remain focused on staying agile, putting the customer first, and investing in True North. We see a clear path to unlocking sustainable sales growth, improving bank profitability, and advancing towards our financial framework over the long term. We look forward to updating you again at our Q3 results call in November. With that, I'll hand things back to Greg.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thanks, Darren. For the past many quarters, I've used the term performing while transforming. This is the idea that we have both a day-to-day business and a long-term strategy moving in parallel. In the short term, you're seeing evidence of our True North advancements with effective merchandising strategies, AI pricing, OpEx discipline, and a sharper operating model. Longer term, we're excited about continued progress across all of the True North cornerstones. In Retail Forward, we have plans to expand both our enterprise footprint and our reach with accelerated ambitions for our modern SportChek and Mark's stores. This remains a real opportunity for us, and our real estate team is actively engaged on sites, including some former HBC leases. Ultimately, True North is about building a long-term omni-channel advantage that gives customers the flexibility to shop with us however they choose.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

To this end, we are making considerable progress at e-commerce, where our sales growth continues to significantly outpace bricks-and-mortar. I know you've been following closely as we have created an increasingly compelling and convenient digital experience. Recently, that progress has accelerated in several ways, including expanding AI search to become increasingly conversational and smart, adding buy now, pay later options online at Mark's and SportChek, and CTR launching free ship-to-home services exclusive to Triangle members, which we are still refining as sales and customer satisfaction scores climb. Now, if you visit any one of Canadian Tire, Mark's, or SportChek online, the other banners are not only visible, but one click away.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

While this may seem like a small convenience, it's indicative of a bigger move towards digital harmonization, taking advantage of our scale, showcasing our full multi-banner assortment, and moving customers more easily across our enterprise. In fact, early results have shown that CTR sizable web volumes can generate impressive customer traffic flow to both Mark's and SportChek. Ultimately, this is just the first completed phase of our digital harmonization strategy, with plans for integrated search, cart, and payment functions to come.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

In our Triangle-powered cornerstone, we are making membership more valuable, increasing personalized offers, and connecting Triangle to more aspects of everyday life. More than 2 million of our loyalty members are now active with our partners at Petro-Canada, RBC, or WestJet. And when our partnership with Tims Rewards launches in a few weeks, millions more will be able to earn Canadian Tire Money with their daily coffee.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

A major plank of our True North strategy, these partnerships continue to drive incremental sales. Finally, I will conclude with a theme you should expect us to return to time and again. That is our customer-centered growth strategy powered by AI. On our last call, I introduced our MOSaiC customer intelligence platform and our plan for a fundamental pivot from selling products to serving the occasions of life. With MOSaiC, we have analyzed hundreds of millions of customer transactions, Triangle loyalty data, and volumes of external insights using bespoke AI to identify where our retail system can show up best in new or existing categories. After significant development and work with Microsoft, this platform is ready for prime time. Our major banners, stores, and sites are executing a new approach to the back-to-school season, coordinated enterprise-wide.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Using AI intelligence, we have introduced new categories of products, new approaches to merchandising, and new price points. We are coordinating our marketing, loyalty, and digital promotions as an enterprise. Canadian Tire, SportChek, Mark's, and Triangle all combined to create scale. Together, we know that the parent buying sneakers also needs crayons and some jeans. We know that the kid moving into a dorm wants a laptop, a fan, furniture, and a hoodie. We know how to serve them in each of our banners, but we now have detailed plans to solve more of their back-to-school needs by moving them across our enterprise. As an illustration, for the first time ever, you will see Mark's and SportChek marketing tucked into your Canadian Tire flyer.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

I just spoke to the fact that our harmonized websites will encourage customers to shop any of our banners and our combined assortment with just a click. Our sites now have enhanced data like essential shopping lists, FAQs, and tips, all designed so AI agents can discover, understand, and recommend our back-to-school products when customers search the occasion on their favorite LLM. Our Triangle team has created personalized offers designed to both help and reward customers, bespoke for their specific back-to-school needs. When we launched True North, you asked us what we meant when we said we would drive customer-centric growth, and this is a big part of the answer. AI insights are helping us dig deeper into our total addressable markets and to find new ones. Back-to-school is a CAD 3.4 billion market in Canada.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

We have a low double-digit share, but our insights show us that Canadians believe we have a right to win in this space. It is a small business for us today, but we have a path to meaningful upside, and we are going to learn what is possible, turning True North theories into action. Internally, we call this enterprise-wide customer occasion a customer lighthouse. Our next lighthouse is holiday, a much larger business for us with meaningful opportunities to grow, share, and sales. I will look forward to telling you more on our upcoming calls.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

To close, I feel good about the team's agility in the face of a tough consumer backdrop. At the same time, I am confident that we are also building for the future. As we open the call for questions, I will answer the first one now. We are thrilled that the Heated Rivalry guys like our plaid bag.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

We did not pay them to carry it. No, I can't get you one, but our stores would be happy to serve you in the coming days. With that, let's open the line to questions.

[Operator]

At this time, I would like to remind everyone that in order to ask a question, please press star then one one on your telephone keypad. To withdraw your question, press star then one one again. We ask that you limit yourself to one question plus one follow-up question before cycling back into the queue. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Irene Nattel of RBC Capital Markets. Your line is now open.

[Irene Nattel, Analyst at RBC Capital Markets]

Thanks, and good morning, everyone. Now that my hopes are dashed, I'll just have to ask a different question.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

That was for you, Irene.

[Irene Nattel, Analyst at RBC Capital Markets]

Thank you. Thank you very much. Really intrigued by your last comments around this shift from product to customer-centric, need-centric. What are your early thoughts around the implications with respect to are you surfacing gaps in your product offering, or is this really just about packaging things differently for the consumer? As you progress down this road, how will we, the investment community, see this reflected in the financials?

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Yeah, maybe I'll take that, and TJ may want to jump in as well. I think contextually, Irene, if you think about our lighthouse strategy, it's really just a more modernized approach to traditional category management frameworks. Given our enormous customer data, we're in a great position to integrate our customer insights into the planning and execution of how we go to market and deliver more effectively on full customer shopping occasions. We're prioritizing each occasion for share growth, and where we have a right to win. Typically, each occasion is associated with a set of categories across our whole retail portfolio. Not always, but often, it's a set of categories across our total retail portfolio, with both trip drivers and basket builders. Each occasion would be underpinned by a detailed playbook across the whole organization for required assortment and pricing changes. Yes, we are adding new assortments.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Some of the insights, I'm thinking about holiday specifically, around gaps in our assortment, around things like lower-priced wrapping paper, and just how we go to market with wrapping paper, how the customer thinks about us for wrapping paper. There's four or five other categories within holiday like that. I'm just using wrapping paper as an example. Back to school, we've introduced from CAD 500 Chromebooks to miniature fans for dorm rooms, all things that were gaps in our assortment before. Yes, the playbooks will identify required assortment changes, identify pricing changes, channel strategies, and the marketing required to win share in the occasion. It's new, but we're excited. TJ and the team at Mark's are super excited about back-to-school and how that all comes together for Mark's. As an example, we're engaging the whole organization in a different planning approach that is very customer-centric.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

I'm feeling good about how we're approaching the early lighthouses, and I think what underpins all of it is just this fantastic data that we have. More to come. We'll continue to talk about lighthouses. We'll talk about the postmortem associated with lighthouses. We may stop short about market share on occasion, but you'll be hearing lots more about this is really how we're going to market, Irene.

[Irene Nattel, Analyst at RBC Capital Markets]

That's great. Thank you.

[Operator]

One moment for our next question. Our next question comes from the line of Martin Landry of Stifel Canada. Your line is now open.

[Martin Landry, Analyst at Stifel Canada]

Hi, good morning. I would like to dig into your e-commerce sales. They were up 14% year-over-year. You alluded to improvements you've made on your website, the ease of clicking on other brands. Just trying to understand a little bit, 14% growth- how does that compare to the previous quarters? Is there any banners that were the main drivers behind that growth?

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Yeah, Martin, it's Greg. Welcome to the call. Looking forward to working with you. Maybe I'll take that one. Ultimately, the strategy is about giving customers optionality around how to shop with us. From an outcome standpoint, we believe there are significant opportunities to increase our total addressable market and market share by removing some of the friction for customers in shopping with us across channels. As we've discussed before, we've been working to drive our capabilities and ensure that our customer experiences were strong. We now feel the time is right as a big lever, a big example, to use free shipping as an option and a demand lever for CTR, while continuing to improve our digital experiences across all of our banners. I think, as you point out, I would say what we're doing seems to be working.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

It's a long game, but we're encouraged that e-com growth continues to significantly outpace bricks-and-mortar growth year-to-date. As you mentioned, comp e-commerce sales were up 12%, backed by 14% in CTR. That is more of a separation or higher performance than what we've seen in many quarters. Free shipping, certainly, from a growth standpoint at CTR is a significant driver, but I think making that offering also just brings more visibility to our buy online pickup in stores. We see growth in that channel as well. We continue to benefit from good traffic across the site, so we're seeing those visits translate into more purchases. We're also getting traction, Martin, on extended online-only assortments, which is, again, fairly new for us. I think we have about 12,000 items now in online only, and that's ramped in the first half of 2026.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

I think it really gives us a new tool for broadening our assortments in general as we deploy the lighthouse strategies that I just talked about. Our expectations going forward, Martin, is growth in both channels, but outsized growth in e-commerce. That's the way we're intending to steer and manage the business.

[Martin Landry, Analyst at Stifel Canada]

Okay. That's super helpful. Good color. It sounds like it's broadly based across all banners, not SportChek, because I just wanted to see if SportChek had a big influence in this quarter.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Yeah. No, not from an e-commerce growth standpoint in terms of driving the overall 12%. SportChek has always had a strong and penetrated e-commerce business. But I touched on digital harmonization for a reason. Strategically, this is a signature move of True North around moving from a holdco to an opco. True North is about aggregating the scale that we've created for ourselves to better compete with scale players. Having websites that aren't connected, each having their own digital front door, doesn't really present our scale to the customer. The reality is, we have an unbelievably deep procured product catalog, and it's designed for life in Canada with many products that are exclusive to us. So we need to better expose the assortment to Canadians with less friction.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

As I said, the tabs are a first start, but a fully integrated search, cart, and payment experience is the end state that we are building towards. SportChek and Mark's, as I alluded to, just given scale and size, will likely benefit more from traffic flow from that integrated experience. Imagine the breadth of a category like sporting goods when all of our banners are built into an integrated experience for the customer. Like we did for the other analysts on the call, like we did previously with our investment in our one digital platform, we will keep you posted on the progress we are making towards that end state destination.

[Martin Landry, Analyst at Stifel Canada]

Super. Thank you, and best of luck.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thank you.

[Operator]

We are open for our next question. Our next question comes from the line of Tamy Chen of BMO Capital Markets. Your line is now open.

[Tamy Chen, Analyst at BMO Capital Markets]

Hi. Good morning. Thanks for the question. Darren, I was wondering if you are able to quantify at all the magnitude of that favorable timing from marketing spend that shifted into Q3.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yeah, I would. Good morning, Tamy, and welcome back. I wanted to give you a little bit of color on it, but it's not a large enough number that I would call out the absolute amount. What I would tell you overall is, we're pleased with how we're managing SG&A, certainly in the quarter and for the first half of the year. You see, each quarter we've been holding rate, and we've actually made a little bit of improvement in the rate. I think you should expect the same type of thing in Q3. We'll see some growth in SG&A dollars. We'll have a little bit of timing impact, but I think we'll be focused again on really maintaining that type of rate, maybe with a little bit of pressure.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Just as a reminder for everybody, the restructuring benefits that we had from our actions, they started a little bit in Q3, so there's a small amount in Q3. The lion's share of it starts hitting in Q4, so just think about that as you're modeling out your numbers.

[Tamy Chen, Analyst at BMO Capital Markets]

Okay. Thank you. My other question was, I see it looks like, since the beginning of last year, you're disclosing your Canadian Tire, your eCTM growth. It looks like the last, I want to say two quarters, there's a notable year-over-year acceleration in that. Can you talk about that a bit more? I assume the acceleration is just from all these partnerships. Can you talk a little bit about what the growth trend was like for eCTM before 2025? Lastly is, I think historically, the Triangle credit cards is the main driver of these points. I assume that's still the case, not so much from the non-credit card Triangle members. Thank you.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Yeah. Maybe I will take that, Tamy. It is Greg. I think this is a very concerted strategy, obviously. eCTM is obviously exclusive to us. It is a big part of our Triangle program and a huge part of the value that we are providing to customers in a very difficult environment. It is a lever that works very well for us from a flywheel perspective. More issuance equals more redemption. More redemption equals add-on sales and more first-party data generation. That is the strategy behind it. The primary reasons or rationale for a higher issuance rate this year, you pretty much answered your question. Partnerships are an entirely net new lever relative to last year, and then just this value focus. This is a way that we can give very differentiated value to a value-focused consumer on value economy.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

CTFS continues to be the predominant issuer, and as we work to integrate the bank even more into driving retail value, we are putting new initiatives in place, as I called out in my prepared remarks, for issuing more Canadian Tire Money, offering bonus offers.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Integrating some of those offers into the online banking platform. There is a lot of net new initiatives around eCTM and the bank integrating to make retail more successful. Relative from a run-rate perspective, I do not know how to quantify that kind of difference versus last year. It is elevated for sure this year, and we would expect that to continue.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yeah. The only thing I would maybe add to that, Tamy, is just the way we are managing all this, and with our margin nerve center, we have our hands on all the dials on what is the most effective way to go to the market and to stimulate demand and still deliver the types of financial metrics that we are looking to deliver. Yeah.

[Tamy Chen, Analyst at BMO Capital Markets]

Great. Thank you.

[Operator]

One moment for our next question. Our next question comes from the line of Vishal Shreedhar of National Bank Financial. Your line is now open.

[Vishal Shreedhar, Analyst at National Bank Financial]

Hi. Thanks for taking my questions. Can you separate the benefit on gross margin in retail from banner mix, and help me understand the underlying margin performance at CTR? Also, as you discuss that, maybe help us understand the outlook for the balance of the year, given freight and foreign exchange and promotional activity as we contemplate our models.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Hey, Vishal, it's TJ. I'll jump in on that one. As Darren talked to it earlier, we were very pleased with how the teams managed our margins in Q2. We were up 33 basis points year-over-year, and as you articulated, banner mix did play a role in that with the growth in Mark's and SportChek. We also, particularly at SportChek, with so much fan-wear sales, we did benefit from regular sales from that perspective. We felt pretty good about our margin rates within CTR, not materially off of last year, a little bit below last year, but nothing material. We continue to build our capabilities around promo and pricing, our margin nerve center, and leveraging our AI tools around DaiVID to manage margin rates.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

As we've said on previous calls, we feel the capability we've built here is on par with what you can see from some of the best retailers operating at global scale. The other thing I'll highlight is that with the focus that Canadians are putting on value right now, we were able to invest in price where we thought it made sense. As Greg mentioned, we had over 5,000 regular price decreases on top of our already sharp promotional activity. So we are really trying to lean into value to help inspire demand. I guess what I would say is, as we go forward, as you know and we talk about it a lot, margin rate can be choppy quarter to quarter. But we do remain focused and committed to our North Star from a margin rate perspective for the year.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

We do expect to face some headwinds, as Darren described, on fuel in Q3. But we do have the full-year North Star in mind as we go forward here.

[Vishal Shreedhar, Analyst at National Bank Financial]

Thank you for that perspective. CTR same-store sales declined 0.8%, and that was more than caused by these weather-sensitive categories, as I understood it. Maybe you can help us understand ex the weather categories, what CTR performed at. I ask in the context of the inventory at corporate increasing 7%, and my interpretation of your comments is that Q3 at CTC rebounded as weather returned to more normal patterns.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Yeah. Maybe I'll take that one again, and I'll cut it into two parts. The way we described it in the call, some of our seasonal categories represented 2/3 of our decline year-over-year. But if you actually unpack some of the other categories that have weather-related activity associated with them, it was more than 100% of our decline was associated with weather. If you aggregate our non-weather businesses, we were actually up. So weather obviously played a big role, and I would also say that patriotic purchasing from last year played a role, and Darren had pointed out that our two-year stack was 5.5% growth at CTR. So we definitely believe weather played a big role. As Darren described, we're seeing as weather showed up in Q3, our results have been a little bit better.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

As you kind of gravitate or move over to the inventory side of the equation, I will unpack that a little bit for you. Dealers drew down inventory in Q2. As you know, our revenue outpaced our POS in Q1 as they prepared for spring. At the beginning of Q1, dealers were at +5% in inventory, and now, as we closed Q2, they were only up 1%. We actually feel pretty good about where the dealers are sitting. As you know, POS and shipment growth normally converge over time, and that is exactly what we are seeing on a year-to-date basis. We are buying for the back half of the year to help support growth for sure.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

As we mentioned in Q1, I did want to highlight that dealers did end a bit heavy on a few fall, winter, and Christmas categories like snow shovels, winter tires, wiper blades, and Christmas lights, which will set them up well if we get an early winter. On the flip side, it may delay some of their ordering that normally happens in the late summer. They may be a little bit slower to replenish depending on when winter shows up. We feel very good about our inventory composition, and we are well-positioned to support sales growth in the back half of the year as consumption on spring, summer has kicked in Q3. We are also feeling pretty good about our inventory at the corporate level. Some of that +7% was the World Cup at the end of Q2, which obviously straddled the quarter.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Overall, we are feeling very good about our inventory composition as we head into the back half of the year.

[Vishal Shreedhar, Analyst at National Bank Financial]

Thank you.

[Operator]

One moment for our next question. Our next question comes from the line of John Zamparo of Scotiabank. Your line is now open.

[John Zamparo, Analyst at Scotiabank]

Thank you. Good morning. I wanted to ask about the Mark's banner. It really seems like you found some momentum here. I wonder if you could talk more about that business. I know you have lots of initiatives underway, but can you talk about what you think is having the greatest impact? However you measure share in that business, do you think you're taking share in some of the success you're seeing from the category broadly?

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Hey, John, it's TJ. I'll take that one. I love questions about the Mark's business. We are very, very pleased with the performance and sustained performance of the Mark's business over the past couple of years. We are up 4% for the quarter, driven by just amazing assortments in rainwear. When rain shows up, Mark's really shows up well. I would say the same thing about our industrial assortments, just fantastic assortments with such significant innovation. I think, the other thing I would point out is our new BBB concept is just absolutely firing. It allows us to bring kind of the best of both worlds for Mark's, the casual side of things with such great inventory presence and displays of things like Levi's jeans. It also allows us to really, really showcase our industrial wear. So we're very bullish about the Mark's business.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

It's also benefiting greatly from our partnerships and growth in our Triangle ecosystem. Members are definitely cross-pollinating to Mark's, and they're benefiting from that. As Greg articulated, we're so excited about a harmonized retail approach from a digital perspective because we think that's just going to drive incremental traffic to Mark's as we go forward. It's such a differentiated business for us, and I couldn't say enough positive things right now about the Mark's business. PJ and the team have just done a fantastic job.

[John Zamparo, Analyst at Scotiabank]

Okay. That's good color. Thank you for that. My follow-up is on the CapEx guide. It sounds like some of the reduction is timing, but some might not be, and some might be more structural. I wonder if you think HBC can run with a lower CapEx intensity relative to sales or EBITDA or whatever measure you use moving forward.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yeah, John, I think it's really more timing and just more discipline in the organization on how you forecast projects, the timing of projects, how you align the teams that we need to align, which is we're improving our muscle in that area. We see lots of good opportunities across all the businesses for investing, and we've talked about the HBC sites, SportChek, Destination Sport, and the BBB stores, as well as refreshes and remerches at CTR. So lots of opportunity. I wouldn't be changing your forward-looking thinking on the CapEx range. Just maybe take the sign that we're just getting tighter on how we manage and run the company.

[John Zamparo, Analyst at Scotiabank]

Okay. Thank you. I'll pass it on.

[Operator]

One moment for our next question. Our next question comes from the line of Jonathan Matuszewski of Jefferies. Your line is now open.

[Jonathan Matuszewski, Analyst at Jefferies]

Oh, great. Good morning, and thanks for taking my question. It was on pricing, and you've been talking about a value-sensitive consumer for a while now. I think you've been lowering prices for maybe two quarters or so. My question is, can you help us understand maybe just where pricing gaps stand today versus competition? Just trying to parse out were the pricing cuts were reactionary to what you're seeing in the market and, therefore, your spreads versus peers have been maintained? Or are these pricing actions more proactive, and your goal here and the results you're seeing are to actually expand your pricing gap versus peers? If there's any way to frame that would be interesting. Thank you.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Yeah. Jonathan, it's TJ. I'll take that one. Thanks for the question. We've put a lot of effort into building our capabilities around pricing over the past couple of years, and as you've articulated, we obviously watch our positioning relative to the competition really, really closely. I think in this consumer environment, we're always looking at different ways that we can provide value to our consumers. We have various levers at our disposal to do that at Canadian Tire as a high-low retailer. Obviously, regular price is one. How we discount category to category is another. Our Triangle membership-based benefits from the value we provide through Canadian Tire Money.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

I think we use all of those levers to try to deliver value, and most of our price changes are deliberate to try to provide value where we think Canadians want value, and our elasticity curves point us in those directions. We use our sophisticated AI models to point us in the right direction. There are at times, we do have to watch competitive activity and react based on what the competition does. The Canadian environment has been very dynamic with tariffs and everything that we've been dealing with on the cost side, so we have to watch that very closely. I would say it's a combination of us trying to being deliberate about how we deliver value, as well as keeping an eye on making sure we're price competitive in the marketplace.

[Jonathan Matuszewski, Analyst at Jefferies]

Okay, thanks. That's helpful. Just a quick follow-up, maybe just to dovetail off of the topic of e-commerce growth from before. How should we think about the cost associated with free ship-to-home for your Triangle membership base? 14% e-commerce growth is a big number. Is it fair to say you feel pretty satisfied with the trade-off in terms of some cost there in exchange for what appears to be pretty solid growth coming from that?

[TJ Flood, EVP and COO at Canadian Tire Corporation]

Yeah, I can take that one as well. I think we are quite pleased. I would say we just started this in May, right? So we're learning a lot. Today, what we've done is we have offered free shipping to our Triangle members at a CAD 99 threshold. What we've seen so far is very promising. Our conversion rates have increased. Our AOV has been almost double what we see in bricks, which is really important because, as you point out, this is an investment in value. As I pointed out earlier, we have several arrows in our quiver to invest in value, and this is just one more of them. So we're watching it really closely, and we're learning. Our AI tools are going to help us manage the tightrope we're always walking, which is managing demand creation with margin management.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

I would also say that our consumers are gravitating to some of our other e-commerce offerings really strongly as well, which have less investment impact. Our click-and-collect growth has been really strong. Our dealer turnaround time on click-and-collect orders has dramatically improved year-over-year, which has inspired consumers to use click-and collect. Our same-day service, which is paid, has been really, really strong. Our NPS scores on that have been great. We've also, as Greg pointed out earlier, have a really strong endless aisle. So it's a big kind of compilation of a bunch of different initiatives to help drive e-commerce growth. We're doing that in balance with all of the margin work that we do through our DaiVID tools. So, that's how we're managing it going forward here.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Jonathan, it's Greg. I would just add, like I talked to in my prepared remarks, we were honing the experiences, right? We wanted to make sure that we had a ship-to-home experience that could stand up to the expectations of the customer. That's taken some time, and we've been monitoring NPS and all those good things. We feel ready from a customer expectation standpoint. The same type of thing I'd like you to think about in terms of just overall margin management capability. If we turned on free shipping a few years ago, prior to the capability now that we've built through DaiVID to be able to manage all of the, as TJ says, the arrows in the quiver to generate demand and manage margin, I think this would have been quite dilutive to us.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

I think it's the combination of the in-store delivery experience, us feeling good about that, us building more capability around margin management that allows us to continue to lock in to our North Star expectation and have this now as a demand lever and optionality for our customer. That's probably the way I'd ask you to think about it.

[Jonathan Matuszewski, Analyst at Jefferies]

Helpful. Thank you. Best of luck.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thank you.

[Operator]

One moment for our next question. Our next question comes from the line of Chris Li of Desjardins Securities. Your line is now open.

[Chris Li, Analyst at Desjardins Securities]

Good morning, everyone. I have a couple of questions about the bank. First is, as you know, insolvencies have picked up a bit. How does that shape your outlook for the bank in the back half of the year?

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yeah. Hi, Chris Li. Overall, as we said in the last two quarters, we see lots of stability on our risk metrics. In terms of PD2+ and write-off rates, they remain stable despite the insolvencies. We are actually beneath the coverage. We are seeing good payment patterns from our customers, and overall, things continue to be quite stable. As we look forward, we think we are still in that market. Obviously, we watch it very closely. We are also at, I would call, an inflection point on the profitability. Definitely was pleased to see this quarter the growth in the revenue that offset the incremental costs we have had in that business. The incremental costs will continue as we have ramped up those investments. We start ramping them in the second half of the year.

[TJ Flood, EVP and COO at Canadian Tire Corporation]

It was nice to see that the profit was flat year-over-year and kind of that inflection point that we call it as we look at the second half of the year.

[Chris Li, Analyst at Desjardins Securities]

That is helpful. That was sort of my other question, just on the banks again. The SG&A rate, I think you mentioned in your opening remarks, you expect the SG&A rate to be still around 28% in the back half of the year. I know the rate was about 24%-25% before the investment. I am just curious to see how much of the increase would you say is more one-time sort of catch-up investment versus structural related to regulatory and other costs that you guys are just bearing in the bank?

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yeah, a little hard for me to tease that out and give you precision on that because it is a little bit of both, as well as us being active and adding new accounts, which obviously drives SG&A. I do not want to get into 2027 yet on the call. I would say that generally, we are going to be looking to grow the profitability of the bank. Like I said, we are at an inflection point and are expecting to start to see improvements. That will be our focus. There may be some SG&A increases as we look to grow the business.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Of course, we are continuing to be laser-focused on the regulatory requirements of that business. We think we can do all that and grow the earnings. We think there is lots of potential in the bank and in integrating the bank better into retail as part of True North. We think there's just tremendous opportunity for us going forward.

[Chris Li, Analyst at Desjardins Securities]

Great. That's very helpful, and all the best. Thank you.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Yep. Thanks, Chris.

[Operator]

One moment for our next question. Our next question comes from the line of Brian Morrison of TD Cowen. Your line is now open.

[Brian Morrison, Analyst at TD Cowen]

Thank you. Good morning. I have a quick question and a bigger picture follow-up. Darren, I just want to follow up on Chris Li's question, because I thought about this a bit more in terms of the allowance rate in dollar terms remaining flat despite GAAR growth leading to a decline in the allowance rate. Is this something that could slip into Q3? Or do you feel Canadian consumer payment behavior is improving? Or that provision was just more than adequate coming into the quarter?

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

Ultimately, when you do all the math, there's a lot of complexity in ECL calculation. Ultimately, it was an adequate reserve. We've generally held the number. We haven't been letting the number fluctuate, not letting. We haven't had the number fluctuate quarter to quarter because of the adequacy of the reserve. And based on the underlying behavior of the consumer, we definitely feel the reserve is adequate. We're actually seeing good retention on the book, which actually helps because you've got longer-tenured customers that you know their payment patterns. The newer customers actually tend to drive your ECL higher. So that's part of it. There's been stronger payment patterns in certain cohorts within the book. That goes into the calculation. And then there's all kinds of things like the unemployment rate forecasts from all the various sources that we use. So there's a lot that goes into it.

[Darren Myers, EVP and CFO at Canadian Tire Corporation]

But my long way of saying, yes, the reserve was adequate, and we feel we're well-covered.

[Brian Morrison, Analyst at TD Cowen]

Okay, that's helpful. Bigger picture is for Greg. We've seen a financial transaction with Loblaw and Equitable Bank. We've seen a loyalty transaction now with Aeroplan and Air Canada. I'm curious if these are areas of consideration you may look to surface value or you're content that you've completed this process over the past year or so.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Well, I think there is certainly intrigue. I mean, got to learn more about the transaction that was announced yesterday with Aeroplan. I mean, they operate their loyalty program quite differently than us from the standpoint of most likely a standalone P&L, the issuance or the selling of points. I think it is a very clever, interesting transaction. I think invariably when you start to think holistically and strategically about your business, you tend to really think about how you can grow organically in your core or inorganically supporting your core. I think it is quite strategic to think about the capabilities and/or assets that you might have that would be intriguing to others. I just think that is good hygiene, good business, good strategy. We are busy, as you know, Brian. This is a massive transformation.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Ultimately, this True North strategy is about improving our competitive posture and delivering better financial results in the core business. Our teams have their hands full, and hopefully you are hearing some excitement about some of the initiatives that we really believe will enable us to deliver those ultimate outcomes. I think the news in the marketplace is intriguing to us, and our ears are always open in terms of how we can create more value for shareholders.

[Brian Morrison, Analyst at TD Cowen]

Thank you very much.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thank you.

[Operator]

I'm showing no further questions at this time. I would now like to turn it back to Greg for closing remarks.

[Greg Hicks, President and CEO at Canadian Tire Corporation]

Thanks, Rivka, and thank you,, everybody for your questions today. As always, I want to thank Team CTC for a job very well done. There's a stat that we track, and it measures the pride our customers feel when they shop with us. When I checked our recent results, it had jumped a remarkable 5%. That doesn't come easy. It's a telling stat and an endorsement of the team's hard work, always with customers at the core. We're also proud to play a part in our communities from our flood and wildfire support for the Red Cross. Our hearts and minds go out to the communities impacted by those wildfires. To the work of Jumpstart's World Cup Legacy Project, building 25 new soccer pitches in neighborhoods that need them. It's our honor. Bye for now.

[Operator]

This will conclude today's call. You may now disconnect.

Participants

Executives

• Karen Keyes, Head of Investor Relations
• Greg Hicks, President and CEO
• Darren Myers, EVP and CFO
• TJ Flood, EVP and COO

Analysts

• Irene Nattel, Analyst at RBC Capital Markets
• Martin Landry, Analyst at Stifel Canada
• Tamy Chen, Analyst at BMO Capital Markets
• Vishal Shreedhar, Analyst at National Bank Financial
• John Zamparo, Analyst at Scotiabank
• Jonathan Matuszewski, Analyst at Jefferies
• Chris Li, Analyst at Desjardins Securities
• Brian Morrison, Analyst at TD Cowen