TORONTO, Sept. 12 /CNW/ - Canadian Tire Corporation and Canadian Tire Retail's Associate Dealers have reached an agreement in principle that will guide the establishment of a new commercial contract between the parties, replacing the existing contract which is set to expire in June 2004.
"Two major factors grant Canadian Tire a distinct competitive advantage in the retail landscape - our unique store and our Associate Dealer structure," said Wayne Sales, president and CEO, Canadian Tire Corporation. "The relationship between the Corporation and the Associate Dealers combines the flexibility of an independent business with the advantages of a central marketing and distribution organization. Our new agreement builds on this successful formula and carves a path for the future that will ensure Canadian Tire Retail remains competitive, exceeds customer expectations and fairly rewards both the Corporation's shareholders and the Associate Dealers for their respective business investment."
Canadian Tire's 440 entrepreneurial Associate Dealers own and operate the retail business of Canadian Tire stores and automotive service centres across Canada. Associate Dealers are required to purchase merchandise primarily from Canadian Tire and provide for various controls on the customer experience, range and marketing of the products offered, and the operations of each store. These obligations, as well as formulas designed to provide financial incentives to each Associate Dealer for their efforts, are specified under the Dealer contract. To provide certainty for the efforts of the Associate Dealers, the Corporation stipulates the commercial terms for fixed periods.
"In reaching an agreement in principle on a new contract, Associate Dealers and the Corporation have worked together to adjust the financial terms of the existing contract and have also agreed to important strategic and operational changes," added Mark Foote, president, Canadian Tire Retail. "As a result, we expect a positive contribution to the future earnings of the Corporation while continuing to offer an attractive incentive for Associate Dealers to build, maintain and grow the business of their stores. The strength of the relationship between the Corporation and the Associate Dealers, and our shared commitment to our customers, have been very important factors in reaching a new agreement."
The overall term of the new contract will extend for a ten-year period beginning July 2004, although the financial terms will be reviewed at the end of five years. The drafting of the definitive Dealer contract is expected to be complete before the end of 2003. Subsequently, the Corporation will issue an update to reflect the anticipated financial benefit of the new commercial arrangement with Associate Dealers on the continuing operations of Canadian Tire Retail based on detailed planning for 2004 which is currently underway.
About Canadian Tire
Canadian Tire Corporation, Limited (TSX: CTR.a, CTR) operates more than 1,000 stores, gas bars and car washes in an inter-related network of businesses engaged in retail, financial services and petroleum. Canadian Tire Retail, with 450 stores operated by Associate Dealers across Canada, is the country's most-shopped retailer, offering a unique mix of products and services through three specialty categories in which the organization is the market leader - Automotive, Sports and Leisure, and Home Products. www.canadiantire.ca offers Canadians the opportunity to shop online. PartSource is an automotive parts specialty chain with 33 stores designed to meet the needs of major purchasers of automotive parts - professional automotive installers and serious do-it-yourselfers. Canadian Tire Petroleum is one of the country's largest and most productive independent retailers of gasoline, operating 220 gas bars and 41 car washes. Mark's Work Wearhouse is a specialty retail organization that operates 308 stores in Canada, selling casual work and work-related apparel and footwear. Canadian Tire Financial Services manages related financial products and services for retail and petroleum customers, and also markets other value-added products to our customers. More than 45,000 Canadians work across the Canadian Tire organization from coast-to-coast.
/For further information: Media: Scott Bonikowsky, Senior Director, Corporate Communication, (416) 480-8570, bonikowsky(at)cantire.com; Investors: Bob Tait, Director, Investor Relations, (416) 480-3207, btait(at)cantire.com; To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports(at)cnw./
