Q4 2025 Canadian Tire Corp Ltd Earnings Call [BACKUP]
<unk> grew two 5% driven by higher average account balances while active accounts increased modestly in the back of increased cardholder acquisition.
We continue to leverage loyalty issuance as a tool to engage cardholders and drive retail sales E.
E C T M issuance to cardholders increased more than 12% to $329 million over the course of 2025, reflecting deeper integration with retail.
Gross margin dollars in CTF asset Etfs S increased 11% as a result of higher revenue and lower net impairment losses.
Normalized <unk> was up 3% driven by the increase in gross margin, which more than offset higher SG&A as we continued to invest in the business.
Overall risk metrics remain stable.
P D two plus improved slightly finishing the year at three 5% down 11 basis points the.
And that write off rate was seven 2% up 13 basis points year over year, but stable versus last quarter.
Folio stability saw the allowance remained relatively unchanged with.
With an increase in the ending receivable balance to $7 $7 billion. The allowance rate ended the quarter at 12%.
While economic recovery remains uneven across the country, we have continued to see stable trends.
As always we keep a close eye on the environment and are prepared to act should we see any meaningful change.
Okay.
Let me provide some color on what we're seeing so far in Q1, and how we're thinking about 2020.
Yeah.
Despite ongoing geopolitical uncertainty inflation and continued mortgage renewals Canadian consumers have remained resilient.
One is off to a good start with winter weather driving sales in late January and into February what is normally our smallest and least discretionary corridor.
Keep in mind, though that we're comping very favorable weather last February as well as a strong end to March which is always the biggest month of the quarter.
Turning to the year as a whole the ctr, we continue to buy for growth in 2026. However, it's worth noting that we will be cycling tough weather comps along with a strong patriotic purchasing in the first half of 2025.
Our sport Chek, we've spent events might be Olympics or World Cup to help us sustained momentum in the first half while the rollout of Triple B stores in Quebec, and Ontario will continue to be key to sales growth at marks.
Our north Star retail gross margin rate of 35% plus remains a good long term anchor our 2025 results demonstrate that through disciplined execution.
Can balanced value to customers, while delivering results above that level.
The rollout of Davidson more check in March late 2026, along with the continued optimization of Ctr will help underpin our gross margin rate notwithstanding we will always have some quarter to quarter variation.
Our retail, although we continue to see inflation in our advancing targeted investments, including an AI. We remain focused on managing the rate of Opex growth.
At the bank, we don't expect the same profitability headwind, we saw in 2025, but ongoing investments will create some pressure on SG&A rate and profitability in the first half.
Finally.
We remain committed to a balanced approach to capital allocation investing in the business for long term value, while also giving back to our shareholders for 2025, our return on invested capital improved to 11%.
2025, operating Capex came in below our range at $502 million due to tighter project discipline and timing.
We expect Capex in a range of $500 million to $550 million in 2026.
Finally, we continue to repurchase shares under our 2026 share repurchasing pension <unk>.
2025, we supported EPS with over $440 million of share repurchases, reducing share count by about 5%.
In summary, 2025 was a strong year built on a new operating model tighter execution and a clear strategic direction.
We intend to carry that discipline and momentum into 2020.
We look forward to updating you further at our Q1 results call in May with that ill hand things back to you Greg.
Thanks, Darren following a strong year, our job is not only to celebrate.
To demonstrate that our progress is terrible.
While we continue to detail the specifics of our initiatives I want to start at a slightly higher altitude.
I want to describe what were building because it's fundamental to the success of true north.
Yeah.
In a new era of retail and a world of global Mega competitors, we are setting a path that is uniquely our own.
Rapidly building a new go to market approach predicated on a retail retail system of unique assets.
Nobody can match dig.
Digging deep bumps.
Our retail system starts with the highest consumer trust in Canada.
It connects our banners brands and partnerships together through the engagement and privilege data triangle rewards.
It elevates, our insights and actions to new technologies and tools like AI.
And it moves us from individual banners selling products to a retail enterprise ready to serve the big and small occasions.
Canadian light.
That's what we mean when we call it a retail system.
By extension I'd encourage you to think about the initiatives in our four strategic cornerstone stock in isolation, but as part of a larger plan.
You can expect us to put those puzzle pieces together more tightly through our actions and commentary in 2026.
Our retail forward cornerstone is fundamentally about growing core retail sales you've seen the results in 2025, but we're also reshaping the customer experience.
We continue to drive new store concepts in store refreshes with 52 last year and approximately 70 plant for 2026.
We're strengthening our investments at marks with bigger store concepts that are attracting new and younger customers, expanding assortments and elevating brand experiences.
<unk> refreshes and new format stores are lifting already outstanding NPS and reinforcing its position as a top destination for the brands.
Likewise, we are growing our e-commerce performance at twice the rate of brakes harder.
On the hypothesis the future of retail is by lowering friction for customers. However, they shop in person from home or in combination.
Rolled out faster fulfillment options easier transaction, so it's contextual AI search.
And as we have ramped up same day delivery related NPS scores have been remarkable and among the best that we track.
Retail forward also includes retail fundamentals Darin spoke about David and our surgical work to balance sales and margin but.
But I wanted to highlight how.
That has shown up for customers.
Last year, we adjusted tens of thousands of prices based on deeper and deeper insights some up others down.
In Q4 year over year improvements in our consumer price value perception for industry, leading with perceptions of our regular pricing up a staggering 50 points.
Yeah.
How do you think about retail forward.
Think of it as a portfolio strategy is meant to change the way Canadian consumers.
Spirits.
CTC.
Our stores digital convenience price value brands in all of the factors that help us balance sales and margin over the long run.
Moving on the progress of our triangle powered everyday cornerstone is clear in our 2025 loyalty results, but in 2026 triangle is not just a member counts it's about velocity.
Engagement is up members are more responsive to promotions.
<unk> or AI informed offers to generate sales.
Growing loyalty attachment also allows us to inspire members to move between banners.
C. G are our customers are shopping marks for Mark's customers were shopping ctr.
And the flywheel turns driving quantifiable sales.
Then of course, we have our growing roster of big brand loyalty partners to give members more ways to earn Canadian tire money for everyday activities like billing their tank banking travel in the morning ritual of grabbing a tense.
As you know <unk> has a multiplier effect driving sales in our stores by extension our most engaged members drive the most sales.
As we lean into partnerships engagement claims.
Many members are already making incredible use of our Petro Canada partnership.
B C has come out of the gates quickly and west jet and temps are on the horizon.
As these partnerships come fully online let me give you a sense of what it can mean in terms of volume and velocity and there are two stats that standard.
First in terms of volume today, we have a growing population of about 2 million members engaged in our partnerships.
Through mechanisms like offers or credit card or the simple act of Lincoln programs.
Over time, we see a path to doubling that counts.
And then in terms of velocity.
You have a large pool of members are highly engaged in our partnership program.
Including the more than 600000 words linked to triangle and Petro points.
Dallas is shows that these customers are spending about 10% more with us that's similar but less.
Of course.
Whatever the measure growing partnerships is an important lever for growing sales.
Making good progress in the early innings.
Sure. Eric This is ultimately about a more modern company organized around stronger customer connections.
Last two cornerstones customer insights and action that one team agile and scaled our key.
Automotive service is a great example of what is possible.
In a category that is built on customer centricity and relationships, we have established a clearer understanding.
Who does or does not come to us and wide applying our existing local knowledge the growing power of triangle do customer insights.
Accelerate automotive service consider a few numbers.
Over the last five years, we have grown to a billion dollar sales.
Compounding at a rate of 7% per year.
It's just an impressive new baseline and a trend line that suggests suggests further growth.
For instance, if we compare our average 15% share in general merch categories to our 10% share in automotive service it could be looking at a growth opportunity of more than half a billion dollars.
And a large highly fragmented market, we have the assets to compete harder to keep a capital light and deliver considerable upside for both customers and shareholders.
But our future is about more than just identifying categories right for growth. It's more fundamental it's about a different go to market strategy with customers.
We'll deliver primarily through faster more insightful coordinated strategies across our enterprise.
Assets.
We offered something of a sneak peek yesterday with the announcement of our work with Microsoft on an AI intelligence engine called Sam.
Together, we are scaling our program that matches our retail system.
Stores sites marketing loyalty partners products and services to the moments of Canadian life.
Last year, we conducted a pilot.
<unk> and L. O M to compete huge sums of internal data and external context, we asked them to identify the moments of life, where CTC is best positioned to serve Canadians.
And in surface more than a thousand occasions for them.
Basement floods, two weekend workouts to anything you'd add you ended your own day to day, where.
Where we can combine all of our existing assets and new insights to pivot from simply selling products, just serving the occasions of Canadian light.
If that sounds conceptual it's not we will begin to commercialize this approach in the back half of 2026 and I look forward to telling you more in the quarters ahead.
I'll conclude by reminding you of our true North vision, three simple phrases that represent always set out to achieve by 2028.
Stronger customer connections higher retail performance accelerated share value.
On the back of a strong 2025 results I Hope you agree we've already come a great distance and we are moving at pace ready to go distance apart.
Our strategy underpins, our conviction that the business should over the long term.
Deliver annual retail sales growth of 3% to 5%.
With earnings growing faster than sales.
While this is not near term guidance.
And any year can be affected by factors such as geopolitics economics, even weather.
True north should position us to deliver these kinds of results more consistently.
In the long run.
I want to thank our team from our offices to stores to distribution facilities and beyond.
2025 was a year of considerable change people performed with determination and transformed with Grace.
My very personal things.
And while we're on the topic of high performance I want to add my voice to those hearing on our Olympic athletes.
Many with deep ties to the jumpstart charity.
And our very own trend Michelle.
Figure skater and sport Chek team member, who not only inspire his teammates here at CTC, but the entire nation.
With that go Canada go.
We can open up the call for questions.
Thank you at this time I would like to remind everyone in order to ask a question you will need to buy star one on your telephone keypad.
Your question. Please press star one again.
So you limit yourself to one question plus one follow up question before settling back into the queue.
Well pause for just a moment to compile the Q&A Boston.
Now first question coming from the line of Irina tailwind RBC capital markets. Your line is now open.
Thanks, and good morning, everyone certainly.
Gave us a lot.
Pack there so taking a step back 2025 certainly.
<unk>.
In a more bullish way shall we say than what we might have thought a year ago can you. Please walk through what the biggest upside surprises were.
And then sort of the I guess the follow up question is how some of the initiatives put in place in 25 of them that are accelerating in 2000 and fixed can sustain that momentum as we move through this year.
Thank you.
Yeah. Thanks, Irene good morning.
Yeah, so biggest surprises.
I think the resiliency of the Canadian consumer.
<unk> comps.
Top of mind.
<unk>.
When we started 2025.
Suggested to you that we didn't.
You don't have a lot of certainty certainty in the economic environment looking forward, but we were buying for growth.
We hoped to see more resilient consumer coming off.
Top period through 'twenty three and.
24 or so.
When we when we look to our data at retail.
We continue to see spend increase for all income level of households.
The largest increases this quarter actually came from.
Our highest debt consults.
That burdened hassle, but for the quarter of the year, we see similar spend increases percentage wise across.
Income levels.
Denver, so that that would be that'd be one big surprise. The other biggest pleasant surprises just the separation that we're seeing.
Between our loyalty sales in our non U S sales.
So I think it speaks to the fact that.
Members are both seeking and we are providing.
Valley.
Okay.
Separation in Q4 and for the year and that.
We believe is indicative of us managing the system that I spoke to engage customers more with that with that privilege changes sort of continuing to see that separation Boris.
<unk> separation that I would say it was a nice a pleasant surprise.
And then third that comes to mind is just the power of partnerships.
You know the <unk>.
I personally wouldn't have expected to see such a phenomenal incremental retail sales.
And staff to cause at the customer members level associated with engaged Petro points triangle triangle words linked members. So that 600000 strong cohort who have linked their programs.
You know I think we're really starting to see the value creation that could come back.
Into our into our banners in the form of incremental spend or engagement.
At the member level and where we're excited.
Bye.
<unk> momentum of our ability to grow.
Linked members with Petro, Canada, and now as we as we carry on.
With other partnerships I mentioned RBC being strong as the gateway already 150000 members linked.
And I think there's a strong value proposition there. So I think our ability to extend our system to get some brand scale around elements.
In Canadians' lives.
Where we we don't have particularly strong owned assets.
Engaged members.
I think all in all very positive.
I forgot the second part of your question those are the three big surprises.
Thank you the second part of the question was how you build on that momentum into 2026 because.
Think about that.
Last comment and meeting your prepared remarks about 3% to 5% revenue growth and more earnings growth Matt.
Clearly as you deliver that very well in 25, how do you keep that going.
Yes, it's a lot more of the same Irene we're going to continue to focus.
With our dealers and across our corporate own banners around the fundamentals of big stock that was a big driver.
In 2025 of winning seasons.
The partnerships.
Just talked about we've got three brand new ones rolling into 2026.
Which will provide wraparound benefit into 2027.
And I think one of the things that.
It is exciting, especially.
As AI is advancing.
As you know we've talked a lot about our agent.
To improve our personalization capabilities, that's been a big focus of us as an organization.
But for the most part that personalization capability has been delivered.
That are call it kind of a look alike or a cohort audience level.
And we're really starting to see evidence now in the technology is helping to get that true personalization.
Sure.
And that's a whole new exciting frontier.
It's completely brand new adjacent to us in terms of the opportunity. So I'm very excited about how AI.
I will help.
Our personalization journey to truly be more.
One on one.
And so so I lean to those critical areas.
You know I read and we're really excited about I'll say heck. We think this is a strategic pivot.
Just pivot from selling products to selling occasions, we think it feels natural for us we're going to stand up.
It's crowded in not only customer.
Site in terms of our brand's ability to travel in those spaces, but also market size and opportunity.
So we're going to stand up a couple of what were calling might houses in key occasions in 2026, I'll stop short of telling you what those are for competitive reasons.
But we'll certainly talk to you this year about how they perform so we're excited about this new event and our ability to be even more customer centric going forward.
Maybe let me just add I think it's clear to everyone that like Greg said, the three to five it wasn't sort of guide for this year I mean, clearly as you think.
26, we still see the economy bouncing back we have some tough weather comps patriotic purchasing so.
Just consider that as you do your modeling for the year.
Thank you and best of luck.
Thanks, Mike Thanks Hakan.
Thank you our.
Next question in queue coming from the line of Brian Morrison with TD Cowen. Your line is now open.
Yes, thanks, very much Greg just circle back to the same store sales growth at CPR for the quarter and it was.
Yes, it was strong obviously in the auto and seasonal categories, but at two 7%, it's not it's lower than your 3% to 5% target I realize for the year you are within that target but.
Two seven off of $1, one last year and a negative to the prior year.
What is underperforming or what categories have room to improve maybe is probably the better way.
To ask.
Maybe I'll just start Brian on that just.
Really for the year and I think you highlighted it it's we got to be careful never to look at a quarter because there's so much variability year over year on its own.
Both recall when we started the quarter we were flat in October. So we have a very slow start and we had a very strong December last year. So when the math comes together, we did well obviously.
It's a number of categories that I outlined.
Let's say the growth was across many many parts of the business, but more importantly was three 7% for several years. So we're pleased with the full year growth. We're pleased with the Q4 growth as well.
But theres always year over year impact from quarter to quarter variability.
I would just add Brian I mean.
The growth was widespread ctr almost 90% of categories grew in the quarter.
Uneven you know as you pointed out so I would point to two things one or two areas. One we still have.
Quite a bit of separation between in this quarter between discretionary and essential.
So discretionary was sub four seven.
Sorry, Central was up 47 discretionary up one six so that speaks to that kind of discerning.
Purchasing again, we did have some good growth with snowball horse.
So I take a discretionary, but but beyond that that kind of healthy.
Discretionary business is something that would look.
Two we took come around in 2026.
And then second is our living division and CCR is underperforming relative to the other divisions.
It's still growing but but an area of focus for the team.
We're not feeling the same level of.
Eunice and innovation from our suppliers that behalf.
In each of the categories in that business.
And it's something that T J and Michelin Davis, the team and all of our merchants are working on.
Pretty I guess aggressively in trying to turn that.
Newness and living on its head and really drive some excitement for 2026.
Okay. Thank you for that and my follow up is really Darin gave us good color on the gross margin expectations for this year.
We're focused on Opex in 2026, maybe just directionally should we expect leverage this year and maybe the key drivers that we should look at that to take into consideration.
Yeah, Brian.
Mentioned.
In my prepared remarks, the way to think about Opex as I'm, either certainly with true north and changes, we're making in operating in a more disciplined way better alignment on the organization. We are very focused on managing the rate of growth of course the actual.
Great it's going to depend greatly on where the revenue number falls, so I want to be careful of that.
Trying to position over the position that we do see inflation, we continue to have targeted investments, including an AI and then we will have productivity issues as you know we have $30 million.
Savings this quarter was the first quarter of full savings those those restructuring savings started in Q3.
We also had higher vacancy rates in 2025 that you need to consider as well.
We're going to be true north and making the taking the actions. We took we obviously weren't hiring so we will have a little bit of.
But a headwind from vacancies probably the best way to think about the restructuring savings as we are on track to the $100 million relative to 2024. So if you kind of want to model that in.
And maybe ill.
Leave it at that.
Thank you.
Thank you thanks, Brian our.
Our next question coming from the line of Mark Petrie with CIBC. Your line is now open.
Hey, good morning. Thanks for the question I wanted to ask just a very high level.
<unk> actually just about the revised org structure and executive alignment and how you think that has affected the business.
Whats gone as expected and what's sort of been a surprise coming out of that.
Hey, Mark it's Greg.
Yes, I mean I think.
True north fundamentally.
Transforming our operating model to better compete.
In this new era of retail.
Defined by a scaled players.
So fundamentally it was a bit of aggregating the scale that we created for ourselves.
The primary rationale for these extensive changes to the workforce.
As we talked to were very difficult, but important decisions to make.
We think the rationale.
Spell understood.
By our teams so.
Organization is now complete.
Probably completed more towards the end of kind of call. It September October so, it's still relatively fresh, but our but our focus now is turning that all of our attention to value creation. So we're working through a process changes.
Working through technology do patient.
Second data infrastructure, so that we can better deploy for value going forward.
And then working through the new and Bacon.
<unk> created through the organization.
I think whenever you do a big organization like this you don't get everything right.
We probably got some tweaking to do in <unk>.
2026, some areas, but I really like what I'm seeing so far.
Especially in the areas of resources capital prioritization.
Performance management Aaron's committed deals.
Strong focus on in season performance management.
And as we as we look to you know where were spending our cash and how we're kind of allocating resources.
Feel like we're in a much better rhythm and management system for making trade offs.
And.
And just managing the decision, making associated with ensuring that those investments create value because we're prioritizing it at an enterprise level not banner by banner so.
Lots more work to do to kind of deliver on that value creation.
Big Big change.
But now the work really get started on <unk>.
Process reengineering technology to finish all the stuff kind of behind the behind the curtain so to speak that will make us a more efficient and agile retailer.
May I just add since that since I joined Greg obviously before I joined this company.
Starting with the Holdco opco.
And it's been a big change I mean the.
The kind of that as Greg said, the rhythm and the performance management alignment.
Fourth quarter, we're able to make decisions much sooner and it is showing up in our results that we will continue to get better.
Still have work to do it's hard to turn a big ship.
But we are making good progress and I do think it will lead to longer term consistency and improve results.
Yeah, Okay I appreciate that thank you.
I also just follow up on your comment Greg with regards to the assortment and sort of I think newness is the word you used.
I think this is another year, where own brands penetration was relatively stable down a little bit.
Does that figure into that comment at all and how are you feeling about that as a lever in the business today.
I feel I feel really good about.
Owned brands.
Performance the overall role they play.
We.
We feel feel really good about the portfolio.
I would say.
<unk>.
Most proud in terms of an accomplishment in 2025.
What we're seeing from a product quality standpoint.
The whole portfolio reached the lowest feedback rates that it has.
So it's starting.
Starting on brands.
The business on the topline is performing better than national brands, both in the quarter and for the year.
<unk> continues to appreciate our margins fall differentiate the offering in the retail system.
The penetration, we're not as fast as that.
On that Mark as we once were in it and obviously it relates to.
Barks in check.
Especially marks the BBB concept is our concept for the future.
I think it's the best representation of our assortment standing tall in front of our membership.
And the mix of national brands to own brands is significantly different in those stores did not <unk> stores and we think that's good.
We're managing a blended margin associated with that concept.
We can see evidence that you've heard us talk to the fact that we've got brands now.
In the VIX the national brands that are attracting.
Ah.
Much younger demographic I think I've talked about the fact that.
Interesting.
It's pretty cool.
These days based on some of the brands they carry so.
Yeah, all of that to say not as fast about penetration increases going forward at the system level.
And continue to feel really really good about its ability to the portfolio's ability to differentiate us with product quality great value.
And running harder on the sales line that the national brands for Us.
Okay got it thanks for all the comments all of us.
Thanks, Mark Thanks, Mark.
Thank you.
Question coming from the line of John <unk> with Deutsche Bank. Your line is now open.
Thank you very much good morning.
I wanted to ask about patriotic purchasing and I wonder if you've seen a resurgence or a continuation of that and this is obviously hard to measure it sounds like HBC has contributed to that the timing of the Winter Olympics add some noise. There. So surely those are both contributing but I wonder if you can get a sense that this wasn't.
Just a one time item in 'twenty, five and that lapping that in the first half of this year might not be as meaningful headwind as perhaps we thought it would be a few months ago.
Hey, good morning, John It's Greg.
Really tough as you as you pointed out in your question to tease out I think we suggested that back you know coming out of Q tubes, Q2's call, we kind of we felt.
It felt more subjective and objective when we were in it.
Q2, and I think we had suggested in Q3.
It kind of fell kind of waning sentiment around patriotic purchasing.
So I don't really know to be honest, how to think about it I don't think we've we haven't planted as of as.
As a major kind of negative building block.
For the year.
We're going to continue to play our game and do all the things that would be.
And in terms of our go to market strategy in 2026.
I think when you were.
Where it is most objective Jon is probably in the sport Chek business, just not really patriotic purchasing although maybe some of its caught up on that is when you think about <unk>.
Blue Jays and.
And Olympics.
Blue Jays, probably represented about a point and a half of car rental comp or the spartech business.
And but this year, we have the World Cup.
The Olympics to work to offset that so.
I do believe the recent Canadian pride associated with the nation getting behind them. So objectively that's probably the.
<unk> point.
And you can put on some degree of patriotism patriotism with the fact base.
Right. Okay. That's helpful. Thank you for that.
And then just a modeling question I wanted to better understand the impact of the extra week. So.
First can you confirm I think you said $287 million in additional retail sales and $40 million.
If that's the case, that's about 99% of last year's retail sales number in Q4, but it's about 20% of last year's IBP.
That's more than I think we would've expected on the income line. So can you help us understand how SG&A is accounted for in that calculation.
SG&A so your numbers the absolute numbers were correct.
Following your math on the percentages, but.
The SG&A.
Leave it to you, we're not giving gross margin, but if you apply just a regular gross margin right behind you could see a slightly light lighter SG&A, which is typical on the extra weeks because you don't have all the same costs within there.
But John I'm, not sure I caught your percent growth.
Year over year for the quarter I assume.
Correct, yes.
Yes, so if you took them for the quarter it would be about.
About half the growth on.
On the revenue, maybe you Didnt say that and just done there we'd be or we would be just probably under.
Pass the growth on the EPS, so 20% EPS without it takes number.
Without the extra week.
Got it okay. Thank you I'll get back in the queue.
Okay.
Our next question coming from the line of Charles <unk> with National Bank Financial Your line is now open.
Hi, Thanks for taking my questions with respect to the underlying business and it seems like.
Management.
Feel some enthusiasm with regard to the initiatives that you've implemented but when we're looking at it started the quarter with respect to sales indicated loss.
Conference call starting up flattish then obviously it ended out strong there's a few more transient events in there including weather and.
And some other events in there as well so how should we think about how to assess the underlying momentum Q1 is going to get a weather benefit as well. So what would you point to to help us better understand what the true comp is moving at.
I don't know if we can.
We can help you discern.
Finite point impact of.
Whether I think darrin.
Suggested that you did have tough comps in October we had strong comps in December.
That wasn't the October comps, we were dealing with sort of standard and most of them. There was some other things.
The performance of the business.
We can tell you we feel.
We believe that we were.
We were.
We were on pace for a strong quarter before weather hit.
But make no mistake it was a positive contributor.
In the quarter for all Ben spoke to some of the categories that performed really well across across banners and those are those are start weather dependent.
But I would remind you though is your commentary around Q1 of this year.
We basically just trade it off.
Weather in January of 2026 for February of 2025.
So.
If you recall last year, we Central Canada, Ontario, and Quebec had very very strong snowfalls ice issues et cetera. So we're confident that as we speak.
But listen you know we.
We've worked really hard.
To be Canada's destination for winter weather like we.
Make no excuses for that.
I think the teams executed really really well.
<unk> replenished our supply chain stood up Brazilians.
<unk> got as much inventory back in stocks, we think our in season management was really strong.
But it does layer on top of a buildup of a healthy underlying.
A healthy underlying business I'm not I'm not sure what else I can I can say on that.
Okay. Thank you for that color and just moving on to the gross margin performance.
Very solid again.
And I think Darren you can correct me if I if I misinterpreted this but you expressed the northstar being 35, plus and I don't recall it being expressed in that way as well does that does that is that increasingly the expectation of what the north star is or should we think about it is in line with what you've said in the past.
Yes. It is.
Good observation, we weren't saying plus we were around 35 of that is the plus we feel very good about that.
Capabilities that we've built the muscle that we built in terms of our processes and we're making as Greg mentioned, good progress with the value orientation, while doing this so.
You know the actual math, if you did the real math based on removing healthy with true North Sea would be 35 to <unk>.
Recall that 35, we came in at 35.5, we liked the plus and we certainly are looking to maintain our loan momentum, but we're not going to start giving guidance on the gross margin line.
I see okay. Thank you for that.
Hi, Thank you congrats on the quarter.
Yes. Thank you thanks Michelle.
Thank you our next question in queue coming from the line of Jonathan Matuszewski with Jefferies. Your line is now.
Hi, Good morning. This is andreas on for Jonathan Thanks, So much for taking the question.
My first one will be on triangle reward so with the RBC partnership ramping quickly how is that informing how you were thinking about westjet and Tim's later in the year and as you look to expand that network further.
What verticals do you see the biggest opportunities for future partnerships.
Yeah. Thanks for the question.
We're feeling good about the ramp thus far in the RBC partnership is it's early days I think I may have mentioned, we're up to a 150000 members.
50000 of that came in January so, we'd love that to be kind of a run rate.
More Canadian tire money's being issued we're seeing new triangles sign ups.
The three times accelerated as a strong value prop for the RBC.
RBC partnership.
And functionality to be able to convert Ivy on points to E. C. T M will be in place by spring so.
I think I.
Generally speaking.
We are developing.
The playbook here with respect to how T.
Set expectations and objectives for each partnership.
And then work with the partner in a joint business planning.
Tight relationship whereby we both have the same.
Targeted outcomes, we have an integrated scorecard.
We used to be stood up a small but mighty partnership team to help manage the relationship to manage to the outcomes that they're looking for so I think that those kind of organizational muscle assigned a copyist.
So what I see because it is that do I love the.
The fact that it's it's grounded.
Cups that we're trying to achieve.
I think we are deploying the same type of <unk>.
<unk> all the way from kind of my relationship with the top of the house.
In each of our most critical partners all the way down to the integrated Spartanburg.
So we're on track and feeling good about launching west jet and RBC.
This year each partnership has different expectations for those outcomes that I.
When I spoke to.
And membership engagement and we're just actively managing that.
Sure.
I think we've said before we're not we're not looking to build a vast coalition to Alaska.
And your question.
We're focusing on strategic industry verticals that aligned with everyday customer needs.
<unk>.
I think we're leveraging this kind of asset light approach to grow in financial services travel.
And so it's a limited number of other verticals.
Et cetera.
So I'll, probably stop short of naming them, but just thinking about where you know Canadians have a good amount of spend in a vertical we don't participate in and you could probably figure out where we're active.
Well, we got our hands full with partnerships, we have here and because as I said earlier receipts so much value.
Turning our attention to making sure that we get value each partnership before we add a bunch more is really important to us.
Great and then just a quick follow up so.
You guys have made meaningful progress in.
Shaping the customer experience through the store refreshes with now the <unk>.
70 planned refreshes for 'twenty six.
From 50 to 25, how are you thinking about the cadence of the store refresh plans from here. Thank.
Thank you.
Yes, so this year liens much more into marks.
We've got I think it's about 13D B visa market right now we've got 10 on the docket this year.
I think we've got just over 30 total projects 70 would be would.
It would be mark so <unk> and then some some refreshes et cetera.
That's because of what I talked about earlier, but we're loving county concept showing up in front of the customer.
<unk> provided.
Strong customer engagement topline performance at returns that are above our hurdle rate. So.
With all day long kind of the best of those types of.
Dynamics.
Where.
You know were 150 in a concept connect across ctr.
So more work to do I think when we originally identified better connected and we thought that we could get to $2 25.
So more work to do there thats kind of how to think about the runway and then.
Sport Chek.
Sports that kind of feels.
To us.
<unk>.
Similar to Mark's.
And just kind of call it a year or two behind <unk>.
The destination sport concept is.
Off the charts performance right now, we couldnt be happier with foreseeing.
We've got foreign market. We're opening three this year performance is well above our hurdle rate.
And certainly our expectation 27 onward, we will build more.
More per year.
Then were doing this year. So I think this is our opportunity to refresh the brand experience either for the athlete tell stories with them for our brand partners.
We really zero in on that business, we lumped Dick's sporting goods in the U S. C. US a few years behind near journey, I think we shouldn't be able to invest in this concept for growth drive strong returns.
And deliver both.
Customer and employee experiences the athletes to work in our stores loved. These destinations are concept. So hopefully that kind of gives you a picture in terms of how we're thinking about the lifecycle and stage of each of the big concepts.
Yeah.
Helpful. Thank you.
Thank you My last question will come from the line of Chris Lee with Chardan. Your line is now open.
Good morning, and thank you for squeezing me in.
Obviously, a lot of moving parts, but when you excluded the weak it seems like CPR revenue growth. This quarter was more in line with POS do you expect this to be the case for 2026, I think last quarter, you mentioned that inventory levels for spring and summer were slightly elevated but I think that was because of air conditioners in Alberta, but just the overall wanted to see how.
Or we should think about revenue growth should we be more in line with comp sales for this year. Thank you.
Yeah, Thanks for that.
Chris So we expected last year views to revenue ratio to be fairly in line.
But revenue.
I ended up outpacing sales.
Teams build throughout the year.
As you point out the dealers did in Q3, a little heavy in spring summer inventory.
And the end of the year with a build in winter inventory. So overall up about 5%, but our winter inventory is declaring given given the weather experienced state. So we'll update you as we normally do regular course after coupons.
Give you a sense of their ending inventory position.
And its expected impact on revenue.
Yes.
Fourth quarter.
Generally speaking, though because of the build.
Now we got this you got this planning assumption wrong last year, but we do we do expect.
We expect some draw down.
Inventory relative to the U S.
In 2026, we think that's healthy.
Given the starting position of the elevation in spring summer.
So that's our expectation planning assumptions for the year.
Yeah.
We'll keep you posted obviously as we move through it.
That's helpful, Greg and maybe as my follow up you mentioned that recent.
A recently negotiated some amendments to the contract with the dealers.
Turning to the extent that you can can you share with us how some of those amendments.
Sure.
Further align your objectives with a true north our strategic priorities.
Yeah, So you're right we did amend the.
The contract with the dealers and I would say at the highest level.
The requirement for engaging.
In contract discussions.
It was really about making sure that we had.
Broad and joint alignment on the true and our strategic priorities.
And so we really feel.
I think the relationship is so strong.
He came together.
On the fundamental.
And our principles and financial frameworks that have historically made our CTC dealer partnerships are strong in that magnitude.
And we.
We added new specificity.
To make sure we were aligned on birth.
<unk> shared commitments like expanding omni channel retail certainly the growth of triangle rewards, how we think about investing in the issuance of Canadian tire money.
And then because brand trust is just underpinning of this entire trimmed our strategy.
Our retail system going forward or as I explained in my prepared remarks, just making sure that we had.
High standards of performance across our network of stores.
<unk>.
Those three or four critical areas all in service of true North.
And dealers are completely aligned.
Two two the intent.
And feel really good that the dealers are with us on true north.
Super Super excited about mosaic in AI I can tell you in terms of what that could do.
Their businesses and so I really feel strategically we're in a we're in a really good spot in the deal or just or that sort of that contract just.
Reinforces the strength of the relationship and the alignment.
That's great. Thanks, very much in the Autodesk.
Thanks, Chris.
Thank you I will now turn the call back over to Mr. Greg <unk> for any closing remarks.
Well. Thank you for your questions and for joining US today, we look forward to speaking with you when we announce our Q1 results at the AGM on May 14th.
Bye for now.
This will conclude today's call you may now disconnect.
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