The changes will be implemented in 2008, said Canadian Tire Corp., and the revised contract will run through 2014.
Financial adjustments in the revised contract include cost-sharing arrangements on marketing expenses, shared savings from store-based energy initiatives, participation by Canadian Tire in the growth of dealer profits, as well as other important financial adjustments.
The adjustments are estimated to provide $15 million to $20 million of incremental annual pre-tax earnings for the dealers, and are estimated to reach an estimated $80 million to $100 million annually by 2014.
In addition, Canadian Tire and its dealers will launch a new initiative that will support Canadian Tire’s PartSource stores, including doubling its parts SKUs to 75,000 units, adding technology to enhance retail operating systems, and creating a network of 22 PartSource hub stores across Canada to allow same-day service for 75% to 80% of Canadian Tire’s 468 retail stores.
Canadian Tire Corp. said the new parts program will generate $120 million to $130 million in incremental parts sales by 2010, increasing to more than $200 million by 2014.
Additionally, Canadian Tire is planning to expand the number of PartSource stores from 67 today to approximately 200 stores by 2014.