Q4 2020 Canadian Tire Corporation Ltd Earnings Call

February 18, 2021

Wanted to ask a question. Please press Star then the number one on your telephone keypad.

I ask that you limit your time to one question plus one follow up question, we'll pause for a moment to compile the Q&A roster.

My first question is from Mark Petrie with CIBC. Please go ahead.

Hi, good morning.

I just wanted to ask about sort of how you are positioning for spring summer.

Obviously lots of moving parts and unknowns between dealer restocking consumer demand.

I guess, how have you approached your buying are you keeping the additional distribution capacity you added in the second half a 2020 and then similar to your comments going into Q4 any comment about how youre thinking about your promo balance would be a it would be helpful. Thanks.

I'm sure Mark all I'll take that a.

Maybe given go into a little bit more a detail and if there's any follow up specifically the C. T. R. I know you mentioned you know ctr and dealers there we can hand it over in a T J.

I think I'd start by saying market and then a non restricted areas. What we're seeing in 2021 is similar to what we saw in 2020.

We're still seeing big trends like one stop shopping so a basket size is still elevated we see elevated ecommerce levels with pick up in store or being a very strong a fulfillment channel, especially for bulkier items that ctr.

We're seeing Canadian is still looking to keep themselves busy a indoors and out a they're taking care of themselves and their homes come.

Customers are still focused on wellness or a playing division in ctr is performing well with a business like exercise a being a key driver playing outside with Toboggans and sleds and toys.

Home DIY is still a critical focus area for families at homes are fixing business continues to perform well.

And our kitchen business is still very strong in the living division.

Industrial and marks comes to mind as well.

Shipments are very strong in spring businesses, which we've previously forecasted given where we ended.

In terms of retail inventory, but winter demand categories.

In a in seasonal and automotive a soft so like always with Canadian tire is vast multi category portfolio. There's there are puts and takes a.

But overall when stores have reopened demand has been very strong with people wanting to get out and feeling better about a about making a trip.

Early indicators for spring sales in.

In the west have actually already started believe it or not we're seeing pools and bikes in patio furniture start to sell a earlier than usual and before a real indicators of spring weather.

And we're also seeing much stronger browse activity on our website for these categories nationally. So there is extremely strong interest in our spring summer a businesses. So our expectation Mark is that the categories that were strong in 2020 will again be drivers.

Drivers this year as it relates to supply chain I think you've heard us talk about re commissioning a R.

Airport Road Airport Road facility. So that is is up and running with more and more doors and more and more portions of the building a.

Being being ready and operational operational in Q1.

Also a re repurposing.

Some of our Brampton distribution center so we.

We don't have all of the three Pls is up and running that we had in Q4 and as our existing facilities a ramp up we will start to ramp down.

<unk> ramped down the three PL facilities.

Okay. That's really helpful. Thank you and then I guess just a follow up you know, we're hearing increased discussion and seeing evidence of higher production costs.

Particularly out of Asia, and certainly higher freight costs.

You think about your assortment and in sort of plan promos in marketing how does this factor in.

By what part of the year do you think this is actually going to be substantially flowing or a materially impacting your business.

Hey, Mark It's T. J. Thanks for the question Yeah. We were seeing the same type of thing you're describing inflation on a couple fronts. One is a.

In categories and in on a product side, where demand is just outpaced a supply.

Supply categories, like fitness and bikes and things like that we're starting to see a <unk>.

Product cost inflation, and then as you pointed out a.

There's a lot a dynamics industry wide going on right now on the freight side with container shortages and a consolidation of production in China, which is causing some freight pressure. So yes, we are seeing some inflationary pressure as we've described on numerous calls over the last couple of years a.

For us margin management and pricing management is now a scientific and it's part of what are kind of we call. It respiratory here at a Canadian tire teams or we're very well versed in and managing that we're obviously going to have to balance. Some of these are some of these cost pressures that we're.

Facing against our promotional activity.

But we have to be competitive as well, we're not going to a given inch from a competitive standpoint on pricing as we're going to pick our spots and engineer margin as best we can as we go forward and we've demonstrated that over the last six or seven years gosh with a with the FX exposure, we experienced a couple a years ago, we had to swallow a probably $400 million in <unk>.

Sure by managing margin. So we're good at that and we're going to continue to do it as we go forward.

Alright, I appreciate all the comments all the best.

Thanks Mark.

Thank you.

Our next question is from Irene Mattel with RBC capital markets. Please go ahead.

Thanks, and good morning, everyone I just building on the answer to that last question.

What are you seeing in terms of competitive activity Walmart in their report this morning day.

No that food and E Commerce did not know that channel merchandise or anything as being seasonally strong. So I'm wondering what you're seeing there.

Sure. Thanks, Irene, it's Greg I'll take that.

I'd say the market is as competitive as it is it's always been.

I think you've heard us talk about the fact that we measure to a competitive price index and a.

Our index relative to the competition improved in each of the last few quarters, a relative to last year or so so we do feel confident in our competitive position right now I think everyone needed to dial back the intensity to manage safety and traffic during the crisis at various times throughout.

2020.

We've seen some evidence of a more dynamic pricing in the market, a particularly with with digital pure players as they've been.

Promoting a shorter supply lines, a when inventory becomes available which is probably a little more intense than it has been in the past, but but then you have you know marketplace offerings, showing more availability and in many of these cases price isn't the driver a.

As our pricing is significantly better and in these situations third parties have inventory availability and they seem to be trying to make some money.

So it hasn't been overly disruptive I think as you've heard us talk a trip consolidation and being in stock for customers has been a bigger driver for our sales non discounted sales experienced a real positive trend throughout the last few quarters, which has helped our margin.

On both units and average retail so overall I wouldn't say he had put all that together I wouldn't say I've seen an increased competitive landscape or felt the need to invest to drive sales and as T. J just set across all of our businesses, where we've got windows into that competitive activity and we'll continue to.

To react a dynamically as we need to a N season as we move forward here this year.

That's really helpful. Thank you.

If you could just spend a minute or two talking about.

The ways in which serve a carefully evolving ways in which you're using you're increasingly large database from triangle to really influence them. You know your promotional activity you're pricing your assortment and you know how.

How far are knocked down this road of a really being able to customize and eventual store assortments, we may be getting.

Yeah, there's a lot a lot in that question and we kind of anticipated that that would be something that you might want to know about so why don't I.

I don't know like when I try and dive into that a little bit for you because I I feel I feel like we need a good amount of time, providing you all more context on how triangle is changing the way.

We're intending to run our business a as a first step before we start working backwards in terms of the role the loyalty program played in driving our results in any particular quarter.

Though it's worthy of a larger unpack I think I think the big thing I want to leave you with is the fact that we're starting to look at the health of our business in a fundamentally different way.

Our triangle program and the data it provides is giving us the ability.

So look at the underlying health of our customer base and take action to better manage a.

The engagement with these customers based on a lifetime value of each customer segment and our medallion implementations that we talked about a in 2020 allows us to go beyond what customers are buying to understand how they're feeling about our experience. So it's a summation of the what and the how.

That's that's coming together.

In a data.

With NPS measurements at each stage of their journey with us and it's the combination of these two that's a powerful way to understand.

Our business and ready it for the future.

Ultimately Irene we're moving from a transactional view to an engagement view a at.

At the customer level I.

I think this understanding really enables us to manage customer relationships and a more much more sophisticated way.

In order to do this effectively we need to identify a customer metrics in aggregate debt give us an indication of the health of the business a so so what do I mean by that.

Well, you're starting to see some of these customer metrics work their way into how we describe the performance of our business.

And over time, we intend to drive full understanding of our most critical metrics you know for instance, we talked today about 1.8 million new customers.

In today's release as an example.

These are customers are new to us and have signed up and joined the base loyalty a credit card credit card program for the first time.

But we're tracking much more of a new members, we have to get a handle on overall churn and lifecycle management, so you're going to hear us talk about other customer metrics metrics like Reengage customers. These are members in the program that didn't shop with us for 12 months, but have come back to shop with us in the opposite being enact inactive members.

Those being members that shop with us, but then lapse for 12 months and for sure measuring a returning members met a meaning those members who returned to shop with us year over year will be critically important. So triangle is gonna be a massive drive a mature a results going forward, good or bad depending on how well we manage these segments.

And while the concept of churn management is well understood and very valuable in sectors like financial services.

In our financial business, where a customer data has been readily available for many years very few retailers have the data available to look at their customer base. This way and even fewer have the capability to manage that churn through their digital and personalization platform. So we now have the data on the what.

Customers are buying and how they're feeling about their experience we're building a platform for automated engagement a.

And therefore, a feel very well equipped to understand the root cause of why a customer churn or may turn a and.

And solve the problem not just for one customer but for a whole cohort.

So I probably gave you a way more than what you were looking for there, but I think the context and a vision is important here and it's a pretty central to how we intend to run the business.

That's that's really fast so just one quick follow up.

Is there a data showing you that customers are a healing Canadian tire more favorably and we are increasing slightly their share of wallet spend at Canadian tire.

Yeah, I mean, it depends on the it depends on a segment, we can we slice it and dice it across I think moving about 37 segment segments, we've got three or four critical.

Segments, where we are absolutely gaining traction from a spend standpoint in the categories that are most important to us so spend per customer enact a families has been a big driver of a growth in all of 2020, I think you've heard me talk about whats happening from a young.

Young customer segment, a profile and the acquisition that marks is a is providing for us, especially with some of the national brands.

That they are they have put forth. So you'll hear us talk about spend per customer and that's the kind of a at the end of the day. What we're what we're after is that that outcome and you'll also hear is a harris talked about our NPS.

And our NPS around the things that matter in our business and that's mostly around experiences you know how is the checkout experience how was the browse experience I was the click and collect experience that was the automotive experience. So juxtaposing that NPS measurement by customer segment.

And spend we can really start to be able to triage.

And and engage with customers on a on a relationship basis and we're feeling really really good about the traction we made with our our core customer cohorts from 2020, we think it's a tremendous opportunity for us going forward.

In addition to having this whole new $1 8 million.

Cohort of new customers that we can engage with.

Are we can we can reach out and build a relationship to try and drive that engagement and spend and we're gonna be tracking that new cohort like Hawks.

In 2021.

That's great. Thank you.

Thank you.

Our next question is from Peter Sklar with BMO capital markets.

Go ahead Doug.

Good morning, a really I think it's a question per T J the.

You look at the gross margin.

That's a company reported a 100 just over 150 basis points.

You know that's a that's a real reversal of the trend of the previous quarters, where you had a negative.

Negative pressure in terms of your gross margin. So I'm wondering if you could talk a little bit about what's going on in the stores that I don't.

Kind of like little snippets here and there on the call, but T. J, if you could maybe drill down a little bit what is driving the very strong gross margin performance in the stores as it is it is a mixed or you are you getting a a good waiting in seasonal categories like Christmas that carry higher margins or what what are the facts.

There's a that are at play here.

Hey, Peter a yeah, I mean, when when we think about the breakdown of margin in Q4, there's probably three key areas that I would I would talk about it in the first is what you just touched on which is which is category mix. We saw a lot of growth in high margin categories like seasonal decor, a Christmas lights.

Winter recreation exercise accessories, a auto travel and storage and paint all of these categories kind of a kind of punch above their weight in terms of margin rate a and we got favorable mix from that perspective, so definitely a business mixes is a is helping us from a.

On a margin rate perspective. The other piece is is is a round reg promo mix.

We with US a honestly in Q4 and throughout 2020, a we were chasing a just unprecedented demand and trying to keep up with supply. So that really a really helped us and drove our reg mix, a little bit higher than it would've been previous year third.

In terms of the business as own brands continue to grow and outpace a our national brands and obviously our own brand a M.

Margin profile is higher and then lastly, what I would say that a big Greg touched on I think a bit earlier was was around our margin sharing agreement with dealers. They also participated in a lot of the benefit that I. Just described from category mix as well as a reg promo mix and with a margin sharing arrangement with them.

We simply were able to book more margin a relative to last year. So those are kind of a four components of of a of what of how I would unpack our margin rate performance.

And T. J in terms of the margin sharing was there like do you kind of a crew through the course of the year was there any favorable catch up or whereas the margin like the retail margin, but a corporation booked in the fourth quarter, but that's what the dealers actually realized in the fourth quarter.

It's a Gregory Peter let me give T J a break on that one or you can ask the top accounting question next day, Let me, let me take that let me take that one.

Yeah, I think you know the way I would answer. The question is is we the booking kind of when a dealer yearend as kind of matters as kind of the first point, but I think the simplest way to think about this to be Frank we had such strong performance in the last half of a year.

When you got to the yearend you understood kind of debt there was a need to book more margin I mean as you know we do this every year, but it was much more pronounced this year given the incredible performance that we saw frankly in the last half of the year. So theres more complexity there around dealer year ends et cetera, et cetera, but if I really tried to simplify it I would just really point to the cigna.

Hum.

The fantastic performance in the last half of the year a seat here.

Okay.

T J.

I didn't quite understand your point to that you were making about the the promotional mix.

Yeah. So yeah are in Iraq on promotion well, what what I would say is given given the demand that we saw there was definitely a migration toward regular regularly price goods relative to a promotion and in certain instances, we couldn't keep up with a demand with supply so when you're in that situation.

<unk> it.

Put you in a position where you you can't promote as much as you as you traditionally would have.

So those two factors a would would've contributed to our are kind of from a.

Reg mix being a little bit higher than that a promotional mix.

Right, Okay, and then a last question I had.

As a for Greg.

Just in terms of the outlook for Q Q1.

You talked about.

You said quarter to date your sales were down a little.

Low single digits are those are you talking about retail sales or warehouse sales and are you attributing all of that.

A two the restrict you know to the government.

A strict sense or are there other factors at play as well.

The.

Yeah, so that the remark that I made with respect to low single digits would be would be comp store sales in the ctr a bad.

Okay.

And I think I also made a comment about the fact that shipments in ctr. So so revenue continues to be very strong.

In Q1, so those those.

That would be a clarification I think to to a to my remarks.

Okay.

Are you attributing that slowed.

Slowdown from Q4 levels all to the.

Two the Lockdowns and other retail restrictions are there any other factors at play that you would want a point too.

I I mean.

Again, I tried to provide a little bit a color in terms of what we're seeing in stores that are impacted by a restrictions and without.

Without giving a too much forward visibility we.

There is a there is a market difference between performance in stores that are operating in restricted regions.

And stores that are operating in non restricted regions I think Gregory is a.

<unk> is a chime in to get in here. So I know it was like a jump ball anyway.

I I just want to emphasize what Greg just said around as you know Peter there's still lots of game to be played in the quarter in March as you know not all these months in the quarter all created equal and I just wanted to reinforce that point, but but yeah, I think where you know the low single digits and look at where look at the weather outside up until recently. So I think you know that has also been part of the puzzle.

This as well as kind of what the weather trends had been like but a but I think I think greg's remarks kind of outlined it well around kind of stores that we're closing stores that weren't in the behavior, we're seeing but just to be clear there's still some some big months left in a quarter. So that's all.

Okay. Thank you for your comments.

Thank you. Our next question is from.

Sooner with a national Bank. Please go ahead.

Hi, Yeah. Thanks for taking my question.

Operational efficiency program called that out as a contributor to a quarter, where there's so many things going on.

I'm prepared with line items. This quarter I was hoping you can give me a little bit more context on what's a contributed and maybe where you are in the program range because it really does is 20% guidance so on and so forth.

Yeah, I can start and if there are specifics that Greg Gregory wants to jump in on him he can.

The team continued to prioritize execution of initiatives in 2020, with 2021 and 2022 a benefit.

Real high impact strategic.

Priority throughout 2020.

Despite the headwinds in Covid, we feel like we have a G achieved all of the objectives that we set up for the program in 2020, and we are absolutely on track to achieve our publicly stated target of $200 million plus.

Which I think you pointed out a michele a.

In run rate savings by 2022.

Well, there's no there's no specific timeline and schedule a debt our debt.

Going to share with you on a cost I can tell you that right. Now you know there are over 200 initiatives in the pipeline to be executed this year in 2022.

You know as it relates to our Opex ratio.

As we've discussed there isn't a straight line from our OE program savings to our Opex ratio.

Cost out initiatives take time and inflation in your cost base can happen at any time, but overall, we're very pleased with a direction of our opex ratio in 2020.

But keep in mind, we had we absolutely had the power of operating leverage a given substantial top line revenue growth throughout the system.

But we also had full fixed cost absorption in months, where we had minimal revenue in some banners. So again, it's it's very difficult to use 2020, as a base year or leaping off point I can tell you that we're running the business with efficiency in mind.

And through 2021, we're going to start to see more broad based system efficiencies and transformative initiatives come to life through the OE program.

Yeah.

Okay. That's helpful. Thank you for that.

And as we reflect on 2021 and beyond how should we how should we think a their premium tires from comes from for real estate growth.

Maybe you could give us a sense by a buyer.

Good day.

Maybe I'll start and Greg I think vishal.

One of the things we've talked about is just given kind of this this environment with a level of uncertainty I don't think we feel comfortable at this stage kind of providing guidance or forward looking information as it relates to kind of real estate and I'll give you a reason why I mean, if you looked at last year. When we had a lot of projects had to close and even in December with the restrictions and shots shut down.

That happened then we had some jurisdictions construction was allowed to continue and some it wasn't I mean, I think the longer term answer a courses were committed to real estate and we see great opportunities to continue to build out and enhance our network, but in terms of actually getting something more specific kind of in a short term I I just think it's just too uncertain.

And for us to kind, a provide that but I'm sure. Greg you want to add to that is yes, I mean.

We're gonna be working this quarter as long as we feel like we have fairly good line of sight to what's what's happening in the economy to update our strategic thinking with respect to capital requirements going forward, we've talked to you about the modernization investments as part of our OE program.

Our in our core technology infrastructure, we're in a built in the middle of building a new state of the art a distribution center in Mississauga, which is going to really help drive ecommerce fulfillment capabilities and.

And we've certainly learned a great deal during the crisis in terms of a role our store plays in driving connected experiences for the customer.

We're seeing growth in all market types across the board, but the highest levels of growth are happening in the suburban markets across Canada.

Markets that kind of EM index higher on homeownership, a garage a yard active families and we think these markets are going to continue to benefit going forward as workplaces embrace a work from home and.

And we see tremendous opportunities to improve the store experience.

The in store technology for enabling E. Commerce wasn't built for this type of scale and the stores are doing a tremendous job with it right now.

We see lots of opportunities to reduce friction and a system on there and minimize touches use automation for some of the order processes and really put our associates in a much better position to deliver.

A a compelling experience so.

We're gonna be we're having lots of conversations about putting an investor day a into the calendar this year, but we want to make sure. We can do it live a.

And in person with you all vishal.

So we're just gonna have to put all the considerations together together and developed a REIT communications approach, but a rest assured we're not we're not standing still in terms of where.

Where we think we have an opportunity to invest capital in a business, it's going to be in the customer experience, both physical and digital it's gonna be in supply chain and automation. We think we have the team we've got the assets and a strong understanding and momentum with the customer a and our financial.

Position a strong we're just looking for a little bit more certainty.

Here as we as we look forward into the economy.

Thank you. Our next question is from Chris <unk> with dish all day.

Please go ahead.

Morning, guys. A quick question I guess it for a great job.

How has your longer term vision or strategy for sports net change as a result with a pandemic is there an opportunity due to perhaps a rationalized from the store base and focus even more on the E commerce channel longer term.

Listen we're.

We think a check had a fantastic quarter.

All things considered we're really happy.

About the how the business is performing considering the restrictions and they have a very different mall dynamic than what I would've alluded to four.

For a marks and we're really excited about the owned brand.

Penetration for the business.

We're seeing.

The Czech better really be a strong customer acquisition driver for the overall ecosystem with a couple of those core segments that I talked about earlier and so that's where we're spending a good amount of our time.

And we have lots of initiatives.

Around you know, whether it's store leases or store labor.

Our E commerce fulfillment, we rolled out a few a hub stores as an example, or made a few of our stores hub stores. As an example, so we're looking at the network a differently.

And I think the decision that we made with respect to closing national sports.

We will drive some velocity and productivity of the sport Chek stores. So.

We're you know we're constantly constantly evaluating you know that the role that that business plays in our portfolio and and we're feeling really good about what we're seeing a in a business right now.

Okay. That's helpful and maybe just a couple of equivalent to a gradually.

In terms of a COVID-19 cost.

By my estimate I think the company can put about 17 million ish of cost from here will pay an increased safety protocols, how much of those a cost to expect to recur again this year.

In 2021 I think.

Thank you are aware the premium pay program came to an end at Canadian tire. He was middle of August I think it was a time period, so that that really wasn't in the fourth quarter frankly that was our decision as to why we didnt isolate the the COVID-19 related costs in the fourth quarter, Chris was it in my mind. They werent all that significant in the quarter a number one number two they became a bit more Rick.

<unk> kind of in a in our base operations. So we didn't feel.

That was really helpful to kind of isolate those and separate them out I mean, you know we'll have to watch it depending on uncertainty and third waves et cetera, I mean, I might might regret, saying this but from what we understand right now what I would call the more kind of in our continuing operations and we'll just keep an eye on that and hopefully a hopefully you know.

It's safe enough for everyone to continue to operate we don't have to have this discussion again, but that's a that's how I'd answer your question.

Okay. That's helpful and maybe just a quick one first on gross margin.

Maybe a T cell for us just the impact of the margin sharing agreement with a deal about how beneficial is that to your gross margin.

Yes.

It's a tough that's Gregory again, I'll try to answer that Chris It's a difficult thing to kind of unpack in a separate it's so there's so many puts and takes to it and I think the key point that I want to make and I mentioned this a few times on kind of some calls this morning, as we had strong margin performance across every banner. So we're thrilled with what we saw.

In Ctr and the team did a great job there, but I also don't want to downplay the contributions that Halle. The contributions that marks the countries that shack. This was a strong overall retail margin quarter and was ctr, a leading part of that absolutely was part of that reason because of the margin sharing for sure but it's it's not you know it.

It's not necessarily a straight line and kind a say here's the answer because there are a different puts and takes I'd just say overall, we recognized more as a result of this arrangement because of the fantastic half of the full year that Ctr hat, that's how I'd answer your question.

Thank you. Our next question is from participate there with Scotiabank. Please go ahead.

Oh, good morning, everyone and thank you so much for taking my question I wanted to dig a little deeper into the.

Capital expenditures.

And you made a very good point.

Response to an earlier question that you know you know that there's a lot of important there yes.

You will be investing in a business over over over a longer longer term, but I just wanted to ask two specific things about your outlook.

Outlook for.

Capex I don't want guidance or anything like that but just the way that you look at Cowen and fiscal 2020, a the capital spend was a lot more than you originally had anticipated and some of that book.

I presume was associated with timing of a specific thing but.

Buried in there also there must have been sort of more a taking a very very close to book, a particular projects and making decisions not to go ahead with a certain ones for various reasons. If you could share I mean, any decisions, where you decided not to go ahead with something that we can have a better understanding of that and then secondarily.

Secondarily is there anything you take takeaway from how you viewed capital investments in 2020 that will feature in your future philosophy about capital spend and then Greg you noted that you learned a great deal about your stores are in.

In 2020 and is there anything that you learned through a learned about the stores in 2020 anything you've learned operating through a.

A copy.

A particular challenges that will inform or change the way that you're thinking about investments in terms of like discovering that maybe there's a places that you wouldn't have invested in that you think now a better places to invest with a long term.

Sure.

Yeah, a lot slots in that Patricia let me try and.

Keep them straight I think if we if we go back to Capex.

Yeah, I tried to kind a give you a real window there in terms of how we're how we're thinking about it and how we're thinking about communicating it.

Thank you know Patricia a national sports is a is a classic example, and gives you a pretty good idea.

Or an indicator in terms of how we're thinking about.

Capital.

It's a smaller banner for us.

For sure, but the decision to close the business as a matter a focus.

There's always been a fair amount of overlap with a spanner both sport chek from Ctr.

And now in addition to having store density in these trade areas, we have significant E commerce capabilities as well.

This was a business that was a receiving just enough capital for.

For maintenance needs over the years and just wasn't a core asset for us and as we as we evaluated our portfolio. So we intend to evaluate.

Review, our assets as part of our operational efficiency program with an investor mindset.

Ensuring there is an intended purpose to our investing.

And in this case, we just couldn't find a continued a purpose and honor.

On our a docket in 2020.

It was a replacement of a whole ERP and Pos not a application for the banner as an example.

So I think you know coming to a conclusion strategically with the right portfolio view and lens around how we think about.

That business in the context of the ecosystem.

I think as is it gives you a pretty good indication around looking at capital on a more holistic.

Enterprise basis.

As it relates to the store, what we've learned a et cetera.

You know I.

I think about.

I think we were all thinking about relevance a lot Patricia.

You know I I think today retailers are either relevant or theyre not.

Theres not much middle ground.

I think we've been seeing rising customer expectations for relevance.

And Covid only magnified it.

Today's more kind of global ecommerce retailers kind of can offer a consumers every day.

So customers aren't lacking any choice when it comes to a product or a.

Places to purchase them, However, I think our biggest learning.

Is through Covid as the customers are expecting more than product or even free delivery there.

They're demanding more value in ways that are relevant to them.

And although customers love shopping online.

I think COVID-19 has demonstrated that what they really want is control.

Control over where and how they receive their online orders.

And the popularity a pickup services has challenged the notion of what customers want from ecommerce.

Sure It seems a little odd that someone would get dressed up for winter in the middle of the pandemic no less.

And getting into their car and go pick up the product at the store in our case Bowl Pisser curbside, but that is exactly what's happening.

And it's happening across the global retail industry. So I think having a wide range a fulfillment options.

And choice for the customer is as is the way of the future.

It and using kind of a store for fulfillment, which we're doing has enabled us to ramp up capacity in a way that many others struggled to do so.

So I think being an omni channel retailer is a huge advantage right now and I don't see it going away. So it's it's a double click on.

Is E commerce here to stay it's okay, well, let's double click and really think about what experience in E. Commerce is here to stay and for us.

We really believe that the store playing a fundamental role at the core of our strategy. Our E. Commerce strategy is critical and the Great News is we're getting better at it.

65% of orders now pick up a.

Orders at Canadian tire.

Already in two hours or less.

And we certainly werent delivering at this level of experience earlier in a pandemic and we can see what it can do for the business. So I think if you're a link that back to the Congress or the question to Vishal asked around how to think about investment in the network.

And it's about digital and physical coming together you get a pretty good idea of where we're going to be focused from a capital standpoint.

Thank you.

All the time do we have a questions today I would now like to turn the meeting over to Greg book.

Closing remarks.

Okay. Thank you operator and summary, you know these continue to be extraordinary and challenging times.

But we're an extremely resilient company a the strength of our brand is built upon a deep rooted values and a fantastic team.

I'm proud of our performance in the quarter a for the year.

And of the thousands of team members I'm fortunate enough to represent so thank you for your interest in Canadian tire and for participating in today's call.

Thank you.

Thank you everyone.

Concludes today's call a webcast conference call will be archived on Canadian Tire Corporation limited a investor relation website for 12 months.

Please contact Investor Relations, if you're there a follow up question is regarding todays call or the materials. We've provided you may now disconnect.

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