Q4 2024 Canadian Tire Corp Ltd Earnings Call
[music].
Thank you for standing by my name is Garmin and I will be your operator conference 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 ever likes to ask a question simply press star one one on your telephone keypad to withdraw your question. Please press star one one.
Kevin Keyes: Now I will pass along to Kevin Keyes had only Mr Relations for Canadian Tire Corporation Karen.
Speaker Change: Thank you and good morning, everyone welcome to Canadian Tire Corporation fourth quarter and full year 2024 results conference call.
Speaker Change: With me today are Greg Hicks, President and CEO, Gregory Craig Executive Vice President and CFO and T. J flood executive Vice President and President of Canadian tire retail.
Speaker Change: Before we begin I wanted to draw your attention to the earnings disclosure, which is available on our website.
Speaker Change: It includes cautionary language about forward looking information and the factors risks and uncertainties, which may cause actual results to differ materially from those expressed or implied which also apply to the discussion during today's conference call.
Speaker Change: Okay.
Speaker Change: 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.
Speaker Change: And we welcome you to contact Investor Relations, if we don't get through all the questions today.
Greg: I will now turn the call over to Greg.
Greg: Thank you Karen good morning, and welcome everyone.
Greg: The quarter came to us as we expected and we delivered at the end of the year much as we delivered prior quarters.
Greg: Then uncertain consumer economy, we control the controllable.
Greg: Architect and sales through strategic promotion and the effective margin management, all while investing in our future.
Greg: This continued diligence contributed to our return to growth and strong earnings performance in the fourth quarter.
Greg: We achieved a normalized EPS of $4 seven in Q4, bringing our annual EPS to $12 62. This represents.
Greg: [noise] presents a significant improvement over 2023 aided by some one offs, which Gregory will address.
Greg: In a complicated year the team performed well and I want to thank them for their discipline and hard work.
Greg: Before we unpack our results let me give you our view into the current macroeconomic environment and health of the Canadian consumer.
Greg: The short story is that like our business. The economy is in a much better place than it was a year earlier.
Greg: Long story is a bit more complex.
Greg: Although consumer confidence remains low it ended the year on an uptick.
Greg: Interest rate cuts have had a distinct positive psychological effect on consumers and we believe an economic benefit may follow.
Greg: As you know compared to other nations Canada's economy is more tightly tied to interest rates. So for our customers' rate relief is real relief.
Greg: Now while rates have come down there is a cycle of mortgage renewals ahead, which will hold shelter costs high.
Greg: That said, we were keen to see a near 20% increase in home turnover in December as historically people turn to Canadian tire when they move and set up a home.
Greg: In terms of how Canadians are specifically shopping with us although the gap between essential and discretionary persists both sets of categories are moving in the right direction.
Greg: For the first time in nine quarters credit card spending was up in the categories in which ctr competes what's more triangle Mastercard spend at <unk> increased by two 4%.
Greg: Overall, we see multiple green shoots, which give us cautious optimism for the future.
Greg: Now I'd be remiss, if I didn't caveat this optimism with the looming threat of tariffs.
Greg: I suspect the consumer confidence uptick that I mentioned earlier has now been substantially erased with tariff talk.
Greg: That threat maybe on pause.
Greg: We are conducting all the business assessments and preparations you would expect.
Greg: We have also spent time, reflecting on our brand purpose. We are here to make life in Canada better.
Greg: As it feels especially relevant right now.
Greg: We have already begun to try to insulate our customers from the risk of higher trade costs hitting ourselves.
Greg: We are reviewing products and U S suppliers and assessing alternatives to the inevitable inflationary pressure these tariffs would deliver.
Greg: Know that we will continue prioritizing value for Canadians.
Greg: Although this has always been a commitment of ours, it's been especially important these past few years.
Greg: I also think there is a bigger conversation to be had.
Greg: I applaud the provincial and federal governments unified response to the unjustified economic assault from our nation's longest standing alloy.
Greg: And I am hopeful for an effective resolution in the near term.
Greg: Longer term, we need a national plan to build Canadian prosperity.
I had the chance to meet with government and business leaders in recent months, we share similar concerns and we also share similar ambitions, we believe Canada can be stronger and more productive.
Greg: Locally owned since 19, 'twenty two we're proud to be called Canada store.
Greg: And the nation is actually in our name.
Greg: Just as we believe Canada must become a more productive nation, we must become a more productive company.
Greg: Our conviction manifest through our capital plans and a range of strategic growth initiatives taking shape.
Greg: I will speak more to this shortly but first allow me to provide you some color on our results.
Greg: As I did through 2024, I'll focus my remarks on three forms of leverage.
Greg: <unk> value and deeper relationships through our triangle rewards program.
Greg: Maximizing our existing assets and driving operating leverage with a constrained top line.
Greg: Let's start with triangle rewards, where we are successfully leveraging our customer relationships.
Greg: In Q4, the delta between loyalty and non loyalty sales grew driven by more members joining the program and signaling that they continued to reap its benefits.
Greg: Throughout 2024 members came back more often and spent more than they did in 2023 remarkably redemption of ECM is now 30% higher than it was just three years ago.
Greg: What's more while full year 2020 for loyalty sales were up 1% they grew 4% in Q4.
And recurring revenue increased driven by our ability to inspire our members to move through our loyalty system.
Greg: We continue to provide our customers with more opportunities to earn ECM through personalized offers promotional activities at our retail banners and partnerships like the one we have with Petro Canada.
Greg: This strategy is translating into increased cross banner engagement.
Greg: Highlighting by the growth in members shopping across our banners and increased redemption across our family of companies.
Greg: Our loyalty performance as a sign of good health, both for our business and our customers.
Greg: Our flywheel is working and members are coming back and spending more.
Greg: Our flywheel is further propelled by our decision to retain full ownership of <unk>, which we announced in Q4.
Greg: We learned a great deal through our comprehensive strategic review.
Greg: Particularly the fact that our bank accelerates triangle ECM issuance and that it serves as an incredible source of valuable data.
Greg: This data is among the many reasons that our bank is a pivotal piece of our retail future.
Greg: In the quarter, we saw a nice trend line and the amount triangle at Mastercard holders are spending across our family of companies.
Greg: This is an important contributor to store sales and a metric that we will track more closely to monitor the bank's unique retail driving capabilities.
Greg: To give you a picture of our progress in the last two months of the year we.
Greg: We saw a marked increase in triangle Mastercard sales in our stores.
Greg: It goes without saying that we're pleased to have retained <unk> as strong return profile and meaningful earnings.
Greg: When we spoke to potential bank partners it became evident to us that the bank strikes a skilled and strategic balance between growth and risk supporting our mid to high twenties Roe.
Which is no small feat.
Greg: All of these factors are fundamental to our go forward Bank strategy, which we look forward to detailing for you as the year goes on.
Greg: Moving now to our continued leverage of existing assets and investments.
Greg: The value of our one digital platform was on full display in Q4.
Greg: We weathered the Canada post strike with digital promotions and leveraged AI to address the unexpected HST holiday.
Greg: We had rock solid website stability during the highest sales days of the year and we grew important categories like automotive with online enhancements.
Speaker Change: To be Frank these achievements would have been impossible 12 months ago.
Speaker Change: They are a testament to the value of our investments as we move to a single modern cloud based tech stack.
Speaker Change: For all of our businesses not just one.
Speaker Change: Also illustrate our enhanced efficiency as this improved performance was delivered by a team that is both smaller and better equipped than it was a year ago.
Speaker Change: By honing in aggregating our digital capabilities, we have established a clear path to our targeted outcomes, specifically agility and scale.
Speaker Change: This will rely heavily on our streamlined execution across our enterprise, along with new technology and AI tools that changed the way we work.
Speaker Change: While many organizations are still piloting AI projects, we have several capabilities in production and in use.
Speaker Change: I am amazed at how fast Gen. AI continues to evolve with thousands of our employees using our bespoke generative AI assistant to achieve better outcomes faster and more efficiently.
Speaker Change: Similarly, we are looking ahead at the next frontier of AI agents that we know we will change our employee and customer journeys.
Speaker Change: We've seen the retail power of CET, our AI tire concierge.
Speaker Change: We want to scale that power by implementing platform systems architecture, and governance across our company not banner by banner.
Speaker Change: I am excited about the work we have started and how it can drive a more personalized customer experience and internal agility and efficiency.
Speaker Change: In bricks and mortar I want to highlight the success, we're seeing at marks where new store investments are showing considerable returns.
Speaker Change: Our modern concept mark stores are attracting new customers and in Q4, our eight stores contributed to half of Mark's overall retail sales growth.
Speaker Change: At a time when the Canadian apparel industry is thinning out Mark's is extremely well positioned to continue winning over customers with another seven new stores set to open in 2025.
Speaker Change: In the 43 billion dollar industrial and apparel sector, where Mark's competes we have sub 4% share and our fifth in the market with considerable runway for growth.
Speaker Change: The success of marks illustrates what happens when we target investments into our highest returning opportunities.
Speaker Change: It also shows that our banners are benefiting from our loyalty system.
Speaker Change: Getting results that would quite frankly be impossible for an individual banner to achieve on its own without significant deleverage.
Speaker Change: Together, our banners partners and triangle rewards loyalty program are becoming a powerful combination for growth and scale and this is a lever we have only begun to poll.
Speaker Change: Moving now to operating leverage our continued efforts to reduce supply chain costs were a meaningful contributor to lower opex at the same time, we are maximizing and enjoying the benefits.
Speaker Change: Of our three year supply chain modernization with new technologies facilities and a network that has fully recovered from pandemic capacity issues for.
Speaker Change: For example, our DC transformations in Calgary in Montreal drove $20 million in savings in 2024.
Speaker Change: Another key to our Opex success was our workforce reductions in late 2023.
Speaker Change: Which meant that in 2024, our teams were more efficient and better equipped and more ruthless in their prioritization of tasks.
Speaker Change: In an age of Hyperscale competition, we must be efficient tech enabled and clear about our tasks.
Speaker Change: We made progress in 2024.
Speaker Change: No we still have more to do.
Gregory: And with that I'll pass it over to Gregory.
Gregory: Thanks, Greg Good morning, everyone.
Gregory: We had a few normalizing items in the quarter, reflecting the major announcements we have made since November, namely the conclusion of our strategic review of Cts.
Gregory: And the sale of our Brampton, DC, which generated a significant Q4 gain.
Gregory: These two items represented about $3 30 at the EPS level.
Gregory: Normalized for these EPS was $4 seven up 20%.
Gregory: EPS growth was driven by improved retail profitability as we continue to control the controllable with strong expense discipline.
Gregory: That contributed to higher earnings and along with working capital improvements translated to higher cash earnings.
Which gave us the flexibility to fully pay down to $895 million of incremental leverage associated with our Q4 2023 <unk> repurchase.
Gregory: Now I'll take you through a little more detail by segment.
Gregory: As we had expected much of the quarter came to us in December given the shift in timing of the Black Friday weekend, and both sales and revenue grew in Q4.
Gregory: This return to modest growth was a good outcome.
Gregory: Consumer demand market that has not yet seen full recovery. It was even more impressive in the context of a more limited flyer distribution due to the Canada post strike, which was a headwind.
Retail sales and comparable sales excluding petroleum were.
Gregory: More than 1% with growth across the banners.
Gregory: While retail revenue was also up after seven quarters of decline up one 3% to $4 1 billion.
Gregory: Higher Ctr shipments contributed as did growth at Helly Hansen and marks.
Gregory: Turning to customer metrics now trips were down modestly across our banners, but both transaction size and units per trip were up this quarter, which we believe to be positive consumer signals.
Gregory: Customers are also scanning their loyalty cards, when they shop, which adds to our first party data.
Gregory: Our loyalty penetration of sales was 54% for 2024, which was up 141 basis points compared to last year we.
Gregory: We had especially high scan rates over the Black Friday weekend, which was a strong weekend for us from a sales point of view.
Gregory: Turning to the performance by banner now that Ctr comparable sales were up one 1% in what was yet another strong quarter for automotive.
Gregory: Set by modest declines in our other divisions as the teams worked hard to mitigate disruptions and offset them through the use of our previous capabilities, including digital and loyalty data.
Gregory: Within automotive auto parts auto maintenance and tires drove growth with much of that coming in December.
Gregory: Automotive contributed meaningfully to the 4% increase in essential categories across ctr, but essential fixing and seasonal categories also saw growth as the sale of the snow shovels and ice melt. We're also up against a milder winter last year.
Gregory: Discretionary was down but the trend continued to improve over prior quarters, and we saw encouraging pockets of growth.
Gregory: Consumables were up in the playing division saw a hockey and fishing up in the quarter.
Gregory: Seasonal was weaker than we had expected in categories like Christmas lights, but newer Christmas day core lines did well.
Gregory: Overall, we were pleased to see a high ticket discretionary items up driven by snow blowers and positive take up of new products as we continue to benefit from improved product vitality.
Gregory: Our investment in Ctr stores remains on track, including the new replacement store opening in Kitchener, Ontario in Q4.
Gregory: A total of 39 Ctr store projects were completed this year.
Gregory: Since we launched the strategy, we have now revamped expanded or replaced 120 stores.
Gregory: Moving now to sport Chek comparable sales were up 4%, marking the second consecutive quarter of growth at sport Chek.
Gregory: Softness early in the quarter was followed by very strong growth in December and growth was especially strong in Quebec at our sports expire banner.
Gregory: From a category perspective hockey hydration and lifestyle footwear, all did well.
Gregory: Winning in store continues to be a strategic priority for the team and our investments in the store experience continue to drive improved customer NPS scores.
Gregory: Yeah.
Gregory: At March comparable sales were up one 8% as industrial businesses returned to growth in Q4 led by strong industrial footwear sales.
Gregory: The results of our newer larger format stores were noteworthy driving broad based retail sales growth across <unk> categories.
Gregory: We opened up two new stores, including one in Toronto during the quarter, taking the total of these new format stores to eight and.
Gregory: And we plan to invest in a further seven of these stores in 2025.
Gregory: Turning now to how he handset where revenue was up 12%. The U S accounted for half of the total growth in the quarter and sales were up across most of our channels with direct to consumer channels showing the strongest growth.
Gregory: For the third consecutive year, we delivered full year gross margin broadly in line with our North Star of 35, 9%.
Gregory: Q4 retail margin rate, excluding petroleum was 36%.
Gregory: Investment in higher promotional intensity at Ctr pressured our margin rate, but we were helped by banner mix given stronger contributions from our higher margin Banner's Helly Hansen and marks.
Gregory: As we've said before while we continue to managing the levers to hold our margins over the longer term, there will always be quarter to quarter variances driven by business performance and mix.
Gregory: You have heard me speak to focus on controlling the controllable and prioritizing our spend throughout 2024.
Gregory: That focus continued to deliver improvement in SG&A expense relative to last year with normalized retail SG&A down $15 million in the quarter.
Gregory: We ended the year with significantly lower supply chain costs, having worked hard to reduce and optimize capacity and helped by lower inventory and improved performance at our GTA distribution Center.
Gregory: We also had a partial quarter of head count savings against exits in November last year, and lower marketing expense this quarter.
Gregory: These decreases have offset continued investments in real estate and in our it network model as we incur cost to transition off legacy systems and move to new streamline cloud based infrastructure.
Gregory: In 2025, our it investment will focus on tech and AI enablement to deliver longer term productivity improvements.
Gregory: Moving now to inventory overall corporate inventory dollars were 135 million below last year or down 5% due to ongoing inventory management across the banners throughout 2024.
Gregory: We also remain focused on revitalizing our product assortment with new inventory in transit ahead of spring summer selling seasons.
Gregory: Dealer inventory was down 4% and we expect their replenishment to continue to closely mirror consumption.
Gregory: I'll now move on to financial services, where there was a lot going on in Q4.
Gregory: With the decision to retain the bank in December we have refocused the business even more firmly on how it can help drive share of tender at CTC retail banners and cardholder engagement.
Gregory: We also continue to prudently manage growth and portfolio risk, which has allowed us to consistently deliver high return on equity for many years something that was commented on many times by potential partners throughout the Bank review process.
Gregory: Let me start now with a few key performance indicators of cardholder engagement before coming back to the risk metrics and the financial results this quarter.
Gregory: Holder engagement remains strong and card spend grew more than 3% in Q4.
Gregory: Promotional activity was aimed at cardholders, who shop, our family of companies with enhanced boxing day orders contributing to the first increase in card spend with our family of companies in six quarters and an increase in share of tender proving that our customers understand and react to the incremental value we deliver to the triangle Mastercard.
Gregory: And also added two average account balances at year end, which drove the $2 three <unk> increase for the quarter.
Gregory: Although risk metrics were up as expected the pace of growth slowed the PD two plus rate, which is typically an early indicator of future write offs was unchanged from Q4 of last year at three 6%.
Gregory: While the write off rate was at 7%. It represented only a 10 basis point increase compared to Q3, but it was up 90 basis points compared to last year.
Gregory: We increased the allowance by $9 $6 million in the quarter, reflecting higher year on year receivables.
Gregory: With the allowance now at $935 million the allowance rate was 12, 4% up slightly from last quarter and remains within our targeted range of 11, 5% to 13, 5%.
Gregory: Normalized IGT was down 12% as higher revenue up 2% only partially offset tightening gross margin due to net write offs and funding costs.
Gregory: All in all the business delivered a solid performance in an economic environment, where consumers remain cautious about their finances and the impact of tariffs, while key metrics like insolvencies and unemployment rates seemed to moderate in December the team is keeping a close eye on them and has a playbook ready to take additional measures to limit risk is.
Gregory: <unk> over the medium term as necessary.
Gregory: In addition, the team remains focused on funding and ensuring it remains appropriately diversified access to committed support to navigate in times of uncertainty.
Cta versus existing committed credit facility of $1 $1 billion.
Gregory: Is expected to be replaced at or before maturity in April 2025.
Gregory: Before I conclude I want to speak briefly about our plans and expectations for 2025.
Gregory: As you know our original planning assumption coming into the year was to buy for flat to modest topline growth and to continue to target our north star margin rate of 35, 9%.
Gregory: With tariffs still a possibility over the near term horizon, we have identified potential actions and we will monitor the economy and consumer demand over the course of the next 100 days before needing to make a call on our growth and buying assumptions for the fall winter season.
We will update you on our view on both during our first quarter call in May.
Gregory: Remember too that we will be cycling some gross margin opex and one off tailwind that had about 61 of earnings benefit in 2024, including insurance recoveries and outside as gains on property sales compared to our normal run rate, including the $13 million one time gain on sale of Chilliwack in 2024.
Gregory: Which flowed through the REIT Springs.
Gregory: Looking back it has been a lot of work to get this result, and we our team credit for continuing to pull all the levers that made a possible deliver a 22% increase in EPS on a normalized basis in 2024.
Gregory: We have done this all in the context of a 2% decline in retail sales and increasing write offs at a bank by managing our margin and controlling our costs.
Gregory: Finally, I just wanted to take a minute to say how fortunate I feel to have had the opportunity to spend more than 30 years at this iconic company.
Gregory: I feel very appreciative for all of the interactions to support <unk> had from all of you on the call as well as from our board executive and finance teams and so many others across the CTC family.
Gregory: I leave knowing that the company is in good hands for the next step of its journey and I look forward to cheering the team's progress on from the beach in Ti.
Gregory: With that I'll hand, it over to Greg for his closing remarks.
Greg: Thanks, Gregory as we previously announced Gregory will transition from his EVP and CFO duties on March 31.
Greg: And officially retire on June 32025.
Speaker Change: Gregory has been a trusted partner during my time as CEO Guy.
Speaker Change: <unk> us through the challenges of Covid, 19, and serving as an advocate to our investors.
Speaker Change: His trusted advice have been critical to CTC and to me personally and for that I am So grateful.
Speaker Change: On behalf of all of Us at CTC I wish him nothing but the best in his retirement.
Speaker Change: With Gregory as impending retirement, we are preparing to welcome Darin Myer as our new EVP and Chief Financial Officer in April I know many of you are familiar with Darren and his retail background.
Speaker Change: Look forward to introducing or reintroducing you in our Q1 call.
Speaker Change: To close I've been reflecting on the progress we've made over the past few years, specifically through our better connected strategy.
Speaker Change: 2022, we have invested $1 $8 billion to advance our retail Omnichannel network supply chain data and technology.
Speaker Change: We've refreshed close to a quarter of our more than 500, ctr stores bolstered our digital capabilities monetize redundant real estate and drove more of our efficiency in our supply chain operations.
Speaker Change: By harnessing the power of the triangle and partnering for scale, we have grown our total active membership to $11 7 million and our active registered members to $9 2 million.
Speaker Change: Personalized offers now account for 8% of loyalty sales with increased one to one Matt member engagement overall, our members are simply more engaged.
Speaker Change: By significantly elevating the customer experience, we reinforced Canadians trusted us.
Speaker Change: Illustrated by our top place in National and International rankings.
Speaker Change: Our better connected achievements will be a springboard to our next horizon strategy and our plans to write a new chapter of prosperity for the strong iconic Canadian company.
Speaker Change: I've previously said that CTC is a bellwether for the Canadian economy.
Speaker Change: Customers were stretched it was reflected in our results Likewise, our economy and our company are in a better position today than a year ago.
Speaker Change: I had been reflecting on two realities first.
Speaker Change: Our a more enlightened company as it relates to the unique power of our customer relationships and insights as well as the tools, we possess for this new era of retail.
Speaker Change: And second Canadian retail has never been more disrupted or competitive. This is no secret and the number of retail company restructurings underway should give all of us pause.
Speaker Change: Our plan is to thrive and we have a strategy to do just that on March six we plan to issue a news release detailing our new path to prosperity and higher performance. We look forward to sharing our next chapter with you.
Speaker Change: With that I'll turn it over to the operator for questions.
Speaker Change: Thank you and at this time I would like to remind everyone in order to ask a question Press Star then one on your telephone keypad.
Speaker Change: To withdraw your question. Please star then one when again, we ask you. Please limit your questions to one plus one follow up before settling back into the queue. We'll pause for just a moment to compile the Q&A roster.
Speaker Change: Our first question is from the line of Brian Morrison with TD Securities. Please proceed.
Brian Morrison: Good morning, Thank you Gregory and it's been a pleasure working with you and I wish you all the best in your next chapter overtime.
Speaker Change: Greg couple of questions. Please so.
Speaker Change: And I'm not going to go operationally here a couple of bigger picture question. So TFS now that you own 100% one of the issues. There was your inability to achieve partnerships now that you have 100% what should we expect with respect to expanding these coalition partnerships what areas do you have.
Speaker Change: Got it.
Speaker Change: To further build out this flywheel.
Speaker Change: Yes, Thanks, Brian for the question.
Speaker Change: Yes.
Speaker Change: As we talked it was a it was a very fulsome and comprehensive review.
Speaker Change: TFS.
Speaker Change: The strategic pre.
Speaker Change: Priority was about determining where we can create more value and that was not only value that we can create in the.
Speaker Change: Core banking <unk> asset, but also.
Speaker Change: With triangle rewards so.
Speaker Change: Purchasing 100% of the bank are owning 100% of the bank now gives us full control of where we go from triangle.
Speaker Change: Partnership standpoint.
Speaker Change: And one of the things that we're very focused on in the core business again.
Speaker Change: To try and keep it at a higher level as you point out is is to build more resiliency.
In this business and we think there are a number of ways to accomplish that.
Speaker Change: Traditional operational raised ways in terms of assortment, but also I think the higher order strategy is about rebuilding resiliency and recurring revenue at a cost.
Speaker Change: And so today, we have we have.
Speaker Change: Have a good line of sight to recurring revenue.
Speaker Change: In our membership our recurring revenue in the quarter grew we were very happy with our recurring revenue keep in mind, though that only 60% of our sales are loyalty sales. So we continue to need to move that bar up and then put our privilege capabilities for personalization and data to work to get more.
Speaker Change: And more.
Speaker Change: Recurring spend from a customer on an ongoing basis.
Speaker Change: Ultimately if you can get to a place where.
Speaker Change: 100% of your sales are loyalty at a 100% of your spend is recurring you've taken.
Speaker Change: You've built a very resilient business, so that those those might be kind of ultimate objectives that would be very difficult to achieve so you need to supplement that with some other.
Speaker Change: <unk>.
Speaker Change: Strategic tactics and we.
Speaker Change: We strongly believe that we can add more value in a triangle members.
Speaker Change: <unk> and.
Speaker Change: And everyday needs categories.
Speaker Change: And what we've been able to see with the Petro Canada partnership is that <unk>.
Speaker Change: Gas as an everyday need gas thats earned and Petro Canada.
Speaker Change: Petro points members are seeing value in the points, they're earning being redeemed for our durable goods and we believe that that provides more value.
Speaker Change: And allows us to extend our reach in that particular business.
Speaker Change: Without having to own the asset to deliver the value both to our members and then back into our business. So I would expect.
Speaker Change: You would expect to hear from us around more types of partnerships that provide.
Speaker Change: Everyday needs value to Canadians and replicate the exact same type of.
Speaker Change: Our results and value delivery to the customer that were seeing with Petro Canada.
Speaker Change: We've suggested to that we're active in a number of conversations that continues to be true.
Speaker Change: Today, and we look forward to kind of announcing our progress on those as we move forward.
Gregory: Okay. Thank you my follow up question I guess I will go operationally and maybe this is for Gregory.
Gregory: With respect to.
Speaker Change: Ctr sales I think you mentioned that October November you were battling some pretty warm weather and then December you came back very strong and then maybe just talk about obviously, we're looking at some pretty big snowfall across Ontario, and Quebec K. This morning can you maybe just talk to the momentum that you saw in December has continued into the softer retail quarter of Q1.
Speaker Change: Yes, Brian It's Greg again, why don't why don't I take that and I'll unpack it a little bit because I think it's topical for everybody on the call.
Speaker Change: Who from a model perspective may have expected more growth from us in Q4, so listen we build we built our Q4.
Speaker Change: Our plan for growth as well given the lack of weather last year, but as usual there were a lot of things going on in the quarter. So let me unpack how it came to us first.
Speaker Change: October and November were unusually warm even more so than last year across the country. So our weather businesses were significantly down heading into December.
Speaker Change: Weather in December was better than 2023, but still below five year averages. So it wasn't the size of tailwind that we were planning for.
Speaker Change: Second the Black Friday shift from November to December It was unusual this year.
Speaker Change: We started December down double digits as a result, and we think the shift delayed Christmas shopping mindsets and the period between Black Friday and Christmas was just more condensed as a result.
Speaker Change: And third.
Speaker Change: The Canada post strike was a big impact in the quarter.
Speaker Change: In all banners, but mostly in ctr is as we rely on this carrier to get all of our flyer distribution to Canadians in a time of year that we rely on most to communicate our best deals in value. So the impact in the quarter was over 100 basis points of comps in the.
Speaker Change: Quarter, obviously much more pronounced in December.
Speaker Change: And we also incurred incremental cost to double print Flyers find alternative distributors, where we could and layer.
Speaker Change: In incremental digital investments to drive demand. So we essentially Brian had to completely reply on the last five weeks of the year, our most important weeks.
Speaker Change: I think the team did a marvelous and resilient job considering we have war rooms set up with our digital partners and we really looked to drive value drive our value awareness digitally we learned a lot. We've got a much better sense of it ended up being a giant unplanned a D test for digital versus the fly.
Speaker Change: Here.
Speaker Change: We have a better sense on where we can drive ROI digitally and what mediums and what channels create the most reach.
Speaker Change: And we think we will just help us adapt our current strategy given the current situation with Canada post has the potential to re emerge having said all of this is as as we said in our prepared remarks, we did see positive and net new demand trends in Q4.
Speaker Change: Especially in our membership so there are positive signals in our sales.
Speaker Change: And those positive signals have continued here.
Speaker Change: In the first six weeks of the year.
Speaker Change: January.
Speaker Change: Is January in 2023 was our best comp.
Speaker Change: Month of the year outside of December because of the because of the Black Friday shift.
Speaker Change: And obviously the weather patterns that you're seeing.
Speaker Change: Throughout Ontario, and Quebec over the last few days into the weekend et cetera, we started strong.
Speaker Change: The dealers are replenishing.
Speaker Change: And those signals that I talked about.
Around demography and income at the household level are continuing here into the first six weeks of the year.
Speaker Change: Thank you very much.
Speaker Change: Thank you. Our next question comes from the line of Mark Petrie with CIBC. Please proceed.
Mark Petrie: Yes, Thanks, and good morning, I'll Echo my congratulations to Gregory.
Speaker Change: It's been a pleasure to.
Mark Petrie: To be dealing with you and working with you for all these years.
Gregory: Maybe this question probably does go to you Gregory.
Mark Petrie: So you are not off the hook yet.
Speaker Change: I just wanted to talk about SG&A dollars. Obviously this has been an area of strength for you guys.
Mark Petrie: And certainly in Q4 that showed up.
Mark Petrie: But at the same time there is also no shortage of areas, where you could invest for growth and so I guess I'm curious.
Mark Petrie: Where you see opportunities for further SG&A leverage and then what's the right way to think about sort of dollar spend growth.
Mark Petrie: In 2025.
Speaker Change: Thanks, Mark I thought youre going to ask me a favorite color, but I guess not.
Speaker Change: And thanks to Brian for his comment as well.
Speaker Change: It is probably one of the things we're really proud about around 2024 results. One I'll just get the commercial again around our improved liquidity position I think Greg and I are thrilled with the progress we've made to kind of get the balance sheet back to where it was prior to the acquisition and probably the second would be our performance around SG&A.
Speaker Change: Top line was down in the year and if you look at the financials. The details of the financial services segment excuse me Youll see things like personnel spend where they were year over year on overall SG&A spend and some of that reflects some of the actions. We took last year some of it reflects.
Speaker Change: <unk>.
Speaker Change: <unk> got some noise here, but some of it reflects some of the actions we took some it reflects.
Speaker Change: Supply chain is kind of the <unk>.
Speaker Change: Some of the three pls as you're looking at 25.
Speaker Change: I don't see this team relenting kind, a one minute on controlling the controllable.
Speaker Change: I tried to put in my prepared remarks real estate and it wasn't investments in 2024, I think that's going to continue in 2025, we think there's more that we can do and should do frankly to drive kind of more longer term productivity gains. So I think I would say that is going to be important for this team as we move forward.
Speaker Change: Beyond that we're going to try to work every angle. We can I think there's more that we can do recognizing.
Speaker Change: I think he atherectomy is mark Theres, some pressure around variable cost right. So depending on what happens around tariffs and demand as I said last year Pos was down almost 2%.
Speaker Change: This year that that was how that helped us a little bit in terms of variable.
Speaker Change: If we are if we are planning and buying towards that modest growth that we talked about that's not going to be something we're going to be able to rely on to help us a little bit so.
Speaker Change: Is there more that we can do it there is and I think I like kind of the capability. That's been built in the last year around how this team is kind of really tackled opex and I, just I don't see that going away I really don't.
Speaker Change: Okay Fair enough. Thanks, and then my follow up is actually just a question of clarification.
Speaker Change: Greg in your comments around loyalty Youre talking in I guess Etfs Youre talking about recurring revenue I'm, just curious how youre actually defining that and what's in that bucket.
Speaker Change: Yes.
Speaker Change: Market's done right at the member level.
Speaker Change: And we measure it a couple of different ways. One is theyre just theyre activity, obviously, we're not a high frequency retailer like grocery so we measure.
Speaker Change: We measure their activity in terms of engaging with us from a spend perspective or over a longer time period, and then we measure the actual spend.
Speaker Change: Per customer in a quarter and how much of that is recurring so.
Speaker Change: That when we quote in the high Eighty's number from our mid to high <unk> from a recurring standpoint that is that the activity level.
Speaker Change: Not at the spend level.
Speaker Change: Okay I appreciate it I'll follow up thanks for all the comments all the best Thanks.
Mark: Thanks Mark.
Speaker Change: Thank you. Our next question comes from the line of Tony Chan with BMO capital markets. Please proceed.
Tony Chan: Hi, Good morning, guys, Hey, it looks great working with you as well so wanted to echo that.
Tony Chan: I had a couple of questions here is first point of clarification.
Tony Chan: Greg I think it was you.
Tony Chan: And you mentioned March six detailing new paths to higher performance, but earlier, you said there'll be an update I think on how youre planning for top line growth and margin. This year in may So I don't know if I misheard, but I guess, what's the difference between those two.
Tony Chan: And milestone if I can call it that.
Speaker Change: Sure. Thanks Sami so.
Speaker Change: March 6th.
Tony Chan: Is about.
Tony Chan: Kind of an out of cycle strategy announcement.
Tony Chan: When you think about.
Tony Chan: We contemplated providing this.
Tony Chan: This quarter, but we wanted to be we wanted the quarter to be as clean as we could.
Tony Chan: Any year end, we're messaging for both the quarter and the year. There's only so much time on a call like this and you guys are busy with a bunch of other issuers today. So March is about just an update on our strategy. We think it's time for an update on our strategy. We haven't we haven't really provided a more fulsome review.
Tony Chan: Since our Investor day in 2022, we have some emerging thinking on spring boarding from our better connected strategy and I think it will help you update your models and a couple of areas any reference that I would've made to May was just simply that's when we'll get back together to talk about Q1 around our AGM.
Tony Chan: So hopefully that's helpful.
Tony Chan: Okay got it.
Tony Chan: And my second question is.
Tony Chan: Wanted to focus a little bit more on gross margin. So you've been in your North star range for last year.
Tony Chan: For this year I wanted to revisit a topic that was touched a bit upon on your Q3 call.
Tony Chan: Can you give us a sense of some of the input to gross margin for this year. If we think about I think procurement costs, given the FX, where the Canadian dollar has been versus the west I do believe you hedge quite a bit but I think it's a rolling hedge and I think in the Q3 call. You also talked about was that Osha.
Tony Chan: And freight costs are coming back up again, so can you just give us an update on those pieces and just how you're thinking about that for gross margin. This year. Thank you.
Tony Chan: Yes, Gregory here, maybe I'll start and Gregory TJ want to jump in.
Tony Chan: I'm sure they will.
Tony Chan: I think you hit on a few things that there's so many levers and kind of what the team doesn't managing margin and frankly I'll go back beyond just last year. So we did slightly over achieved last year against our North Star I think are normalized number was 36, 2%.
Tony Chan: But if I go back to the last two or three years since pretty much investor day, we broadly been in line with that North Star every year end and we have to recognize quarter to quarter, there's going to be noise right there could be.
Some promotional intensity that we have to deal with or a mix issue for businesses that that always causes quarter on it on a on a.
Tony Chan: Some noise in that basis.
Tony Chan: So I think thats, what I would I would say the first comment.
Tony Chan: I will talk specifically around FX, you're right to say that we hedge and it is it is kind of rolling so a lot of the currency.
Tony Chan: Would be bought for most of kind of let's say the first three quarters to have little more bright spot kind of maybe the fourth quarter.
Tony Chan: And the way we are still thinking about it we know theres theres risk out there with tariffs and what that might do to exchange rates for example, but.
Tony Chan: We believe that we can still be competitive or kind of in that margin profile and theres things that we can do and will do.
Tony Chan: But again, that's I think a lot of it is going to depend on this tariff and where things go in that regard. So I think thats part of what we tried to say in the remarks is I think we need 100 days or so for kind of the world to hopefully settle down a little bit and then come back and talk a little bit more about things, but as we sit here today without any news on tariffs I would tell you that TJ and the team are still strive.
Tony Chan: To get that North star for 2025.
Tony Chan: Great. Thank you.
Tony Chan: Thank you.
Tony Chan: Our next question is from the line of Vishal <unk> with National Bank. Please proceed.
Tony Chan: Okay.
Speaker Change: My questions.
Speaker Change: Regarding regarding tariffs could you just give us some high level puts and takes on how you.
Speaker Change: I understand there is substantial uncertainty on how that may unfold, but for the investment community to help us understand your high level thinking about how that might pressure your results and what offsets you could do and how quickly.
Greg: Sure. Thanks, Vishal its Greg.
Greg: The situation is so unfortunate on so many levels.
Greg: At a time when the.
Greg: The economy seems to be moving in the right direction and we are gearing up for a return to growth. We're now faced with the threat of tariffs and as you suggest the new.
Greg: A new zone of uncertainty.
Greg: The biggest the way we think about it is the biggest concern for these tariffs for US is the indirect impact of the tariffs.
Greg: Their potential to slowdown Canadian GDP and employment trends.
Greg: Reversing some of the positive signals, we've seen emerging from 2024, if that materializes, it's gonna have broader implications for retail demand.
Greg: And lead to write offs at the bank unless theres some government intervention.
Greg: On the direct impact side, here's what we know today.
Greg: We purchased 15% of our goods directly from the U S.
Greg: And there are some.
Greg: Minor residual impacts from both the China and Mexico tariffs.
Greg: We all know the dollar hasn't reacted favorably.
Greg: So the news over the last few weeks. So it's prompted us to closely examine the impact of currency on pricing and.
Greg: And reassess our assortment architecture across all banners.
Greg: If you've got a.
Speaker Change: You have a tariff.
Speaker Change: Impacting your Cogs in the good level of your assortment, that's going to impact your better and best as well.
Speaker Change: As Gregory just said, we have a forward hedging program in place that helps us.
Speaker Change: In 2025, and where we're hedged forward for over 80% of our 2025 USD requirements at <unk>.
Speaker Change: Below the spot rate today, which provides us some cushion for 2025, but margin risk as we head into 2026.
Speaker Change: So the majority of the direct impact for sure just pumps.
Speaker Change: Straight down to margin management.
Speaker Change: I can tell you, we certainly prefer tailwind.
Speaker Change: And our gross margin line.
Speaker Change: But we manage through our fair share of headwinds. These last few years and I have confidence in the team's margin management capabilities, we're going to do our absolute level best to insulate our customers as much as we can from higher costs.
Speaker Change: <unk>.
Speaker Change: As you would imagine kind of standard playbook type stuff, we're reviewing products, we're examining U S suppliers exploring opportunities for Canadian partnerships.
Speaker Change: As a retailer with a diverse product range and sourcing strategies, where I think.
We're well positioned to manage this as best we possibly can.
Speaker Change: And our broad assortment.
Speaker Change: <unk> multiple brands at various price points and sourcing from different countries with varying tariff and foreign exchange exposure. So I think it's this diversity that offers.
Speaker Change: Some natural substitutability between products and helps us shield, both ourselves and our customers from some of the pricing pressures.
In the bank.
Speaker Change: It's really about unemployment vishal.
Speaker Change: The modeling and the bank, how we plan for the bank assumes.
Speaker Change: <unk>.
Speaker Change: An unemployment rate for the for the country, which would've been the exit rate coming out of December and that six six territory.
Speaker Change: So any movement up from from that exit rate is going to impact the ECL and most likely write offs in the year, so those become a little bit.
Speaker Change: Harder for us to manage its more of a <unk>.
Speaker Change: <unk> have a straight line and.
Speaker Change: Unfortunately only.
Speaker Change: But in anything related to the core business, we have levers at our disposal.
And then I would think about it vishal both in terms of direct and indirect in the indirect we will just continue to.
Speaker Change: We keep you updated as we learn.
Speaker Change: As we learn more.
Speaker Change: Gregory just wants to jump in here too vishal.
Speaker Change: Michel just Greg nailed the bank answer and I just want to close the last piece of it is the team still has a playbook in there than they are in their hands that is something like Greg mentioned where to come into effect that go back to what happened with Covid when.
Speaker Change: The government as you serve like there's so many variables at this point.
Speaker Change: Hard to call but.
Speaker Change: Where there'd be an impact in the unemployment rate Greg nailed it around the impact on the ECL I would just argue there's going to be some mitigating impact from the government I don't think they're going to they're going to watch that carefully I believe then you'll have the business will mitigate as well around actions. They can still take to try to manage that risk that was all I wanted to to add onto that.
Speaker Change: Okay. Thank you for that and related to that question somewhat.
Speaker Change: Once upon a time tire head ambition.
Speaker Change: Probably still guys to grow the owned brands and start to explore international opportunities.
Speaker Change: I noticed you said Helly Hansen, a big part of that growth was in the U S.
Speaker Change: Does this.
Speaker Change: New angle and the way the world is developing does that cause you to reflect on that strategy and maybe think differently.
Speaker Change: No. It's I mean, it's.
Speaker Change: When you look at the impact its not not really material for <unk>, given the way given where goods are manufactured in where they flow.
Speaker Change: Our kind of testing the water so to speak with a few of our brands in the U S. On various digital channels is not really a strategy we're deploying.
Speaker Change: Deploying any more and so it doesn't it doesn't really impact our go to market strategy on that front at all Vishal.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And it comes from the line of Irene <unk> with RBC capital markets. Please proceed.
Irene: Thanks, Sharon and good morning, everyone just sort of.
Speaker Change: Following offline yes.
Speaker Change: Can you walk through sort of a more granular level.
Speaker Change: When you're planning for and have with dealers I think expectations around order flow through 'twenty, you trying to imply given all of these uncertainties.
Speaker Change: And can you also walk us through what your ability is kind of changing I guess mid course, corrections and be sort of really.
Speaker Change: I guess react as the situation evolves.
Ryan: Hey, Ryan.
Ryan: It's T. J. Thanks for the question I think maybe where I will start is just to give you a bit of an inventory snapshot of where we are because that gives you a sense for kind of how we're starting the year.
Ryan: And if you look from a corporate standpoint.
Ryan: We finished the year down.
Ryan: But when you think about where we've been over the past couple of years, we're now starting to turn our attention pretty significantly to what we describe as assortment vitality and newness in the assortment. So we feel like we've done the heavy lift of reducing our inventory levels coming out of Covid and now we're we're reinvesting.
Ryan: Back into the newness of the assortment and I think if I was to piggyback on that and explain where the dealers are as well I think I would say similar there they've kind of rightsize their inventory and theyre looking forward to a new fresh assortment as we head into the spring season.
Ryan: We mentioned on the Q3 call that our inventory levels on spring summer are good and are healthy I should say in.
Ryan: And dealer land, so given all of the uncertainty surrounding us whether it be tariffs or the direct or indirect impacts of that I think what we can expect is that dealers are going to more closely mirror how consumption flows in terms of their buying habits I think during the pandemic and post pandemic you saw.
Ryan: A lot of build and burn activity from their inventory standpoint, I think it's going to much more closely mirror.
Ryan: What happens from consumption and I would say that over the long term as you know you've been following us a long time quarter to quarter, you could get some choppiness in there where the shipments to dealers outpaces, Pos or vice versa. So I think that's.
Ryan: That's how I would I would kind of prognosticate it with respect to how we're how we're looking at this and as things unfold here.
Ryan: We are really analyzing the demand trends very closely at the category level, and we're agile and our ability to adjust our inventory buys so as Greg and Gregory pointed out with the indirect effects.
Ryan: Of of tariffs, we'll have to see how demand translates across the country, it's not likely to be uniform across the country.
Ryan: It's not likely to be uniform in terms of demand across categories. So we watch our demand signals and all of the data that we have in order to make make our inventory buys and we lean heavily into trending categories and we try to make offsets when we start to see some some softening in demand. So that's really how we're going to manage it as we as we go.
Ryan: Forward here in a very dynamic environment.
Ryan: Okay.
Ryan: So a couple of follow up questions to that.
Ryan: Yes.
Ryan: What is your need.
Ryan: When you say sort of respond to evolving trends what is your lead time at this at this point and how quickly can you can that adjustment.
Ryan: Any insight.
Ryan: Arguably.
Ryan: Assortment and to what degree is the data that you are the incrementals at that.
Ryan: You are getting some loyal chain versus let's say historically than it would've been maybe just on the card to what degree is that helping you make all these decisions.
Ryan: Yeah, Let me let me start with your second question first I think the consumer data than what we've been able to join up with our triangle membership base over the past couple of years is really informing.
Ryan: Our buying decision, we're getting a lot Richard data.
Greg: Greg talked a little bit about.
Greg: Kind of how we get visibility at the customer level in terms of return.
Greg: Folks returning and continuing to to buy a Canadian tire side I'd say the data that we have is very rich lead time really varies category by category. There are some categories that are closer in in terms of lead time that we can pounce on quickly.
Greg: As we have to take inventory risk.
Greg: And we despite the tariffs with all of the Green shoots we've been seeing we have been planning for growth and we're leaning into those categories, where we're seeing green shoots in.
Greg: We're just going to have to read and react as the tariffs take place here.
Greg: And go from there, but the lead times are very depending on the category.
Greg: Okay.
Greg: And just finally I just want to add my thanks to that chip Gregory and my best wishes to everyone. It has been a pleasure.
Speaker Change: Thanks Ernie.
Greg: Thank you.
Speaker Change: Our last question comes from Jon <unk> with Scotia Bank. Please proceed.
Speaker Change: Thank you very much good morning, I'll add to the complement and best wishes to Gregory as well.
Jon: I wanted to come back to consumer sentiment and I don't imagine you're about to give intra quarter guidance on same store sales, but I wonder if you could talk about it directionally just over the last month or so or even less than that have you seen a noticeable change negative change in spending or sentiment or traffic.
Speaker Change: Once the tariffs were announced a couple of weeks ago and we've all seen the same reports about consumers looking to buy local or buy from Canadian retailers are Canadian brand is that something that you've seen over the past couple of weeks.
Speaker Change: Hey, John its Greg as I said.
Speaker Change: Earlier.
Speaker Change: Third strong theres strong demand out there right now.
Speaker Change: So we were up against tough January and feel good how we exited <unk>.
Speaker Change: Excellent.
Speaker Change: Larry.
Speaker Change: We continue to be Canada store for seasonal needs right. So.
Speaker Change: This type of weather pattern, and we don't make apologies for that we've worked for decades to get to that place.
In consumers' minds Canadians mind, so yeah.
Speaker Change: Yeah, I mean, we're feeling we're feeling good.
Speaker Change: It's <unk> it's <unk>.
Speaker Change: Really tough to draw a linear line to sentiment, especially in a real tight period like the first six weeks of the year I can tell you I guess it would have been last Monday when the whole country was worried about this cataclysmic event that was going to happen.
Speaker Change: That wasn't a very good day for sales.
Speaker Change: People were.
Speaker Change: They were glued to their TV sets.
Speaker Change: But in general it's.
Speaker Change: Really because because the weather's head, it's tough to see if kind of by Canadian is giving us.
Speaker Change: A little more <unk> on the top topline in it and because the weather's here. The same is true in terms of.
Speaker Change: Trying to tease out if there's if people are tightening their belts because they're worried about tariffs. So we just need a little bit more time here and we'll.
Speaker Change: We will update you as we come out of the first quarter.
Speaker Change: Okay. That's helpful. Thank you and then a second follow up on on tariffs I Wonder if you could add a bit more color on what are some of the larger categories that you are importing from America and any other details on how quickly you can pivot.
Speaker Change: The other suppliers on those particular products.
Speaker Change: Yeah.
The way to think about sourcing.
Speaker Change: I think I quoted 15%.
Speaker Change: We we we source significantly more from Canada, and our Canadian sourcing has.
Speaker Change: From a country standpoint has grown the most in terms of percentage of mix over the course of the last couple of years that.
Speaker Change: The Canada sourcing mix flows with our essential businesses. So if you think about anything that kind of goes into a bag or a bottle, it's likely that as a.
Speaker Change: Canadian.
Speaker Change: Supplier so to the degree that tariffs impact continued to negatively impact discretionary consumer demand and we have to continue to pull up on essentials, and Thats, where Canadians focus their spend.
Speaker Change: Then we have Canadian sources to be able to stand at the ready for those those types of categories.
Speaker Change: It's a it's a whole mix of.
Speaker Change: <unk> of categories across all of our businesses <unk> check.
Speaker Change: Any any product that we source in the U S. We have alternative sources for.
Speaker Change: We think that.
Speaker Change: About 25 to 30 of it if we percent of it if we had to completely resource.
Speaker Change: We would be able to find Canadian suppliers, and if you take a big business like auto parts as an example, big.
Speaker Change: Big kind of U S supply.
Speaker Change: Supply base into into the Ctr in parts of our businesses.
Speaker Change: That would probably have to move overseas.
Speaker Change: But again I think we feel good about our sourcing capabilities and the diversity around a plan B plan C plan D et cetera.
Speaker Change: And obviously there is not a country in the world from a sourcing perspective that we don't have freight capabilities to be able to move the product.
Speaker Change: It's just about making sure from a service or supply from a product quality specification standpoint et cetera.
Speaker Change: We're putting ourselves in a position to to maintain what what type of service levels Canadians need of us relative to our primary.
Speaker Change: Partners today.
Speaker Change: Thank you we have time for one last question from Jonathan Matuszewski with Jefferies. Please proceed.
Jonathan Matuszewski: Oh, great good morning, and thanks for squeezing me in.
Jonathan Matuszewski: My question was just on promotional activity and just trying to understand what you saw in <unk> as it relates to consumer elasticity kind of where that is these days and how it's changing.
Jonathan Matuszewski: Maybe just like the categories, where incremental promotions are working in <unk> and those where maybe they're not.
Speaker Change: I think this quarter saw higher promotional intensity, so any more color would be helpful. Thanks, so much.
Speaker Change: Yes, Jonathan it's T. J I can give you a bit of color on that from a ctr perspective, I think you nailed it the competitive intensity in promotional intensity definitely ramped up this year I think with with the shift in Black Friday timing.
Speaker Change: I think a lot of retailers, we're trying to and the fact that consumers are creating value I think.
Speaker Change: Our retail competition, including ourselves kind of really leaned in a little bit into.
Speaker Change: Into promotional activity a couple of categories. We saw some some interesting positive benefits from investing in price we're in household batteries and.
Speaker Change: And.
Speaker Change: And some hunting category.
Speaker Change: Or is that we're able to drive demand on.
Speaker Change: And I think what.
Speaker Change: How I would summarize it as I was very impressed with our marketing team's effort in bringing forward how much value Canadian tire does provide whether it would be our our digital in TV presence with our equity ads or whether it be sharpening our pencil using our elasticity modeling to decide where to make the appropriate <unk>.
Speaker Change: <unk> I think overall as we did a postmortem on Q4 Canadian tire did a great job in owning that value.
Speaker Change: And youre going to get you're going to see us continue to do that as we go go through 2025, we've got a strong marketing Arsenal our triangle membership rewards.
Speaker Change: Our good better best architecture across.
Speaker Change: A whole swath of categories across Canadian tire retail really in our owned brands and national brands kind of once you finally allow us to provide value to our customers and thats, what theyre, creating right now.
Speaker Change: The uncertain economic backdrop.
Speaker Change: Thanks, so much and best of luck.
Thanks, Rob. Thank you so much and this concludes our Q&A session I will turn it back to Greg Hayes for final comments.
Greg Hayes: Thank you Carmen and thank you for your questions and for joining US today, we look forward to speaking with you again soon bye for now.
Greg Hayes: And this will conclude today's call you may now disconnect.