Canadian Tire announced in a company statement Wednesday that it will be closing down 115 corporate stores, while focusing on creating a "super brand" under its FGL Sports. It said it will try to retain as many employees as it can.
Canadian Tire will be performing a major shakeup over the course of the next five years. The retail outlet will focus its efforts on Sport Chek and Atmosphere, its most profitable corporate banners, by establishing 100 stores or approximately two million square feet of retail space, according to a news release.
Meanwhile, 115 underperforming under-performing corporate stores will be shut down and approximately 20 of those stores will be converted into a Sport Chek or other brands, such as Athletes World, Nevada Bob’s Golf and Sport Mart. This will result in a net closure of 95 corporate stores.
Executives stated it will attempt to maintain as many employees as it can.
The company noted that it will persist in amalgamating specialty stores into concept stores, like Hockey Experts and Nevada Bob’s Golf, within Sport Chek.
“Our growth strategy will further position Canadian Tire and FGL Sports as the ultimate authority in sports in Canada," said Michael Medline, President of FGL Sports. "In our work leading up to the acquisition of Forzani, it was clear that banner closures would be necessary and that was built into our financial modeling. These banners are expected to be generating unprofitable sales at the time they are closed and are not strategically well-differentiated in the market. This plan allows us to focus on our core banners in order to maximize results for FGL Sports."
The pre-tax costs related to the store closures will be approximately $26 million and will be recognized in the second quarter results of 2012.
The Toronto-based retailer published its first quarter numbers earlier this month, which showed revenues were up 23.4 percent to $2.4 billion in the three-month period.
“We had a very good first quarter driven by strong retail sales growth from all banners, including our most recent addition, FGL Sports, and strong performance by Financial Services," said Stephen Wetmore, President and CEO of Canadian Tire Corporation, in a news release.