Research Update: Canadian Tire Corp. Ltd. Ratings Affirmed On Expected Leverage Reduction, Outlook Stable

Toronto-based retailer Canadian Tire Corp. Ltd. (CTC) reported a weaker-than-expected operating performance in 2023 due to a slowdown in consumer spending and warmer weather conditions in the fourth quarter. The 25% year-over-year drop in the company's EBITDA, along with its repurchase of Canadian Tire Financial Services (CTFS) segment in the fourth quarter, has increased its leverage to 3.7x. We now assess CTC's business as less resilient, given the degree of impact of economic cyclicality on its 2023 EBITDA. However, we expect the increase in its leverage to be temporary and expect it to improve in 2024. Therefore, we revised our assessment of CTC's business risk to satisfactory from strong and our comparable ratings analysis to positive from neutral. We affirmed

...- Toronto-based retailer Canadian Tire Corp. Ltd. (CTC) reported a weaker-than-expected operating performance in 2023 due to a slowdown in consumer spending and warmer weather conditions in the fourth quarter. The 25% year-over-year drop in the company's EBITDA, along with its repurchase of Canadian Tire Financial Services (CTFS) segment in the fourth quarter, has increased its leverage to 3.7x. - We now assess CTC's business as less resilient, given the degree of impact of economic cyclicality on its 2023 EBITDA. However, we expect the increase in its leverage to be temporary and expect it to improve in 2024. Therefore, we revised our assessment of CTC's business risk to satisfactory from strong and our comparable ratings analysis to positive from neutral. - We affirmed all of our ratings on CTC, including our '###' issuer credit rating. - The stable outlook reflects our expectation that the company will likely improve its currently elevated leverage to the low-3x area by year-end 2024...

Research Update