Canadian Tire Corporation, Limited

Thank you for standing by. My name is Steven, and I will be your conference operator 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 would like to ask a question, simply press star 1 1 on your telephone keypad. To withdraw your question, please press star 1 1 again. Now I'll pass along to Karen Keyes, Head of Investor Relations for Canadian Tire Corporation. Karen?

Thank you, Stephen. Good morning, everyone. Welcome to Canadian Tire Corporation's first quarter 2026 results conference call. With me today are President and CEO Greg Hicks, Executive Vice President and CFO Darren Myers, and Executive Vice President and Chief Operating Officer TJ Fleck. Before we begin, I'd like to remind you that today's discussion contains information that may constitute forward-looking information within the meaning of a policy security's laws, including management's current expectations regarding future events and the company's True North strategy. Although the company believes that the forward-looking information in today's discussion is based on information, estimates, and assumptions that are reasonable, Such information is necessarily subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on these material risks, uncertainties, factors, and assumptions, please see the company's MD&A, which is available on our website and filed on CDAR+. The company does not undertake to update any forward-looking information whether written or oral, except as is required by applicable laws. I would also highlight that the Q1 2026 results do not include any normalization or results from discontinued operations unless otherwise stated variances to last year are to normalize results from continuing operations. Note as well that comparable sales are presented on a shifted basis. with week one of 2026 compared to week two of 2025 to account for the 53rd week in 2025. After our remarks today, the team will be happy to take your questions. We'll try to get in as many questions as possible, but I ask that you limit your time to one question plus a follow-up before cycling back into the queue. And we welcome you to contact Investor Relations if we don't get through all the questions today. I'll now turn the call over to Greg.

Thank you, Karen, and good morning, everyone. In Q1, we continued to perform and transform well, pairing strong operational discipline with momentum in key parts of our True North strategy. I'll cover both and then invite Darren to dig further into the numbers. EPS was ahead of plan and hit the high end of our historic Q1 norms. We managed OpEx growth closely and delivered solid gross margin in retail and at the bank. And retail revenue, excluding petroleum, was a highlight. up 5% as we restocked Q4 sales and increased shipments of new and exciting spring products. In what is our smallest retail quarter, Marks and SportCheck each grew sales. CTR sales declined, largely due to weather, which meant comp sales were down 1% enterprise-wide. I've said it many times, we're here for life in Canada, whatever the weather. Unfortunately, the seemingly endless Q1 winter clearly delayed the warmer weather and the inevitable sales it brings. Also, as sometimes happens, the seasons didn't line up neatly to our quarterly reporting dates. The first week of Q1 was negatively affected by strong winter sales pulled into last year's 53rd week. And the last week of Q1 was negatively affected by a delayed spring against strong comps last year. Absent these factors, our overall comp would have been positive. Like our customers, we have been patiently awaiting the spring. And in BC, where we have seen better weather, we've seen much better sales. I'll spend a minute on some of the economic volatility we see around us and how consumers are starting to respond. Similar to our comments at the end of 2025, we see a Canadian customer that is resilient but discerning. In the face of macroeconomic confusion, they have their chin up and their eyes wide open. Even as budgets get strained, customers are still shopping. But they are more selective and more value-driven. We are obviously watching these trends very carefully. For instance, triangle credit card data shows significant increases in household spending at the gas pump. This is no surprise, but it has our attention. As discerning customers move to value, we too are moving to value with a highly relevant and highly measured approach. For example, in Q1, when customers traditionally prioritized life's essential products, we lowered thousands of prices for Canadians. As we showed better value, we saw better unit and sales performance. So we remain value-focused heading into spring. This includes prioritizing products priced below $50. which represent more than half our sales, with plans to add thousands of SKUs that will bring excitement, newness, and just the right value. Affordable quality for the season is also showing up in our own brand selection, like Raleigh Cycling Products, our new WIG Fitness line, premium paint DIY accessories, and a new line of Wind River Rainwear. As part of our increased focus on value and retail fundamentals, Our David pricing and promotions engine is playing a major role, using AI tools, data, and intelligence that we simply never had before, interrogating and adjusting historic offerings and category prices. This is giving us higher fidelity elasticity models while giving customers better prices and choice. We're also augmenting our digital experiences to highlight our value. And in Q1, we added personal notifications for customers waiting for specific price drops, tools to help with product price comparisons, clear value callouts on our sites, and filters to surface online sales and clearance, which alone drove about $5 million in incremental Q1 sales. With a clear picture of our customers' bias for value, we should also acknowledge their resilience. This bears out in a few CTC stats. As counterintuitive as it may seem right now, our lowest income, highest debt customers are showing the most robust sales growth. The gap between essential and discretionary sales performance is narrowing. At Canadian Tire, spend per basket was up, despite fewer units and more deeply discounted items. Triangle MasterCard holders are paying their balances at levels we describe as stable or healthy. And overall, Triangle member visits and sales significantly outpace non-loyalty. In other words, we have more core customers and they are more active with us. With an eye on the economy and our customer, we continue to lean heavily on the clarity of TrueNorth. This includes detailed vectors of growth, increasing agility, and good progress on various initiatives across our strategic cornerstones, and I'll cover a few. In Retail Forward, we are enhancing our omnichannel opera, with data showing the continued success of each of the respective new formats in our three largest banners. These new concepts continue to outperform the rest of the network when it comes to basket sizes and customer NPS. As a reminder, we have plans for about 70 real estate projects across our banners this year, many outside the big six Vectom markets. Places like Thunder Bay, where we have plans for both a destination sport and a BBB store later this year, and places like Penticton and Saskatoon, where CTR stores are expanding. These projects continue to bring omnichannel product and value options to more Canadians in markets where CTC can drive differentiated growth. In this same omnichannel vein, we are continuing our rapid progress on digital and e-commerce, where growth is still significantly outpacing our BRICS business. This quarter, we fully deployed our new contextual search platforms to both SportCheck and Markz, driving more convenience for both online browsing and shopping. Today, when a SportCheck customer types Taylor Swift Reebok shoes into our browser, our engine is smart enough to know that the Reebok Club C85 shoe is the Taylor Swift shoe, and it will show up first. The platform also provides more personalized search results. Now, when searching for hiking boots on Mark's site, your results will be tailored to your previous search history and look very different than results for another customer. Almost 40% of our search in these banners have unique personalized results. With Marks and SportCheck up and running, CTR will scale up over the summer, at which point 100% of search sessions will return the kind of results I've described. We are particularly excited to see how this works in automotive, where searching specific parts for car models has been a pain point. These e-com and digital improvements are key to True North. and we have the right teams and resources assigned to ensure the innovation continues. Moving to Triangle Powered Every Day, we are proving that an expanding loyalty system is a powerful business driver. Historically, the bulk of ECTM was earned in our stores and through Triangle credit card purchases. That's still the case, but we are increasingly providing members other ways to earn ECTM, including personalized bonus offers and our loyalty partnerships, which combine to represent a third of all issuance in Q1, growing much faster than base and credit issuance. In partnerships, Triangle and PetroPoints are combining to relieve some of the pain in the pumps, rewarding our highest value customers. And we've seen good activity in our two new partnerships, RBC and WestJet, launched in Q1. Combined, they have already added hundreds of thousands of newly linked members. As we said last quarter, this is a key metric for us, and we have a long-term plan to double the number of Triangle members engaged with our partners from 2 million to 4. Finally, in our one-team agile and scale cornerstone, we are modernizing the business. Our Mosaic AI intelligence platform is in late-stage production, which we expect to complete in Q2. We have begun to action select insights drawing from the more than 1,000 customer life occasions and 180,000 demand signals Mosaic has already surfaced. Elsewhere, teams company-wide are continuing to adopt AI at pace. We've now rolled out Copilot to thousands of corporate employees with a record response to training programs, high engagement, and what I would call a growing use case culture with a lot of testing and learning. Developers are now using AI to inform about one third of our code and newly constructed agents have been deployed in real world workflows. As with AI deployment, we're focused on modernizing the business, but we're equally focused on upskilling our people for the future of work. As we do, we're evolving the CTC culture in very constructive ways. And with that, I'll invite Darren to walk you through the Q1 figures and provide a bit of insight on our outlook.