On Thursday, Canadian Tire announced the reduction of 3% of its full-time workforce as part of a cost-cutting measure, citing the impact of ongoing inflation, which has led to a decline in demand.
The Toronto-based retailer is now part of a growing number of companies trimming their workforce in the face of challenges posed by rising interest rates and escalating costs associated with labour and supply chain.
According to a Reuters report, Canadian Tire anticipates achieving an annualised run-rate savings of approximately C$50 million ($36.31 million) following the reduction in headcount.
However, the company also foresees incurring a charge ranging from C$20.0 million ($14.6 million USD) to C$25.0 million (0.73 ≈ $18.25 million USD) in the fourth quarter related to these strategic actions.
The company announced a workforce reduction of approximately 200 employees. Concurrently, it disclosed a 1.6% decrease in consolidated comparable sales, attributed to customers favouring essential items and reducing expenditures on discretionary products like athletic footwear and clothing.
Canadian Tire, experiencing a 2% decrease in its shares during afternoon trading, reported an adjusted profit of C$2.96 per share, falling short of LSEG's estimated C$3.29 per share.
Nevertheless, it exceeded third-quarter revenue projections and unveiled an extra share repurchase program totalling C$200.0 million.
In late October, Canadian Tire had disclosed its evaluation of alternatives for its financial services arm and completed the repurchase of Scotiabank's 20% stake in the unit through a cash transaction valued at C$895 million, reported Reuters.