Canadian Tire Corporation and Purchase of the Forzani

case Studies IN SPORT MANAGEMENT http://dx.doi.org/10.1123/cssm.2015-0025 Volume 4 Case Study 15 New to the Board: A Case Study of Canadian Tire Corporation and the Potential Purchase of the Forzani Group Limited Michael L. Naraine University of Ottawa Jess C. Dixon and Candice Horton University of Windsor This case study explores the potential purchase of the Forzani Group Limited by the Canadian Tire Corporation. Students take on the role of Sara Brown, a new member of Canadian Tire’s board of directors. With an emergency meeting scheduled for the following morning to decide the fate of the proposed acquisition, Brown has been called upon to provide input to the board given her aptitude for corporate acquisitions and mergers. The case profiles both companies and details the state of the retail sport industry in Canada. Notably, there is emphasis on company product offerings (e.g., merchandise), financials (e.g., balance sheets), and goodwill (e.g., charities) to provide students with pertinent information to develop their argument(s) for and/or against the acquisition. Primary learning objectives include engaging in environmental scanning exercises (e.g., SWOT analyses) and evaluating market forces present in the retail sporting goods industry. Keywords: Canadian Tire Corporation, Forzani Group Limited, corporate governance, acquisitions, retail sporting goods, Canada Brown’s Dilemma Having finished a quick workout at the gym, Sara Brown returned home to prepare for tomorrow’s emergency meeting of the Canadian Tire Board of Directors. Having joined the board less than a year ago, this was only Brown’s second board meeting, so there was still plenty to learn about the firm, its many subsidiaries, and the personalities of the other board members. As one of the few females on the Canadian Tire board, and as someone with experience dealing with corporate mergers and acquisitions, Brown knew that her opinions were going to be sought out in resolving the second item on tomorrow’s agenda (i.e., the potential acquisition of the Forzani Group). What made this particular item stressful for Brown, aside from her inexperience on the Canadian Tire board, was that she had learned through informal conversations that the board was split on the acquisition decision and that her vote could decide the fate of the acquirer—Canadian Tire. Canadian Tire Corporation Limited (CTC), a major retailer of automotive parts/repair, housewares, sporting goods, and home improvement, had been contemplating the acquisition of one of Canada’s top sport retailers, the Forzani Group Limited. With the growing threat of competition from other major retailers, Canadian Tire’s board recognizes that it must develop a plan of action to sustain its growth and encourage consumers to keep choosing Canadian Tire as its primary retail destination. In addition to the company’s efforts in other markets, Canadian Tire’s management team has proposed to hone in on the sporting goods division and believes that the purchase of FGL could be consistent Michael L. Naraine is with the Faculty of Health Sciences, University of Ottawa, Ottawa, Ontario, Canada. Jess C. Dixon and Candice Horton are with Department of Kinesiology, University of Windsor, Windsor, Ontario, Canada. Address author correspondence to Michael Naraine at [email protected]. This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 120 Canadian Tire Corp. and Potential Purchase of Forzani Group Limited   121 Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 with the mission, values, and goals of the firm. However, there is some debate within upper management and among industry analysts as to whether the purchase would add value to the organization vis-à-vis shareholder wealth. Not only would the purchase be financially taxing, but the acquisition of a major sports retailer could have an adverse effect (e.g., investors divesting interest in CTC) if the industry continued to decline beyond the 3.7% drop in sales from 2009 to 2010 (Statistics Canada, 2011). Moreover, the purchase could potentially draw resources away from Canadian Tire’s other subsidiaries and make them less competitive in those areas, a potentially devastating scenario given the multiple competitors that currently exist within the marketplace (e.g., Wal-Mart) and those seeking entry in the near future (e.g., Target). Upon entering the kitchen, Brown’s smartphone began to vibrate, notifying her of an incoming e-mail. The message was from a fellow CTC board member, John Wilson, who proceeded to reaffirm his belief in Brown’s abilities: “You’ve got this one in the bag. See you tomorrow.” For Brown, the decision was not as clear-cut as Wilson had framed it, as there were many different perspectives to consider. Feeling a bit uneasy, Brown put a pot of water on the stove to make some tea and switched her phone into “silent mode.” She sat down to begin reviewing the reports on both companies once again to ensure her position was clear, defined, and well supported. A lapse in judgment could destroy shareholder wealth and ultimately result in her termination. Report 1: Canadian Tire Corporation Background and History After being founded in 1922 by Alfred and John Billes, Canadian Tire had begun to expand beyond the sale of automotive parts and accessories (e.g., homemade antifreeze). In the 1950s, the company introduced gas stations to complement its automotive services. Later in that decade came the initiation of Canadian Tire money, a loyalty program that rewarded customers with “currency” that could only be spent at Canadian Tire retail locations (Biesada, 2011). Canadian Tire continued to reduce its reliance on automotive sales by entering into the small appliances and housewares market, which helped move automotive sales from 50% of total sales in the early 1970s to 35% of total sales later in the decade (Biesada, 2011). A large part of the Canadian Tire strategy was to focus on financial services. CTC would purchase Midland Shoppers Credit Limited in 1968, a small financial services firm, and rename it Canadian Tire Acceptance Limited. This acquisition helped further the company’s involvement in the financial sector in the mid-1990s, as its financial division introduced the Options MasterCard credit card program. In 2000, Canadian Tire integrated its financial services and famed customer loyalty program by developing the Canadian Tire Money on the Card program. Three years later, Canadian Tire Bank was established as a wholly owned subsidiary of Canadian Tire (Canadian Tire Corporation [CTC], 2010a). This move provided the company with greater marketing flexibility for its credit card operations, as well as enabling expansion into other common banking services such as savings accounts, variable and fixed rate mortgages, and Government Investment Certificates (GICs; low-risk investment opportunities commonly issued by Canadian financial institutions that offer a guaranteed rate of return over a fixed period of time). With increased competition in other market segments, Canadian Tire’s financial services arm proved to be a valuable asset to the product and services mix. In addition to moving into financial services, Canadian Tire has consistently grown its brand by starting new ventures, acquiring other retailers, or establishing strategic business partnerships. In 1999, the company opened the PartSource chain of automotive parts retail outlets, which was put in place to service major automotive parts purchasers, professional automotive installers, and automotive enthusiasts. Two years after this expansion, Canadian Tire became one of the busiest e-commerce sites in Canada (CTC, 2010a), selling over 13,000 unique products online in 2010 (Biesada, 2011). This same year, Canadian Tire acquired Mark’s Work Wearhouse, a national leader in workrelated, casual, active, and business-to-business apparel. This acquisition, which took place in February of 2002, cost an estimated $110.8 million (CTC, 2004). As of 2011, Canadian Tire had 485 Canadian Tire retail stores, 87 PartSource outlets, 272 gas stations, 267 convenience stores and kiosks, 75 car wash stations, 90 propane stations, 378 Mark’s Work Wearhouse retail locations, and issued approximately 4 million Canadian Tire MasterCard credit cards (Biesada, 2011; CTC, 2010b). The Canadian Tire retail outlets serve over 185 million customers per year, with 90% of Canada’s population living within 25 km of a retail This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 122  Naraine, Dixon, and Horton location (CTC, 2010c). Canadian Tire Petroleum is one of Canada’s leading independent gasoline retailers (CTC, 2010b), and contributes 18% of Canadian Tire’s overall revenue as of 2010 (Biesada, 2011; see Appendix A for CTC’s financial statements). Overall, Canadian Tire has a wealth of operations in a variety of markets and has done considerably well in growing its brand by way of low prices, volume purchasing, and an emphasis on value, quality, and customer service. Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Canadian Tire’s Company Values Customer service has always been a strong focus for Canadian Tire, which takes pride in its tradition of operating with integrity (CTC, 2010d). In its beginnings, Canadian Tire offered a guarantee to consumers termed the Super-Lastic Tire Guarantee, which covered more than just manufacturers’ defects (Biesada, 2011). Over time, Canadian Tire introduced customers to additional product offerings and a friendly retail shopping experience through its “Smart Store” and “Small Market Store” initiatives. The Smart Store layout, which was introduced in 2008, offers fresh and frozen groceries, nutritional supplements, fitness products, and a Mark’s Work Wearhouse section. The Small Market Store covers 14,000–19,000 square feet to better serve rural communities. This store is similar to the Smart Store layout, just smaller in scale and product stock (Biesada, 2011). Canadian Tire also strongly believes in ethical conduct as a company and expects the same from its employees and suppliers (CTC, 2010d). This notion stemmed from original co-owner Alfred Billes, who got recognized as a Member of the Order of Canada in 1976 for contributing to the business community, showing concern for employee well-being, and sharing company successes with employees (Biesada, 2011). In 1980, Canadian Tire’s gross operating revenue reached over $1 billion for the first time, and its employees shared $7,265,000 in bonuses (CTC, 2010a). The company applies a strict business code of conduct for employees and suppliers to ensure a clear understanding and consistent commitment to ethical business practices. To this end, it established a business compliance office located in Toronto, as well as a website and telephone hotline that can be contacted in cases where potential breaches in Canadian Tire’s Code of Business can be reported (CTC, 2010d). Alongside its values of superior customer service and strong relationships with employees and suppliers, Canadian Tire plays an active role in the communities it serves. In 2009, one in three families could not afford to have their children participate in sport activities due to financial deficiencies. Canadian Tire, along with its subsidiaries and donors, raised $11.5 million in support of community-based programs for financially challenged families and children as part of the Canadian Tire Jumpstart Charities program. This charitable program helped over 216,500 children participate in local organized community sport programs between 2005 and 2009. As part of this program, Canadian Tire retail locations host Jumpstart days, where one dollar is donated to the Jumpstart program for each customer purchase that is made. In 2009, outside of corporate sponsors, 2 million Canadian Tire retail customers participated in Jumpstart days across the country. Canadian Tire employees have also been known to donate a variety of sporting equipment such as soccer balls, pumps, and training equipment to local youth (CTC, 2009). The Canadian Tire Jumpstart Charities program works because the organization and its supporters see the importance of sport participation in increasing a child’s chance to succeed in life (CTC, 2009). Canadian Tire’s Competition Given that Canadian Tire operates in multiple industries, it is susceptible to competition from a wide variety of firms. The three primary competitors to Canadian Tire are Wal-Mart, Sears Canada, and the Hudson’s Bay Company (Biesada, 2011). These firms operate similarly to Canadian Tire in that they offer a tremendous assortment of products and services, thereby enticing consumers to make all their purchases in one convenient location. In January of 2011, Hudson’s Bay sold off one of its subsidiary department store chains, Zellers, to the American firm Target (McQuigge, 2011). With Target seeking to capitalize on the Canadian marketplace, it may serve as a future threat to Canadian Tire and its retail operations. In addition to these major department store retailers, Canadian Tire must also compete with smaller, more specialized businesses within each specific industry in which it operates. For instance, in housewares, Canadian Tire competes against firms like Benix & Company, which operates solely to provide customers with housewares and cooking products. With the growing threat of its competitors, Canadian Tire must continuously expand the quality and diversity of its products and services to remain profitable. This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. Canadian Tire Corp. and Potential Purchase of Forzani Group Limited   123 CTC and Sporting Goods Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Canadian Tire’s entry into sporting goods is a reflection of the company’s overall strategy to provide its consumers with the convenience of making all of their purchases at one location. This holistic shopping experience is intended to capture the interest of families, who are Canadian Tire’s primary consumers. Historically, in an effort to accommodate these consumers, Canadian Tire retail outlets carried a limited variety of product offerings, opting for low- to mid-cost items that would entice both recreational and casual sport consumers. Where Canadian Tire really added value to its sporting goods offerings was in the area of bicycles. By 2002, Canadian Tire had a strong assortment of bicycles and bicycle accessories, which included national brands such as Bell and CCM, as well as low-cost, in-house brands like Supercycle (Bortolussi, 2004). Having a strong bicycle segment drew consumers into the sporting goods section, which was often located at the rear of the store, in hopes of enticing additional impulse purchases. Despite the company’s success in the bicycle market, Canadian Tire has neglected to grow other aspects of its sporting goods offerings (e.g., baseball, lacrosse, and soccer). Moreover, even though bicycle sales are relatively high, the company has not been able to attract business from avid cyclists (Dummett, 2011). At present, the company maintains its offering of basic and affordable sport products as a convenience to its existing clientele. Canadian Tire Challenges Throughout Canadian Tire’s development as a top retailer, it has incurred many successes and challenges. Although the company has identified customer service as one of its core values, it has developed a questionable track record of customer service and product quality. As a result, many Internet websites have been developed for consumers to vent about “Crappy Tire,” the colloquial term used to describe the company’s product and service offerings (McCarthy, 2001). Consumers have also been pretty adamant about its poor automotive service repairs, having ranked Canadian Tire as a poor performer in that category (Van Alphen, 2010). Nevertheless, the company still generates considerable revenues from its automotive division. Changing Gears With her eyes already becoming blurry from scanning through the CTC report, Brown got up to remove the pot of boiling water from the stove. She proceeded to pour herself a cup of tea and then sat back down at the kitchen table to resume her analysis. Before delving into the second report, she logged on to her tablet and decided to do some research on the state of the Canadian retail sport industry to give her a better sense of both company’s positions within it. Industry Analysis The retail sport industry is comprised of the footwear, apparel, and sporting goods (equipment) segments, and has multiple business channels associated with it. As such, there are many retailers present in this industry, including both small- and large-scale operators with multiple departments or specialties in specific sports categories. These include Canadian Tire and the Forzani Group Limited (FGL), the latter of which has served as an anchor within major shopping malls throughout Canada, alongside other major big-box retailers (e.g., Winners, Old Navy, and Staples). The Forzani Group has also traditionally operated in large spaces, allowing it to accrue a 20.9% share of the market in 2010, a significant increase from its share a few years prior (SEDAR, 2010; see Appendix B). However, the firm has struggled to capture consumers in the hard goods (i.e., sports equipment) segment, which is partly attributable to the 1.9% decline in the overall market in 2009. As a specialty sports retailer, FGL appeals to younger consumers as well as those who have more disposable income. Conversely, Canadian Tire, one of the larger retailers in the industry, has captured strong market share in hard goods and, from a geographic perspective, has operated in “power centers” alongside three or more big box retailers with shared parking space and a specific clientele. Nevertheless, CTC has failed to adequately perform in the footwear and apparel segments (see Appendix C), despite its appeal to lower- and middle-class consumers with less disposable income (see Appendix D). In addition to its challenges to perform in footwear and apparel, CTC has faced myriad competition within the sporting goods market and from other big box retailers. The Forzani Group serves as the major sports retail competitor to This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 124  Naraine, Dixon, and Horton CTC, but the market is also occupied by companies specializing in a particular product category, such as Sports Gilbert Rousseau’s Pro Hockey Life (King, 2007), Sporting Life (which specializes in swim, running, and racquet sports) and even Toys R Us (which specialize in toys and games; Jones, Evans, & Smith, 1994). From a big box retailer perspective, CTC and FGL face competition from discount retailer Wal-Mart, which carries products in several categories (including sports equipment), as well as looming competition from companies such as Target who have planned to infiltrate the Canadian market (Shaw, 2011). Having now developed a better sense of the state of the Canadian retail sport industry, it was time to get back to the task at hand. Brown had refreshed her memory about CTC’s history, values, and operations, but now she needed to do the same for FGL. With that, she placed down her tablet and opened up the second report in the acquisitions portfolio. Report 2: Forzani Group Limited Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Background and History In 1974, John Forzani opened an athletic footwear retail location, Forzani’s Locker Room, in Calgary, Alberta, while a member of the Calgary Stampeders professional football club (Pierce, 2011). Upon retiring from his professional playing career in 1976, Forzani devoted a great deal of his time and effort to meeting with suppliers at hotels and conventions in hopes of building the business. The company continued to grow throughout the 1980s, capitalizing on the massive interest in personal fitness. However, the expansion of FGL’s operations did not occur until the early 1990s (Pierce, 2011). FGL began its expansion by acquiring Sport Chek International Limited in 1991, and Hogarth’s Sport and Ski in 1992 (Forzani Group, 2011a). Together, these acquisitions signaled that the company had shifted its focus to more hard goods, such as bicycles, golf clubs, and skis. In 1993, FGL became a publicly traded company with reported annual revenues in excess of $70 million (Olijnyk, 2002). In 1994, FGL extended its reach beyond Western Canada through the acquisition of Sports Experts Incorporated, a national sporting goods retailer that amassed annual revenues of approximately $266 million (Onstad, 1997). By 1995, FGL experienced some turbulence. The company had over-expanded without adequate resources and faced increased competition from U.S. businesses (i.e., Sportmart and Sports Authority). Both U.S. firms planned on setting up 25 stores in Canada, with each store operating spaces up to 50,000 sq.-ft. As part of a panicked response to this threat, FGL converted many existing Sport Experts stores into 35,000 sq.-ft. Sport Chek stores and opened 20 new locations in April of 1995 (Onstad, 1997). While these moves staved off the threat of American competitors, the consequence of these actions resulted in the company posting considerable financial losses soon thereafter. After a corporate restructuring led to the hiring of Bob Sartor and Bill Gregson as the chief executive officer and chief operating officer, respectively, FGL began to navigate its way out of debt and potential bankruptcy and experienced a rise in its stock. In early 2001, FGL stock (traded on the Toronto Stock Exchange as FGL.TO) traded at slightly above $3 per share. By the end of that year, the stock had risen to just over $15, and by 2002, it had grown to over $20 per share (Olijnyk, 2002). In light of the company’s success, FGL decided to centralize itself and become a national brand. In 2005, having already purchased the mid–price point retailer Sport Mart and Nevada Bob’s Golf specialty franchise, FGL acquired National Gym Clothing Limited. As a result of this acquisition, FGL was able to raise its market share in Ontario from 12% to 16%. In addition to gaining market share, FGL obtained considerable distribution channels and greater access to negotiate better prices with its suppliers (Ryan, 2005). With the company continuing to maintain its profitability, FGL once again sought to expand its market share. With over 400 general (e.g., Sport Chek, National Sports, and Sport Mart) and specialty stores (e.g., Nevada Bob’s Golf, Coast Mountain Sports, and Hockey Experts) across Canada, FGL further expanded its retail sports empire in 2007 by acquiring Athletes World. A former division of the Bata shoe company, Athletes World was focused on sports culture and lifestyle apparel and footwear. In addition to the Athletes World acquisition, the company created a new venture known as S3, dedicated to surfing, snowboarding, and skating (Forzani Group, 2011a). Developed to cater to these emerging sport lifestyles, FGL had now built a complete sports retail empire that touched upon many consumer demographics through the sale of virtually every known sporting equipment, footwear, and apparel brand. This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. Canadian Tire Corp. and Potential Purchase of Forzani Group Limited   125 Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 FGL Successes and Failures The Forzani Group had done a remarkable job of staying true to its mission of helping Canadians live healthy, active lifestyles (Forzani Group, 2011b). While FGL continued to grow its market share and distribution channels, it also initiated several community outreach projects like ‘The Power of Sport for Kids’ program. The program was developed in 2005 to help organizations and groups that support at-risk and disadvantaged youth by providing sports equipment and monetary donations (Forzani Group, 2011b). In addition, the company had been active in sponsoring and collaborating with elite sport governing bodies such as Hockey Canada and Soccer Canada, providing developmental opportunities for young, aspiring athletes. The FGL model for its retail stores had also been a strong indicator of the continued success of the business. Part of the reason FGL had been able to compete in the marketplace is through the efficient use of space and resources. Unlike the big-box retail model, FGL stores worked on a seasonal model, keeping sporting goods in stock for that season and sending them back to the warehouse in the off-season (Onstad, 1997). This is a model that retailers in other sectors have adopted as well, but has significantly benefited FGL by limiting inventory levels while simultaneously diversifying its product offerings. FGL has experienced strong revenues due, in part, to its product offerings and advertising campaigns. In 2010, FGL reported more than $28 million in net earnings (see Appendix E for financial information) despite a poor economic environment. The reason for this success is partially due to FGL’s ability to attract new customers and retain old ones with its marketing (Pierce, 2011). In 2010, FGL signed National Hockey League (NHL) superstar Sidney Crosby to a five-year endorsement deal (Marketwire, 2010). In addition to signing star athletes, FGL developed in-house apparel brands such as Onyx that helped deliver low-cost, high-margin products to its customers. The company has also done a remarkable job of capitalizing on consumers in the 18–35 year old demographic who make purchases at malls and urban centers by locating stores in these types of facilities (Dummett, 2011). In addition, FGL has maintained exclusivity agreements with 90% of its shopping-center locations, effectively shutting the door to other sporting goods retailers in those establishments (Dummett, 2011). While revenues were maintained with Sartor and Gregson at the helm, FGL experienced difficulties maintaining efficiency and developing growth. Although the company had built a vast empire, it had yet to fully engage customers in Atlantic and Northern Canada. As of 2009, 537 of FGL’s 564 retail locations were spread evenly throughout Western Canada, Ontario, and Quebec, with a mere 37 stores located in the Atlantic provinces and Northern territories (Pierce, 2011). In particular, FGL’s limited engagement in Eastern Canada enabled competing retailers such as Wal-Mart and Canadian Tire to generate large sales volumes. While FGL’s subsidiaries have done a fair job of capturing a considerable percentage of the dollars spent in the sporting goods industry, they have not been able to increase their share of units sold in the marketplace. That is to say, that the sporting goods industry in Canada remains highly competitive and consumers have multiple retail options from which to make their purchases. Decision Time Having now read through both reports and conducted a thorough analysis of the Canadian retail sport industry, Brown became worried; she was still unsure of her position ahead of this critical vote. While getting up to pour herself another cup a tea, she peered out the kitchen window to see children playing road hockey under the dimly lit streetlights. “Is this acquisition in the best interests of the shareholders of CTC?” she thought to herself. “What about the end consumers? Would they benefit from this acquisition as well? Who wins and who loses in a deal like this?” With so many questions, so little time, and her long-term position on the board at stake, Brown began to write down her arguments in hopes of impressing her fellow board members and putting CTC (and its shareholders) on the path to success. Discussion Questions 1. How do CTC and FGL each attempt to differentiate themselves within the Canadian retail sport marketplace? 2. What are the strengths, weaknesses, opportunities, and threats of both CTC and FGL at the time of the proposed acquisition? This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 126  Naraine, Dixon, and Horton 3. Perform Porter’s (2008) five forces analysis on the focal organization in the case (i.e., CTC). Are these forces conducive to an acquisition of FGL? Why or why not? 4. What are the benefits and detriments of CTC’s proposed acquisition of FGL? How (if at all) will CTC and FGL be able to combine and/or share resources to gain incremental value through this acquisition? 5. Should CTC proceed with its acquisition of FGL? Support your answer. Acknowledgments The authors would like to acknowledge the feedback from two anonymous peer reviewers who significantly aided in improving the quality of this case study. Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 References Biesada, A. (2011). Canadian Tire Corporation, Limited. Hoovers Inc., Retrieved from http://www.hoovers.com/company/Canadian_Tire_Corporation_Limited/hcrtji-1-1njhxk.html Bortolussi, S. (2004). Canadian Tire Corporation, bicycle category: The Schwinn assortment decision (case number 9B04A038). Richard Ivey School of Business. London, Canada: University of Western Ontario. Canadian Tire Corporation, Limited (2004). Annual information form. Canadian Tire Corporation, Retrieved from http://corp. canadiantire.ca/EN/Investors/Governance/AIF/CTR_AIF2004_eng.pdf Canadian Tire Corporation, Limited (CTC). (2010a). History, Retrieved from http://corp.canadiantire.ca/EN/AboutUs/Pages/History. aspx Canadian Tire Corporation, Limited (CTC). (2010b). Corporate profile, Retrieved from http://corp.canadiantire.ca/EN/AboutUs/ Pages/CorporateProfile.aspx Canadian Tire Corporation, Limited (CTC). (2010c). Business overview, Retrieved from http://corp.canadiantire.ca/EN/AboutUs/ Pages/BusinessOverview.aspx Canadian Tire Corporation, Limited (CTC). (2010d). Codes of conduct, Retrieved from http://corp.canadiantire.ca/EN/AboutUs/ Pages/CodesofConduct.aspx Dummett, B. (2011). 2nd update: Canadian Tire to buy sporting-goods retailer Forzani for C$771M. The Wall Street Journal, Retrieved from http://online.wsj.com/article/BT-CO-20110509-711911.html Forzani Group. (2011a). History. Forzani Group Limited. Retrieved from http://www.forzanigroup.com/fglprofile.aspx?selected=history Forzani Group. (2011b). Corporate mission. Forzani Group Limited. Retrieved from http://www.forzanigroup.com/corporateGiving. aspx?selected=pos Jones, K., Evans, W., & Smith, C. (1994). New formats in the Canadian retail economy. Journal of Shopping Center Research, 1(1), 161–208. King, M. (2007, April 19). Rousseau’s hockey gear empire goes national. The Montreal Gazette. Retrieved from http://www.canada. com/story.html?id=463be7e0-216f-4284-bff8-77f9d5c5131a Marketwire. (2010). NHL superstar Sidney Crosby teams up with Sport Chek, Sports Experts and Hockey Experts. Yahoo! Finance. Retrieved from http://finance.yahoo.com/news/NHL-Superstar-Sidney-Crosby-ccn-602294358.html?x=0&,y=1 McCarthy, K. (2001). Canadian Tire loses fight to call itself ‘crap.’ The Register. Retrieved from http://www.theregister. co.uk/2001/07/04/canadian_tire_loses_fight/ McQuigge, M. (2011). With Zellers gone, what will the future hold for Hudson’s Bay Company? Canadian Press via Global News. Retrieved from http://www.globalnews.ca/story.html?id=4104716 Olijnyk, Z.Z. (2002). At the top of its game: Escaped from the jaws of defeat, Forzani finds new fans. Canadian Business, 75(8), 19–20. Onstad, K.K. (1997). Extreme retailing: In the ’90s, sports retailing became a lot meaner and a lot tougher. Armed with some highpriced talent and a new playbook, Forzani Group is making a comeback. Canadian Business, 70(12), 94-96, 99. Pierce, R. (2011). The Forzani Group Ltd. Hoovers Inc., Retrieved from http://proquest.umi.com/pqdweb?RQT=501&idlqry=FOR ZANI+GROUP&idltype=company&idlkbase=2&idlmode=1 Ryan, T. J. (2005). Forzani acquires National Sports. SGB, 38(3), 16. SEDAR (2010). Management’s discussion & analysis for the period ended August 1, 2010 (Forzani Group Limited). Retrieved from http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00001892 Shaw, H. (2011, January 13). Target in Canada . . . finally. National Post. Retrieved from http://business.financialpost.com/2011/01/13/ fp-marketing-target-canada-finally/ This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. Canadian Tire Corp. and Potential Purchase of Forzani Group Limited   127 Statistics Canada (2011). Retail and wholesale trade (Canada Year Book Publication 11-402-X). Retrieved from http://www.statcan. gc.ca/pub/11-402-x/2011000/chap/retail-detail/retail-detail-eng.htm Trendex. (2008). Trendex sports vision: The Canadian sporting goods market. Silver Spring, MD: SGMA. Van Alphen, T. (2010). Petro-Canada’s Certigard tops auto service rankings. Toronto Star. Retrieved from http://www.wheels.ca/ article/791418 Appendix A Financial Statements for Canadian Tire Corporation, Limited Consolidated Balance Sheet (in USD Millions) (Biesada, 2011) Dec. 2010 Dec. 2009 Assets Current Assets Cash Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 554.2 749.0    Net Receivables 3,242.3 3,054.4    Inventories 901.3 889.6 Other Current Assets 305.8 178.7    Total Current Assets 5,003.6 4,871.7 Net Fixed Assets 3,219.2 3,030.6 Other Noncurrent Assets 539.6 473.2 Total Assets 8,762.3 8,375.5 Accounts Payable 1,355.6 1,325.9 Short-Term Debt 140.6 294.7 Liabilities Current Liabilities 615.5 822.7 Total Current Liabilities Other Current Liabilities 2,111.7 2,443.3 Long-Term Debt 1,079.2 1,050.0 Other Noncurrent Liabilities 1,505.6 1,368.0 Total Liabilities 4,696.5 4,861.3 Shareholders’ Equity 4,065.9 3,514.2 Total Equity Common Stock Equity 4,065.9 3,514.2 Shares Outstanding (millions) 81.4 81.7 Consolidated Statement of Operations (in USD Millions, Except per-Share Data) (Biesada, 2011) Revenue Cost of Goods Sold Gross Profit Gross Profit Margin Dec. 2010 Dec. 2009 8,979 8,277.4 7,998.6 7,421.3 980.4 856.1 10.9% 10.3% SG&A Expense 33.0 23.5 Depreciation & Amortization 247.3 235.8 This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. Appendix A (continued) Consolidated Statement of Operations (in USD Millions, Except per-Share Data) (Biesada, 2011) Dec. 2010 Dec. 2009 Operating Income 596.9 456.6 Operating Margin 6.6% 5.5% 596.9 456.6 143.4 137.4 453.5 319.2 — — Income Before Taxes Income Taxes Net Income After Taxes Continuing Operations Total Operations — — Total Net Income 453.5 319.2 5.1% 3.9% Net Profit Margin Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Consolidated Statement of Cash Flows (in USD Millions) (Biesada, 2011) Dec. 2010 Dec. 2009 Net Operating Cash Flow 991.0 399.1 Net Investing Cash Flow (769.9) (899.7) Net Financing Cash Flow (570.7) 840.8 Net Change in Cash (349.6) 340.2 Depreciation & Amortization 247.3 235.8 Capital Expenditures (237.5) (209.6) Cash Dividends Paid (68.5) (65.5) Appendix B Canadian Total Sporting Goods Market (January–December 2008) Units Dollars Wal-Mart 19.8% Canadian Tire 11.4% Canadian Tire 14.3% Sport Chek 10.0% Sport Chek 7.4% Wal-Mart 9.9% Zellers 4.5% Sears (Total) 4.9% Sears (Total) 4.3% Sports Experts 3.6% Costco 2.4% Golf Town 3.3% Golf Town 2.3% Zellers 2.5% Sports Experts 2.3% Sport Mart 2.1% Winners 2.1% Costco 2.1% Sports Mart 1.6% Foot Locker 1.6% The Bay 1.6% The Bay 1.5% Foot Locker 1.0% Mountain Equipment Co-Op 1.2% Winners 1.2% Note. The figures shown are >1.0% (Trendex, 2008). This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 128 Appendix C Canadian Total Sporting Goods Market Retail Dollar Market Share (January–December 2008) Retail Channel Equipment Footwear Apparel Department Stores 7.4% 4.3% 15.3% Discount Stores 16.4% 10.4% 27.9% Sporting Goods Stores 32.5% 45.3% 24.2% Athletic Specialty Shops 15.6% 8.0% 5.9% Clothing Specialty Stores 0.5% 6.9% 14.1% Footwear Specialty Stores 0.3% 23.7% 2.3% Canadian Tire 19.9% 1.3% 0.6% All Other Outlets 7.4% 0.1% 9.7% TOTAL 100% 100% 100% Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 (Trendex, 2008; Statistics Canada, 2011) Appendix D — Total sporting goods market retailer positioning, quadrant view (January–December 2008) (Trendex, 2008) This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 129 Appendix E Financial Statements of Forzani Group Limited Consolidated Balance Sheet (in Thousands $CDN) Jan. 2010 Feb. 2009 Cash 962 3,474 Accounts receivable 71,544 84,455 Inventories 316,319 291,497 Prepaid expenses 5,092 2,827 Capital assets 199,589 196,765 Goodwill and other intangibles 95,990 91,434 Other assets 5,914 8,545 Future income tax asset 6,519 9,960 Total Assets 701,929 688,957 Indebtedness under revolving credit facility 27,932 17,130 Accounts payable and accrued liabilities 265,007 275,000 — 7,501 Other liabilities 6,177 2,946 Deferred lease inducements 44,062 47,811 Deferred rent liability 5,525 5,893 Total Liabilities 348,703 356,281 Share capital 150,359 147,161 Contributed surplus 5,770 6,401 Accumulated other comprehensive earnings 34 863 Retained earnings 197,063 178,251 Total equity 353,226 332,676 Assets Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Current Liabilities Current portion of long term debt Shareholders’ Equity Consolidated Statement of Operations (in Thousands, Except per-Share Data) (Forzani Group, 2011a) Jan. 2010 Feb. 2009 990, 706 994, 043 Revenue Retail Wholesale 367, 540 362, 715 Total 1, 358, 246 1, 345, 758 Cost of sales 864, 004 863, 239 Gross margin 494, 242 483, 519 — — Amortization of capital assets 53, 504 47, 156 Interest 2, 488 5, 175 Total 55, 992 52, 331 Operating and administrative expenses This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 130 Appendix E (continued) Consolidated Statement of Operations (in Thousands, Except per-Share Data) (Forzani Group, 2011a) Jan. 2010 Feb. 2009 41, 077 44, 771 Current 8, 858 6, 273 Future 3, 441 8, 872 Earnings before income taxes Income tax expense Total 12, 299 15, 145 Net earnings 28, 778 29, 626 Earnings per share 0.94 0.95 0.94 0.94 Diluted earnings per share Downloaded by Ebsco Publishing on 12/27/16, Volume 4, Article Number 1 Consolidated Statement of Cash Flows (in Thousands $CAD) (SEDAR, 2010) Net Operating Cash Flow Dec. 2010 Dec. 2009 51, 050 94, 658 Net Investing Cash Flow 3, 478 (73,981) Net Financing Cash Flow (57, 073) (55,137) 962 3474 Net Change in Cash Depreciation & Amortization 53, 504 47, 156 Capital Expenditures (55, 643) (52, 139) Cash Dividends Paid (9, 174) (9, 327) This content is copyright © 2015 Human Kinetics, Inc. and is not to be distributed, disseminated, or reproduced without permission. 131 Copyright of Case Studies Sport Management (2167-2458) is the property of Human Kinetics Publishers, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use.

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.