Customers head in and out of a Canadian Tire store location in Scarborough, Ont.
Canadian Tire Corp. is making changes in the executive suite and shifting its separate units under one corporate umbrella to eliminate what it calls a "silo perspective" that caused unnecessary duplication and bloated costs.
The big hardware, home goods, clothing and automotive retailer hopes the changes will result in a better customer experience, bringing more bodies into its stores.
As it creates a more centralized structure, Canadian Tire said Wednesday it will lay off some of its managers - less than 1 per cent of its work force of 58,000 - while reassigning others.
"Essentially, we have put experienced and talented individuals in key roles across the organization, we have reorganized to much more effectively live up to our commitment to allow every customer to feel they are dealing with one company rather than a series of loosely integrated business units," chief executive officer Stephen Wetmore said on a conference call.
"Looking forward, we need a structure focused on motivating customers to spend more across our unified business, to do so more often and to built a support infrastructure that delivers a superior customer experience."
Mr. Wetmore is giving expanded responsibilities to some of his senior executives and charging them with improving the company's efficiency. The retailer will centralize a number of functions that had been managed separately by its six brand categories - living, fixing, playing, automotive, apparel and financial services.
"Historically, Canadian Tire has operated as separate but interrelated businesses," Mr. Wetmore said.
"This often meant that business and marketing decisions were manage through siloed perspectives" with separate information technology, finance and human resources structures for each division.
"While this structure led to a focus on individual business performance, it significantly increased our operating costs and led to an unfocused approach on our customer."
Robert Cavallo, a retail analyst at Mackie Research Capital, questioned the timing of the move given that the company is in the very early stages of a strategy announced in April that made no mention of a management overhaul.
"When you announce an initial plan and within five months you're starting to announce realignments within the organization to better attack the plan, it just raises at least a flag or a question mark as to whether the plan is actually viable," he said.
At the investors day in April, Canadian Tire said it was returning its focus to its automotive division, under the vision of then automotive president Michael Medline.
But the company said last month Mr. Medline would be stepping down from the post in October to "pursue other career ambitions" after 10 years at the company.
Mr. Medline was instrumental in Canadian Tire's new automotive sales strategy, but soft auto sales in the second quarter while the new strategy was still in its early days, left some analysts skeptical about the reasons for his leaving.
Mr. Cavallo said the shakeup wasn't necessarily triggered by Mr. Medline's departure, and is rather part of a more underlying change to the company's business model.
"It doesn't seem as if they're really changing what the growth strategy was," Mr. Cavallo said.
"Maybe it's from overall, not just automotive, things aren't moving from a timeline perspective where they thought they should be, and in light of that, maybe it's time to look at a different way of attacking the plan."
Mike Arnett and Glenn Butt, who have led the main retailing and automotive operations respectively, have been promoted and given expanded responsibilities.
Mr. Arnett remains president of Canadian Tire Retail and will get added responsibility for company-wide strategic marketing.
Mr. Arnett will also oversee efforts to improve the efficiency of the retailer's merchandise procurement.
Mr. Butt becomes executive vice-president of the parent corporation, responsible for in-store customer experience and store operations at Canadian Tire.
Pat Sinnott, Canadian Tire's executive vice-president for supply chain, has been assigned to improve the effectiveness of core processes throughout the organization.
Paul Wilson, who has been president of the Mark's clothing division, and Dean McCann, who has been president of Canadian Tire Financial Services, will continue in those capacities.
The automotive parts and hard goods retailer will record a $15-million pre-tax charge in its third quarter to reflect the cost of departures related to the shakeup.
Huw Thomas, executive vice-president of financial strategy and performance, and Stan Pasternak, SVP and Treasurer, will retire over the coming months. Their responsibilities will transition to Marco Marrone, EVP Finance and CFO.
Canadian Tire operates 273 gas stations and 479 retail stores across the country.
The Canadian Press