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Canadian Tire Corp. Ltd. is taking a big step outside the country by agreeing to acquire the Norway-based Helly Hansen sportswear and industrial clothing line for $985-million with an eye to eventually using it as a springboard to expand its own brands globally.

Stephen Wetmore, chief executive of Canadian Tire, said in an interview the Helly Hansen acquisition fits with everything the retailer was seeking in a purchase: a prominent brand with lots of room to expand profitably in Canada and globally through an already-established distribution network.

“We wouldn’t have paid what we did if we didn’t think it had a tremendous financial future,” Mr. Wetmore said, adding the investment has “virtually unlimited potential.”

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Still, investors seemed nervous Thursday about the move, sending Canadian Tire’s Class A shares down 5.4 per cent to $165.87 amid uncertainty about the Toronto-based retailer’s bid for worldwide expansion and the purchase’s relatively high price.

For years, Canadian Tire has been searching for ways to expand beyond its current Canadian businesses even as the retailer acquired other brands at home to give it an edge in an ultracompetitive market in which discounters and e-commerce powerhouse Amazon.com Inc. are racing to steal away business.

Almost 40 per cent of Canadian Tire’s overall annual sales are made of its own brands, ranging from Motomaster tires and auto parts to Mastercraft tools, Noma lights and Canvas home décor items. More recently, it has acquired Paderno cookware, Woods camping gear and Golfgreen lawn items. Canadian Tire also owns sporting goods chains such as Sport Chek and work-wear specialist Mark’s.

The Helly Hansen purchase marks “a leap forward” in Canadian Tire’s “highly successful owned brand strategy, and propels it into a new realm of brand management and distribution,” Mark Petrie, retail analyst at CIBC World Markets, said in a note.

Even so, Canadian Tire faces a “limited” risk of a potential interruption of supply to competing retailers that also carry the Helly Hansen products and may not want to contribute to a rival’s bottom line, Mr. Petrie said.

Brittany Weissman, an analyst at Edward Jones in St. Louis, Mo., said the acquisition makes sense for Canadian Tire in the longer term but the retailer paid a relatively high price for Helly Hansen.

“You have to pay for that growth” in future years, Ms. Weissman said in an interview.

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She suggested that Canadian Tire’s stock dropped on Thursday partly because of the high purchase price and also the uncertainty tied to the acquisition. It’s a departure for the retailer to make a brand acquisition beyond Canada’s borders and to take over a brand that is also carried at rival retailers. As a result, Canadian Tire won’t benefit from exclusivity, opening it up to the possibility of price competition from rivals.

Peter Sklar, retail analyst at BMO Nesbitt Burns, said while Helly Hansen’s fast-paced growth may justify the high valuation, “managing a high-end, high-growth international brand represents a shift in strategy for Canadian Tire, and introduces all the associated uncertainties.”

Canadian Tire is buying Helly Hansen, a global business of outdoor technical outwear and accessories, from Ontario Teachers’ Pension Plan. Helly Hansen generates $500-million in annual revenue and $50-million in earnings before interest, tax, depreciation and amortization (EBITDA,) the company said.

The deal, which is to close in the third quarter, will be paid for in cash and debt and calls for current Helly Hansen management to remain in place in Norway.

Mr. Wetmore said Canadian Tire’s Mark’s, along with the FGL sporting goods retail division, together, make it one of Helly Hansen’s biggest retail customers.

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He said the brand has huge potential to expand in lucrative markets such as the United States and Germany, which is the world’s largest outdoors sports market.

“To actually have a brand that’s capable of growing just about anywhere in the world because of its ability to develop products for harsh climates – then the world is our opportunity,” Mr. Wetmore said.

He said a retailer that wants to enter a new market would normally have to spend “billions and billions” of dollars to go the conventional route of buying or leasing stores, renovating them, building distribution centres and other infrastructure, hiring staff – all to snatch business from incumbents.

Canadian Tire’s plan to acquire Helly Hansen, on the other hand, is “capital light” and gives it the chance to expand profitably around the world under a proven and solid management team, he said.

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Canadian Tire reported a first-quarter profit of $78-million, or $1.18 a share, down from $87.5-million, or $1.24 a share a year earlier. Revenue grew to $2.81-billion from $2.72-billion.

Sales at stores open a year or more, a key retail measure, rose 5.2 per cent, with Canadian Tire gaining 5.8 per cent; Mark’s, 3.4 per cent; and FGL, which includes Sport Chek, 3.9 per cent.

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