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Canadian Tire CorporationCanadian Tire Canadian Tire Corporation 2016 Report to Shareholders 2016 Report Shareholders to 2016 Our Triangle represents the most iconic brand in the marketplace and for 95 years, we have been providing customers with everything they need for the Jobs and Joys of Life in Canada. For a full update of 2016 business highlights, community investments and video messages from the executive team, please visit our Year in Review website at yearinreview.canadiantirecorporation.ca Maureen J. Sabia, Chairman of the Board 1 / Stephen G. Wetmore, President and Chief Executive Officer 2 / Management’s Discussion and Analysis 3 / Consolidated Financial Statements 58 / Board of Directors 114 / Executive Leadership Team 114 Maureen J. Sabia Chairman of the Board The Board of Directors took a bold decision in July of 2016 to change the leadership of Canadian Tire and appointed Stephen Wetmore as President and CEO. My colleagues and I felt strongly that we had We have examined our relationship with the responsibility for the long-term success Management and we are seeking even of the Tire and we were unanimous in our better ways of making sure that the flow of belief that a transformational leader was information to the Board is as effective as Sadly, in May of 2017, the Board will say needed to lead the Company at this time of possible to facilitate better decision making goodbye to George Vallance, a valuable unprecedented change in the retail industry. in order to achieve our 2022 goal. In today’s member of our Board of Directors. George Moreover, we firmly believed that Stephen fast-changing world, it is not enough for decided to retire as an Associate Dealer in would take the Tire’s iconic brand to the us to be at the leading edge of good January 2017 and Don Murray, a highly next level, a strategic imperative for us. governance, disclosure and oversight. experienced Associate Dealer, has been We must be very good at working together nominated in George’s stead. With That decision marked the beginning of an with Management to achieve our goals. shareholder approval, Don will assume his energetic journey towards creating at duties in May. George made significant the Tire a unique marketplace of innovative There is a school of thought that believes contributions to our deliberations during products to serve Canadians for the Jobs the fundamental flaw in corporate the course of his six-year tenure on the and Joys of Life in Canada. Great people, governance is the asymmetry of information Board and he will be greatly missed. great products and a great customer between the Board and Management. While experience have become our watchwords. there can be no doubt that Managements On behalf of my fellow Directors, I want to will always have (and should have) more say a special thank you to Stephen for once The rapidly changing world of retail makes it information than Boards of Directors, much again accepting the heavy responsibilities imperative that Canadian Tire have the best can be done to redress the balance. implicit in assuming the office of CEO. possible talent, so we are making talent At Canadian Tire, the CEO and his And, very importantly, I want to thank the management a priority. We are focusing on Management team are working diligently Management for the hard work ethic they enhanced operational excellence. We are with the Board to ensure a more robust have demonstrated while being innovative determined to unlock the power of the analytical flow of information between and disciplined as they set about Canadian Tire family of companies and Management and the Board. implementing Stephen’s vision for the Tire. brands. Moreover, we have become Together, Stephen and his team have made unceasing in our efforts to provide our At Canadian Tire, both Management and the significant progress. customers with an omni-channel shopping Board agree that Boards of Directors should opportunity that exceeds their expectations. not be content with simply an oversight Canadian Tire’s shareholders could not be function. We believe that Boards have a better served by their Board of Directors. In the summer of 2016, I posed a question responsibility to lead and that leadership Our Directors act with courage. They to our Management and our Board: should be shared between the Board and understand the challenges and issues the What is our vision for the Tire as we Management. This is a more activist model Corporation faces. They never fail to assist approach our centenary in 2022? Under for governance and it is a change that is Management when their experience and Stephen Wetmore’s leadership we have both necessary and desirable. expertise can be helpful. They never shrink set out with relentless determination to from challenging Management, and they become the undisputed #1 retail brand We have added two new Directors whose work hard at their relationships with their in Canada. experience and wisdom are adding fellow Directors. considerable value to our deliberations as We are in a strong position today to achieve we face and overcome the challenges in Finally, I cannot adequately express my that goal, but it will require us to make the business and retail environment in appreciation to my fellow Directors for substantial changes to meet our customers’ which we live. They are: Pat Connolly, a the support they have given me in a year evolving demands. We must continue to long-time and recently retired veteran of that taxed us all. They never hesitated to foster a test-and-learn culture and Williams-Sonoma and a leader in be there when I needed them for advice encourage innovative thinking and prudent e-commerce; and Dr. Eric Anderson, and counsel. risk taking. Much will be demanded of all of a leading data analytics scientist and us. But most of all it will require that we be I am optimistic about the future for academic at the Kellogg School of open to doing things in a different way in the Canadian Tire. My expectations are high, Management. Indeed, the Board of Directors interests of making our vision a reality. but I recognize that achievement is but has set aside a day to learn from data the reward of struggle and hard work. The Board of Directors has also looked at scientists on how best to understand the Fortunately, hard work is one of the how it must work differently. We have complexities of data-driven decision making. hallmarks of the culture at the Tire. I hope revised the mandates of the Board and its An understanding of these complexities by that our shareholders share my optimism. Committees to ensure their appropriateness Management and the Board will be needed for the journey upon which we have if we are to stay at the forefront of retailing. Sincerely, embarked, to ensure that they continue to Never before have we been as sophisticated be aligned with our view of best practices in in data analytics as we are today. governance and that they properly reflect the dynamic that in today’s world must exist Maureen J. Sabia between the Board and its Committees. Chairman of the Board Canadian Tire Corporation, Limited CANADIAN TIRE CORPORATION 2016 REPORT TO SHAREHOLDERS YEARINREVIEW.CANADIANTIRECORPORATION.CA 1 Stephen G. Wetmore President and Chief Executive Officer 2016 was an incredibly successful year for our Company. A year that illustrated the character of our brand. Our strong performance was the outcome strengths and product offerings to keep of our Company’s ability to understand a customer for a lifetime in Canada. how to prepare Canadians for the Jobs A common view of our customers enables and Joys of Life in Canada. A phrase that our retail and financial services offerings is easily stated but extremely difficult to to be uniquely adapted to the needs of execute. It has taken us 95 years of our high-value customers. This One learning, it’s why we come to work each Company, multi-channel approach is day and it’s why we will continue to be designed for today’s marketplace and successful, and relevant, to our customers increases our ability to drive operational as we approach our centenary in 2022. efficiencies. We are on a journey to We have created a great platform for Community continues to be a cornerstone become the foremost retail growth and we will continue to adapt and of our Company and 2016 was another brand in Canada together with evolve to address our changing great year for our Jumpstart charity which marketplace. Being an omni-channel has helped kids from coast to coast our Associate Dealers, our retailer has resulted in a major shift in our participate in organized sports. We have franchise owners, our leadership culture. Attracting great talent and received tremendous support from our team and the thousands of cultivating our current talent is critical in customers, partner athletes, Jumpstart employees who support them driving our creativity and performance. Ambassadors, and from our Associate Our investment in our new Consumer Dealers whose involvement in their local across the network. Brands Division will be a significant communities and commitment to the differentiator and driver for growth as we Canadian Tire brand make an enormous develop and acquire products and brands difference in the lives of kids across that enable our customers to get their Canada. We look forward to continuing jobs done and to experience the joys our efforts to provide many more of life in Canada. It will also equip us with Canadians with access to sport and a pipeline of innovative products for both recreation in the years ahead.

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