Canadian Tire Corporation Limited Has a New CEO

Canadian Tire Corporation Limited (TSX:CTC.A) announced the departure of CEO Michael Medline and the reinstatement of Stephen Wetmore to the CEO role. Here’s what investors need to know.

| More on:
The Motley Fool

Canadian Tire Corporation Limited (TSX:CTC.A) announced a major change to the company this week, which has left many investors and industry pundits curious for answers.

After only two years on the job, Michael Medline resigned this week from his position as CEO of Canadian Tire; former CEO Stephen Wetmore is returning to the post he occupied from 2009 to 2014.

Exactly why the shakeup occurred was not immediately disclosed, but some sources have stated that the board of the company was concerned about the long-term direction of the company, particularly with respect to speed and adoption of new technology.

Medline we a big supporter of the use of technology in the retail process, effectively taking Canadian Tire from a tired brand with a limited digital exposure into a best-practices retailer for the entire brick-and-mortar retail sector.

Canadian Tire is and will remain a technology leader

Canadian Tire has integrated the use of technology into the retail process in a very short time and given serious thought to leveraging digital means to increase sales and expand to a larger audience. Integrating technology into the buying process is no simple feat; countless companies have tried in the past and met with little success. Canadian Tire, on the other hand, has taken this approach to a whole new level.

Some of the innovations that the company has introduced over the past year include a driving simulator to let customers try out new tires in different driving conditions, a treadmill that recommends the best athletic shoe, and a VR headset to see how new patio furniture will look in the backyard.

The company also made changes to stores to allow for digital-order pick-up and drive-thru areas, and even brought back the print catalogue of old with a new digital-content twist.

These were all innovative advancements released under Medline’s tenure, some of which were worked on in conjunction with Wetmore in his prior role as CEO, and there’s little reason to believe that this will change now that Wetmore has resumed his role as CEO.

Canadian Tire will continue to innovate and post great results

Another area where Canadian Tire innovated over the past few years was in the realm of rewards programs. The company introduced a digital version of the Canadian Tire money of years past and has made a number of agreements with other companies for both banking and credit services. It also integrated into other rewards programs, such as Cineplex Inc.’s Scene loyalty program.

There’s no reason to expect any of this to change under the new management as the programs have been wildly successful.

Canadian Tire currently trades at $138.27, down approximately 1.75% this week on the news of the staffing change. Looking out over the longer period tells a completely different story, however, and this is what investors should be concerned with: year to date, the stock is up impressively by 17%, and over a much longer period of five years the stock is up nearly 125%.

In my opinion, any volatility in the price of Canadian Tire is only for the short term. The company remains on a sound financial footing and is a great investment option for those seeking a long-term retail stock that is redefining the retail sector.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned.

More on Investing

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »