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Canadian Tire Reports Increases in Second Quarter

TORONTO -- Canadian Tire Corp. Ltd., which operates 250 "gas bars" and 55 Simoniz car washes in Canada in addition to other retail ventures, reported second quarter net earnings of $92.2 million (Canadian dollars), an increase of 14.1 percent compared to $80.8 million in 2004. Excluding non-operating gains and losses, net earnings were $84.8 million, an increase of 16.3 percent compared to $72.8 million last year, the company reported.

"Healthy retail sales across our businesses and a concerted effort to manage expenses contributed to strong earnings growth for the quarter," said Wayne C. Sales, president and CEO. "Strong seasonal sales from Canadian Tire Retail and double-digit same-store sales growth from Mark's defined our sales performance for the quarter. PartSource experienced double-digit comparable store sales growth with significant commercial sales increases during the quarter. Continued growth of the Canadian Tire MasterCard and personal loan portfolios contributed to a nearly 20 percent increase in the receivables base of Financial Services, while Petroleum experienced very strong gasoline volumes and non-gasoline sales, partially off-setting the impact of higher operating expenses related to the expansion of the gas bar network over the past year."

The company's total retail sales grew to $1.96 billion, an increase of 4.2 percent over the $1.88 billion recorded the year prior. Same-store sales increased by 2.5 percent and comparable store sales increased by 2.2 percent during the quarter.

Petroleum's performance during the quarter was marked by sales growth in both the gasoline and non-gasoline businesses. Gasoline sales volumes rose 9.2 percent during the quarter to 411.6 million liters from 377.1 million liters a year ago.

While no new petroleum sites were opened during the quarter, the cumulative effect of the expansion of the gas bar network over the past year and the positive response to the company’s customer loyalty program contributed to the increase in total gasoline sales volumes. Non-gasoline sales continued to climb, with car wash sales increasing 31.1 percent and convenience store sales up 13.5 percent from the second quarter of 2004.

Petroleum's pre-tax earnings contribution was $0.1 million, an 82.3 percent decline over the comparable 2004 period. The modest profit was a result of higher operating expenses related to the expansion of the gas bar network over the past year and gasoline margins that were lower than expected, but up slightly year-over-year. In addition, Petroleum incurred environmental costs related to closed sites.

In 2005, Petroleum plans to open five gas bars, five convenience stores and five car washes. Plans to rebrand competitor sites have been adjusted and are now targeted in the range of 10-15 sites vs. the original plan of 15-20 sites.
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