Thank you for standing by. My name is Andrea, and I will be your conference operator today. Welcome to the Canadian Tire Corporation earnings call. All lines have been been placed on mute to prevent any background noise. Following today's presentation, there will be a question-and-answer period. If you would like to ask a question, simply press star one one on your telephone keypad. To withdraw your question, please press star one one. Now, we'll pass along to Karen Keyes, Head of Investor Relations for Canadian Tire Corporation. Karen?
Morning, everyone. Welcome to Canadian Tire Corporation's third quarter 2026 results conference call. With me today are our President and CEO, Greg Hicks, Executive Vice President and CFO, Darren Myers, and Executive Vice President and Chief Operating Officer, TJ Flood. Before we begin, I'd like to remind you that today's discussion contains information that may constitute forward-looking information within the meaning of applicable securities laws, including management's current expectations regarding future events and the company's True North strategy. Although the company believes that the forward-looking information in today's discussion is based on information, estimates, and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information.
For information on these material risks, uncertainties, facts, and assumptions, please see the company's MD&A, which is available on our website and filed on SEDAR+. The company does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws. I'd also highlight that in light of the 53rd week last year, comparable sales for Q3 are presented on a shifted basis, comparing weeks 27 to 39 of this year to weeks 28 to 40 of last year. After our remarks today, the team will be happy to take your questions. We'll try to get in as many questions as possible, but we do ask that you limit your time to one question plus a follow-up before cycling back into the queue. We welcome you to contact Investor Relations if we don't get through all the questions today.
With that, I'll turn the call over to Greg.
Thank you, Karen. Good morning, everyone. Our Q3 results were solid across the board, characterized by comp sales and share growth, record revenue at the bank, disciplined cost control, and EPS up nicely, growing 13%. I want to thank the team for a standout performance. In an economy that continues to test consumers, they remain resilient, and our offer continues to resonate. Sales grew in each of our CTC banners and each of our CTR divisions. Triangle membership grew at elevated rates, with loyalty sales and traffic up 6% and 3.6% respectively, drawing more Canadians to our doors. Our digital channels and new omnichannel convenience helped drive e-comm market share and sales, up almost 25% at CTR alone, where online spending is well above our in-store average. Our combination of great new products, value offerings, and 5,000 lower prices hit the mark.
I should also mention a great performance at the bank, where our Triangle World Elite Mastercard was named customers' top-ranked no-fee card for the third year in a row by J.D. Power. While our strategies are clearly working, we are going to need every bit of this momentum heading into our biggest quarter and toughest comp, up against last year's exceptional Q4 results and early snowy winter. I would also flag that the Canadian consumer psyche is still on high alert. The clouds of geopolitics and macroeconomics have not cleared, inflation is tough, and rates are heading higher. As we triage our retail data, we are reassured that it shows customers of all income levels continuing to shop with us. However, it is no surprise that we have also seen consumer sentiment decline, while new industry reports suggest holiday spending will be constrained. This is not new; it is our undeniable economic reality.
That is why we have been driving value all year. It is why our most budget-sensitive customers are turning to Triangle Loyalty. It is why promotional pricing was the determining factor in our Q3 numbers. Our job has not changed. We will continue to make sure that when cautious consumers decide to shop, they choose to shop our stores and use our Triangle Loyalty Program with all the personalized savings it is bringing to millions of Canadians. With that, I will turn it over to Darren and return in a few minutes for a True North update.
Thank you, Greg, and good morning, everyone. We delivered strong results in the third quarter. Diluted earnings per share was CAD 4.27, up 13% year-over-year on a normalized basis. Broad-based sales growth and disciplined execution drove improved earnings across both the retail and financial services segments. We also benefited from a lower share count and a favorable blended tax rate. Let me walk you through the quarter, starting with retail. Retail sales and revenue were up 4.4% and 5% respectively in the quarter, supported by petroleum, where higher gas prices more than offset lower volumes. Excluding petroleum, retail sales were up 1.7%. Revenue increased 1.5%, with CTR revenue returning to growth and strong growth at Mark's and SportChek. Comparable sales were up 3.2%, with all three banners growing more than 3%, supported by strong September results. At CTR, comparable sales were up 3.2%.
Our value offerings resonated well with consumers, and we were pleased with our e-commerce progress, with sales up 25%, supported by continued strength in pick up at store and the ramp up of ship to home. Growth at CTR was broad-based. Essentials and discretionary were both up, as were all divisions. Living and seasonal and gardening led the growth, benefiting from more consistent weather, with strength across outdoor tools, gardening, and backyard living. Living also benefited from a well-executed back-to-class campaign, with strength in food storage, kitchen appliances, and cleaning products. Automotive extended its growth streak to 25 consecutive quarters, with auto service continuing to perform well. SportChek's 3.2% comparable sales increase was supported by targeted inventory investments, including newness in athletic footwear. Fan wear contributed approximately one-third of the growth, while team sports and hockey also performed well. At Mark's, comparable sales were up 3.3%.
Industrial footwear and workwear grew, while back to class drove sales of Carhartt and Levi's. Our newer format BBB stores continue to outperform, including our newest and largest location, which opened in Thunder Bay during the quarter. Turning to inventory. Across the banners, corporate inventory was up 6% at the end of Q3, mainly to support Q4 sales at CTR and Mark's. CTR dealer inventory was down 1%, reflecting sell-through in essentials. Inventory included some spring/summer carryover from Q3, and as we noted last quarter, some pockets of elevated fall/winter inventory heading into Q4. With stronger sales growth this quarter, CTR retail sales growth over the last 12 months is now outpacing CTR revenue growth. As you know, although there are quarterly timing differences, these metrics tend to converge over time. Moving to margin.
Gross margin rate, excluding petroleum, was 35.6%, down 16 basis points on last year, reflecting fuel surcharges and disciplined and targeted promotional investments to support sales growth. Our margin tools, including David, continue to support more targeted promotional and pricing decisions, helping us invest where we see the strongest customer response and returns. Turning to SG&A. Our focus on performance management and operating discipline continued to deliver this quarter, while we continued to invest in our strategic priorities. That discipline, along with some timing benefits and the savings from last year's restructuring, drove operating leverage, with retail SG&A dollars broadly flat despite higher revenue. As a result, SG&A as a percentage of revenue, excluding petroleum, improved 29 basis points to 24%. Retail IBT increased nearly 3% to CAD 198 million, while normalized retail EBITDA grew 2% to CAD 495 million.
Retail ROIC also improved 60 basis points year over year to 11.2%. Moving to financial services. Financial services delivered 18% IBT growth, with record revenue and gross margin expansion more than offsetting SG&A investments, while ROE remained strong. GAR increased 4.2%. Average balances were higher, reflecting higher card spend, while improved cardholder retention once again contributed to growth in active accounts. Credit performance remained resilient. Aging was down slightly year over year at 3.4%, while the net write-off rate held at 7.2%. The allowance was unchanged at CAD 935 million, with the allowance rate declining to 11.7% on higher ending receivables. Moving on to capital allocation priorities. We remain committed to balanced capital allocation, investing in the business and giving back to shareholders through dividends and buybacks. We continue to expect 2026 CapEx to be between CAD 450 million and CAD 500 million.
We were also pleased to announce today that our annual dividend will increase to CAD 7.30 per share beginning in March, marking our 17th consecutive year of dividend increases. As of the quarter end, we have completed close to 80% of our CAD 400 million share repurchase intention for 2026. We anticipate completing that program by year-end and will provide details on their 2027 buyback intention and CapEx on our Q4 call. Before I wrap up, let me spend a moment on what we are seeing in Q4. We are feeling good about our progress year to date. Quarter-to-date sales are off to a slower start, but most of our biggest quarter is still ahead of us. As always, consumer sentiment and weather will be important factors.
It is worth remembering that we are cycling a strong quarter last year, which benefited from favorable weather and sales of Blue Jays World Series-related gear at SportChek. In addition, a very strong 53rd week across the banners contributed approximately CAD 40 million of IBT. Our North Star retail gross margin rate at 35% plus remains a good long-term anchor, and our year-to-date performance has tracked well against it. We expect some Q4 rate pressure as we cycle a very strong rate last year, which included some margin-sharing benefit at CTR. We also continue to balance sales growth with value to our customers and ongoing transportation fuel headwinds. On SG&A, we expect some rate pressure from the shift of marketing and IT expense from Q3 into Q4, as well as lapping the benefit from the extra week in restructuring savings last year.
Lastly, we are encouraged by the progress in our financial service business. While we continue to monitor insolvencies closely, we expect continued improvement in profitability if credit metrics remain stable, as they have all year. In closing, in a challenging economic backdrop, we are pleased with the team's ongoing execution. Delivering broad-based sales growth along with resilient margins, operating leverage, and improving returns is a strong outcome in this environment. We remain focused on staying agile, putting the customer first, and investing in True North. We see a clear path to unlocking sustainable sales growth, improved bank profitability, and continued progress towards our long-term financial framework. We look forward to updating you again at our Q4 results call in February. And with that, I will hand things back to Greg.
Thanks, Darren. As always, I want to take a couple of minutes to update you on our True North traction, because more than a year and a half into our transformation, we are at an interesting point. We are past the first phases that were heavy on vision, planning, thought modeling, and internal alignment. We are well into the building phase, standing up many of the capabilities required for this new era of retail, like omnichannel enhancements, an increasingly meaningful loyalty program, scaled partnerships, and AI productivity, and we are beginning to see results. Over the last year, we have often celebrated our team's ability to perform and transform in parallel. Today, the line between our performance and our transformation is blurring as True North advancements become our norm. This is natural as we near the end of the second year of transformation.
The initiatives and capabilities we've established through True North have moved from theory to action and are starting to create real value. When we launched True North, we talked to you about our excitement for investable store concepts. New format stores have now driven 30% of the year-to-date sales growth at Mark's and SportChek, and we're adding more sites as we speak. Likewise, in our latest Concept Connect Canadian Tire store, we expanded the sales floor about 50%, allowing space for great products and service combined with best-in-class omnichannel infrastructure for customers who choose the convenience of ordering online. These are not only more modern formats, we put them in non-VECTOM markets where we can scale to provide the best assortment and experience in town. When we launched True North, we also told you we plan to build a long-term omnichannel advantage.
Year-to-date, e-comm is up 11%, and in Q3, we continued to grow share with a range of enhancements and our new free ship-to-home convenience generating bigger baskets. We told you Triangle Loyalty would anchor our retail system. In Q3, loyalty sales grew more than twice as fast as retail sales, with some of the year's best results at Mark's and SportChek. Then we added Tim Hortons to the list of major brands distributing Canadian Tire Money every day to our members. And while we hoped 200,000 Canadians would link up in the first four months, that happened in the first four weeks, and we more than doubled it since. We also told you we'd push forward with AI, creating better retail and customer outcomes. In Q3, our Mosaic platform guided our back-to-school Lighthouse program.
Our David platform optimized our price margin balance, supporting elevated promotions. And we were busy in lab with Microsoft and our dealers, creating a new AI platform that will bring much more data and science to the art of running our stores. My intention wasn't to give you a line list of short-term achievements. I'm giving you an illustration of the higher performance and long-term value creation we are starting to deliver, value created through transformation one quarter at a time. Let's talk for a minute about how it will show up in Q4. When we launched True North, we said we would go to market differently, using insights and AI to pivot from just selling products to serving the occasions of our customers' lives.
As you heard from Darren, our first occasion, back to class, increased our sales and share in a CAD 3.4 billion market and in moments that really matter to our customers. With this backdrop, our next occasion is a big one, preparing for the holidays, an addressable market of greater than CAD 5 billion, where we not only have a very strong foothold, but the opportunity to serve more of Canadians' entire holiday mission. There's no debate, we have always been Canada's Christmas store, but AI and insights have led us to white spaces where we can do more or do better, where we can drive meaningful and outsized incremental growth. From hundreds of insights, I'll share a very small one. Data tells us we have been significantly underrepresented in opening price point wrapping products.
This year, we have a new assortment of wrapping paper at CAD 1.49 and gift bags at CAD 1.29, with high expectations for sales and share growth. We are doing similar things with value ornaments for CAD 0.99. We have a more exciting Christmas light assortment. We are expanding our outdoor wireframe and inflatable decorations, and we are leaning in on gift-giving for a range of personas, including a bigger and more sustained play on toys. When you add it all together, the holidays are a sizable TAM where we have a right to win and to take more share. I am pleased with how we are working horizontally across the organization, starting with a deeper understanding of the customer's mission and then going to market differently. Insights and data have determined our assortments and value.
Every marketing channel is lighting up, with online campaigns already running and plans for specialized guides for hosting and gifting. We have amazing national and own brands programs, including a much larger HBC Stripes collection that is already flying. Triangle and the bank are driving personalized value, and our stores are being merchandised for impact. It is an all-of-CTC effort based on a clear insight: Canadians want a beautiful holiday. They do not want to overspend, and nobody will help them meet the occasion better than us. With that, let us open the call for questions.
This time, I would like to remind everyone, in order to ask a question, please press star, then one one on your telephone keypad. To withdraw your question, please press star, one one again. We ask that you limit yourself to one question plus one follow-up question before cycling back into the queue. We will pause for just a moment to compile the Q&A roster. Our first question comes from Irene Nattel with RBC Capital Markets. Please go ahead.
Thanks, and good morning, everyone. Really intrigued by the sustained same-store sales momentum at all three banners, particularly given the constrained consumer spending. Your comments about how you are going to market differently give us some insights into it. Can you talk us through how internally you are balancing the value piece of it with driving the sales and the communications to consumers so that perception of Tire and where the value sits at the banners is shifting?
Hey, Irene. It's TJ. I'll take that. There's a lot in that question, and it starts with what we've been able to do using our proprietary data. We have so much information about our customers, which helps us really market to the masses as well as market to the individual. I think if you go a little bit further into that, it gives us insight in how to create the fantastic assortments that we have to deliver against the occasions across a 52-week calendar. We use AI with our Mosaic tool to help point the way there, and then our assortments are built to provide consumers with optionality across a good, better, best price spectrum. We feel very good about that.
We've got the one, as you know, the one-two punch we have with really strong national brands and a strong portfolio of own brands. I think finally, all of the work that we've done in AI with respect to pricing with our David modules is really helping us run that balance of managing margins while creating consumer demand. It's very pronounced in its rollout at CTR, and you're going to see us, our teams out in the West at Mark's and SportChek are going to get some of the modules associated with David in Q4, which will really help them, particularly in 2027 from a value creation standpoint.
I think it's a mix of the fantastic consumer data, the insights we're driving using AI, and doing what we do best, which is value create and manage margins and inspire consumer demand in a backdrop where consumers are really craving value.
That's really helpful. Thank you. I think in your opening remarks, you guys called out you had lowered prices on 5,000 products. Where are you in that journey, and how should we expect that to play out over the next, let's call it, six, eight quarters?
Yeah, Irene, I'll take that one as well. Pricing is something that is very dynamic, right? You're running the balance of understanding what your costs are and facing some of the headwinds that we have, particularly in transportation, as Darren managed, with where we need to inspire consumers and be competitive in the marketplace. It's ongoing. We're going to be continuing to be in a very dynamic and very value-oriented price cycle here for the next probably year to 18 months is what we project, and we're just going to have to watch it every day and do what we do best, which is manage that balance.
That's great. Thank you.
Thank you. Our next question comes from John Zamparo with Scotiabank. Please go ahead.
Thank you. Good morning. I wanted to ask about the state of consumer health and consumer spending at the moment versus a quarter ago or two quarters ago. I ask in the context of, do you think Canadian Tire is taking share in the categories it competes in, or do you think the state of the consumer is perhaps healthier than some might perceive?
Yeah, John, it's Greg. I'll take that. Look, I think at this point, it's safe to say that the war in Iran and the tariffing impact has created a negative shock that's shrinking the economy's potential. But at the same time, as TJ said, the consumer has been much more resilient than you might expect. The biggest headwind, and it was the same last quarter, to your question in terms of what's different, it continues to just be pressure on the household wallet. Gas prices this quarter, again, were significantly up year-over-year. There was quite a fall in consumer confidence in Canada from August to September. It's one of the biggest drops that we've seen since we had been tracking it on a monthly basis. But customers are still making trade-offs. I wouldn't confuse a cautious consumer with an absent consumer.
I think Q3 for us showed that Canadians will spend when the value proposition is right. We saw this in increased spend per member from our loyalty members. I think the challenge in an environment like this is the bar is higher. They want value, they want relevance, they want convenience, they want price, and they want to shop at a place that they trust. For us, it just keeps coming back to why True North matters so much. It's using Triangle, to TJ's point again, better customer insights, pricing tools, digital conveniences, disciplined execution to put investment where customers will respond.
I think Q3 is another proof point that we're getting even better as we modernize and apply more science to things like promo and pricing elasticity, and offer more ways to earn value in our loyalty program with things like partnering, which is net new for us, and bonus issuance. All of these levers, which were both up significantly in the quarter, and all of these levers are just a core part of how we go to market now. We would love to have, and we've talked about this before, we would love to have much more sophisticated market share data. We do have an independent source that has been our source for many years now. I think it's the best market share data that we have, and it's comparable on a quarter-over-quarter, year-over-year basis.
It would absolutely suggest that we took share in all three banners and the aggregate level at CTC. That for us, relative importance is as important, maybe even more important than absolute performance in an environment like this. This is something we track religiously internally. We're now tracking it for the occasions that we're attacking. We talk about it in our boardroom. Taking share is all part of the outcomes that we're looking to deliver in True North. We feel that we did just that. That was an outcome delivered in Q3, and that's our intention going forward here with True North.
Okay, that's helpful. Thank you. Then a modeling question. I wonder if there's anything you can say to frame the impact of weather so far in Q4. I know this is as much an art as it is a science, but anything you can add to quantify in terms of last year's weather trends, maybe on some of your most important or most dependent on the weather categories, or any months that stood out last year in Q4?
John, I'm probably going to disappoint you on my answer here, but yeah, we said it's off. We're off to a slower start in October. Clearly, winter has not showed up, and as a reminder, we're comping, would have been these weeks right now, the large storms last year. So, we do need winter to show up. There's a lot of quarter left to play, but we need the weather to turn for our business, certainly, to get people shopping for the categories that you'd expect them to shop for. But I can't give you any quantifications at this point, other than to say there's a lot of quarter left.
Yeah. Okay. Fair enough. Thank you very much. I'll get back in the queue.
Thank you. Our next question comes from Brian Morrison with TD Cowen. Please go ahead.
Thanks. I did want a little bit more granularity on Q4, but in absence of that, maybe Darren or Greg, could you just comment on the magnitude and the shift of marketing expenses from Q3 to Q4? Then, as my follow-up, when you talk about Q4 being a slow start and some inflationary pressures on the consumer and consumer confidence, maybe you can just square up the CTF performance in Q3. You had a sequential decline in the write-off rate, a stable allowance provision. This is very encouraging. I just want to understand the positive performance there and in turn sustainability with your cautionary consumer outlook.
Okay. Maybe I'll take both of those on, Brian. Thanks for the questions. In terms of the SG&A, what I would say is, we're really pleased, again, how the organization is showing up in terms of cost management, and it truly is evolving. We're on top of it as a group and making good trade-offs as the world changes. Really pleased with the Q3 performance. Just like in Q2, we had some timing pushes. Q2, we had timing pushes. Q3, I think there is a little bit of timing pressure into Q4, but probably the largest difference will be that we're no longer getting the tailwind of the restructuring, and the extra week last year does change the dynamic. So, don't expect to see the operating leverage in Q4 like we saw in Q3. It will probably go the other way from a reported basis, just given those dynamics.
On the bank, listen, the bank continues to perform well. We've been saying it all year. The consumer has been resilient, but it's not without work and effort of the bank team, which is doing a fantastic job. This team knows how to operate in this type of dynamic environment and is constantly making changes and tweaks to the playbook, or they have a playbook in terms of how they implement it. So, we're seeing good performance. I'd say insolvencies were a bright spot this quarter. It's something that we've talked about in other quarters, being a little bit elevated. They weren't as high this quarter, so that was a pleasant surprise. They're very difficult to predict, though. So we're still dealing with a consumer where you could see insolvencies go up, but we're seeing good payment patterns.
We're seeing, as you said, the PD2+ is doing well, the write-off rate is doing well. So overall, I'm using the word we used all year, which is it just continues to be a resilient book. In terms of the performances, there was a lot of things that go into that. We're certainly pleased with the customer retention, the engagement that we're seeing. We saw good growths in accounts. We saw higher card spend. I think you're seeing the system of retail and the partners that we have, people are seeing more value in our offering holistically and as a system. We've also made some refinements kind of in our risk-based pricing, which have been benefiting us a little bit and a little bit more this quarter. So, a lot went into that. We're pleased with where the bank's at.
As I said in my prepared remarks, we do think we'll continue to see profitability improvements in Q4, just assuming, of course, that the credit environment and we continue to manage it well and there's no major jumps in insolvencies.
Very helpful. Thank you.
Yep. Thanks, Brian.
Our next question comes from Martin Landry with Stifel. Please go ahead.
Hi, good morning. I want to touch on your occasion-based strategy. It looks like you executed well with the back-to-school, and you had mentioned that back-to-school, your market share was a little lower, so there was some room to move up there. Now you are talking about the holiday period and also room to expand your market share there. I would assume that you are probably at least or maybe over-indexing with the holiday period, given that you are the Christmas store. Can you tell us a little bit about where you are in terms of market share for the holiday period in a broad sense, and what makes you think you can continue to gain share, given where you are?
Yeah, Martin, it is Greg. Maybe I will take that. I think maybe if we just step back a little bit, and I am glad you asked about Lighthouse. This is a big part of our strategy. It really is a strategic pivot for us to move, to go to market around occasions, as opposed to just products. If you think about the strategy, it starts with our customer data, as TJ said, and having those insights be at the center of all of our go-to-market activities. It starts with a particular focus on occasions with meaningful TAM where we have a right to win. So, if you link it to the question that you just had with respect to holiday, it is a meaningful CAD 5 billion plus TAM. We know exactly what our market share is by category.
There are categories where eight of every CAD 10 that are being spent are being spent somewhere other than Canadian Tire. So, it is a very fact-based approach in terms of where the headroom opportunities are. We are not going to chase occasions where there are small TAMs with minimal headroom. I can assure you of that. We have to apply these types of macro occasion, like from a resource allocation standpoint, we are not going to spread the peanut butter thin here. So we are going to go after big TAMs where we have a right to grow and headroom. So, when you look to holiday, as I said on my prepared remarks, the insights have led us to white spaces where we can do more or do better, I think where we can drive meaningful and outsized incremental growth.
I talked to the opening price point wrapping products and ornaments that I talked to in my remarks. We see lots of opportunity in the spectrum of offerings that we have. We took our board to our Christmas house last night and had dinner and walked them around the whole assortment. If you just take outdoor Christmas day decor as an example, the team has put forward a new assortment of value-based inflatables, a significant investment from an assortment standpoint in wire forms, and the assortments look absolutely fantastic. So again, when you put it all together, the Christmas holidays are a sizable TAM where we have a right to win and take more share. This holiday season, we are going to go stronger in gifting that anchors in toys, where we have been expanding our selection over the last few years.
But what we learn from Q4 will also help us into 2027, because we expect to roll out a Lighthouse around gifting more generally. That means not just leaning into having the right products to gift, but also how we get consumers to have us more front of mind when they are looking for gifts for other occasions like birthdays or Mother's Day, engaging the whole organization across all our banners in a different planning approach that is very, very customer-centric. As I have said before, these are some of the initial Lighthouses, but there will be more to come, and we are evolving to a more occasion-driven approach to thinking about customer needs, and we will continue to update you as the strategy progresses.
Perfect. Thank you for the call. Just switching to your e-commerce sales, they were up very strongly at Canadian Tire Retail. I assume this was driven still by, I think, your free shipping promotion above CAD 99. Could we expect that to continue, that piece to continue into Q4?
Yeah, Martin, it is TJ. I will take that, and I am glad you highlighted this because we have done a lot of work on our path to purchase with respect to e-commerce, and it was one of our key tenets of True North. For us, it is all about, as Greg was just talking about, looking at opportunities to gain omni-channel market share. The sweet spot for us is that we grow our bricks-and-mortar business, and given the growth of the e-commerce channel in general, we want to grow our e-commerce business faster than the growth of our bricks and mortar, and that is exactly what we did in Q3. We had good bricks and mortar growth, and we had really, as Darren pointed out, strong growth at CTR in e-commerce, up 25%. I think it is really about meeting the customer where they are.
If you want immediacy, our click-and-collect offering is world-class. Our dealers have done an amazing job over the past year improving their turnaround times. The majority of our stores now turn e-commerce orders around in less than an hour. So we have seen really strong growth in click-and-collect. Building on immediacy, our partnership with DoorDash has been fantastic. We are seeing people lean into our offering around same-day shipping. As you pointed out, we are ramping up with free shipping for our Triangle members. So I think it is the collection of all of that. Our marketing team has also done an amazing job on the digital path to purchase. There are so many things we have done on improving search, improving page looks and views, and the amount of inspiration that we provide on our website.
We're building momentum here, and it's quite exciting, and it's taken a lot of work. We had to do a lot of work on foundational elements with our technology stack. But we're very, very pleased with it, and as you say, as we go forward here, we're looking forward to opportunities to continue its growth, and obviously Q4 is a big quarter for e-commerce, so we're hoping to keep the momentum going here as we go forward.
Okay, super. Thank you, and best of luck.
Thank you.
Thank you. Our next question comes from Chris Li with Desjardins. Please go ahead.
Oh, good morning, everyone. Greg, I know this is probably a very tough question to answer because there's still a lot of noise with macro challenges and et cetera, but I'm just curious, as you continue to successfully execute on True North, at what point will you be able to feel comfortable or confident in saying you can achieve your longer-term revenue target of 3%-4% on a consistent basis? Thanks.
Yeah, I don't know that it's that tough, Chris. I mean, the kind of financial framework that we outlined all has to have a supportive economic backdrop, right? We need to see growth in the economy. We need to see our TAM growing so we're not swimming so much upstream. I think the TAM this year had some growth in it in Q3, so on a year-to-date basis, we get to marginally positive. And our financial framework is, again, requiring a backdrop that has, call it kind of a 2% economic growth associated, so a supportive backdrop.
But I think if you roll up a little bit strategically and you go back to the first principles of our True North strategy, there were three simple phrases that captured all we set out to achieve by 2028 under our True North vision, and they were stronger customer connections, higher retail performance, and accelerated shareholder value. From that context, I feel really good about our progress. We have a ways to go, for sure. As we've discussed, this is a large transformation. Ultimately, it's about improving our competitive posture and delivering better financial results. But I think Q3 gave us encouraging evidence against our strategy, and I think Q4 should also play to the capabilities that we're building. If you think about each on the customer side, our loyalty program is in full gear. Our personalization engine is getting better.
Our Triangle members are driving our trips and sales. We've got great partnerships and early innings of value creation, and our price perception, NPS, and our pride in shopping at CTC scores are all going in the right direction. E-commerce capabilities are gaining a share, to TJ's point. More members are moving around the system. Our smaller banners are getting outsized value as we aggregate the scale we've created for ourselves. And we're developing and deploying differentiated platform AI that's focused on driving enterprise share in occasions that we just talked about. So, taken together, I think we've come a long way in modernizing and improving our competitive posture. As I said, still lots of game to play, but I think these priorities give us confidence in our ability to drive stronger returns, improve the quality of earnings.
and create that long-term shareholder value we're looking for while maintaining the flexibility to invest in the future. I think the key is making progress repeatable, one quarter at a time. But overall, feeling quite good. To TJ's point, I think we're working the organization or Darren's point in the bank would apply to our retail business. We're working really hard to achieve these results. But overall, we're feeling good about the progress and the strategy.
That's great. Thank you. Very helpful. I have maybe a multi-part question on Mark's. In your recent press release, you mentioned you're doubling the number of new format stores, I think from about 21 to 40 by end of 2028. I guess my questions are, first, roughly how many will be conversions versus greenfield? Secondly, is the sales per square foot of these new format stores comparable with the traditional stores? Typically, how long does it take these new format stores to be earnings positive? Thank you.
Hey, Chris. It's TJ. Yeah, there was a lot in that question, and I'll try to unpack it a little bit here. We're very pleased with the momentum in the Mark's business, and TJ and the team have just done a remarkable job. I think we just had our eighth consecutive quarter of comp sales growth, and we're really excited about the trajectory of that business. As you articulated, our BBB stores is a huge component of that. What we like about it is, it allows us to showcase our product offering in a much more pronounced way, both from a national brand and an own brand standpoint. We see categories like jeans and industrial wear just take off almost immediately. It allows us to attract a new customer, and as we've articulated throughout this call, we're using our data to point us along the way.
The consumer feedback has been really strong, really strong NPS, really good basket sizes. Of our rollout will be kind of expansion of existing footprints, but also some relocations into bigger footprints. You're going to see us do a fair bit of that as we go forward. We've got a really aggressive rollout strategy for the business, and so far, we're very happy with the returns we're getting on them. We're seeing a better margin profile. We're working through what our labor rates look like in these stores. But all signals point to a very strong concept that we feel is investable, and that's investable against, and that's exactly what we're going to do as we go forward here. There's still a lot of opportunity, particularly in the province of Quebec for white space, and we're going to try to exploit as much of it as we can.
Very, very bullish on this concept, and we are looking forward to continuing to roll it out.
Great. Thanks, and hope you guys have a great holiday season. Thank you.
Thanks. You too, Chris.
Thank you. Our next question comes from Tamy Chen with BMO Capital Markets. Please go ahead.
Hi, good morning. Thanks for the questions. I wanted to ask on the essentials side of the business at CTR. I know Q3 typically over-indexes in this a bit more than some of the other quarters. Are you doing anything or certain things a lot differently now to drive traffic to your stores specifically for essentials? Because what I am getting at is that broad category, in the Canadian landscape, you have a number of other large-scale competitors, and everyone is trying to be more razor-sharp at this time with showing value. I am just curious if things have been different in how you have approached driving traffic specifically for essentials.
Yeah, Tamy, it is TJ. Maybe I will take that one. There is a lot that goes into driving traffic, and you are pointing out but one of the elements. We look at all elements of the marketing mix, right? We have significant mass awareness that we drive through our flyer as our kind of weekly invitation into the store, and we lean into providing value through that. We also lean into individualized offers through our loyalty program to try to make sure we trigger our member base with offers and value in the categories that are important to them. It is kind of an eclectic mix of how we approach the marketing engine in terms of driving traffic. I think essentials is a little bit more pronounced in Q4, as you point out, and automotive for us plays a big role in that.
Yeah, you are going to continue to see us really seek to provide value to consumers throughout Q4, and I always go back to our assortments as well. You have got the spectrum of good, better, best across all of the categories in which we compete, and that gives consumers optionality, and they can lean into value as they so choose. We feel like we are very well positioned to compete in an environment that is very value-focused right now.
The only thing I would add, Tamy, it is Greg, is all income cohorts are looking for value, but it is especially important for our lower-income cohorts. When you look at spending in our Triangle membership in Q3, we saw growth in all purchasing power segments of membership at the quarter, and all segments accelerated spending relative to Q2. But it was our high debt and low income segment that drove the highest spend increases. I just think this is indicative of us providing the value they are looking for across a number of levers that TJ just talked to.
Right. Interesting. Okay. And my follow-up, this is a little bit more near term. I guess I am just curious on your ability to pivot or how you would adjust. On Q4 and possibly even heading into Q1 next year, with respect to weather, we are seeing a milder fall right now. Should winter be more mild, which I think is possible this year, how would corporate and the dealers try to manage through that? Or there is really not much you can do within the quarter if the winter weather just really does not show up? Thanks.
Yeah, it is a good question, Tamy. It is TJ again here. I think what we try to do as we head into any quarter is really control what we can control. And what we have done as we prepare our inventory levels going into Q4, both corporately and the dealers are strong to support what eventually will be a winter here, and also to support what we think is going to be a robust gift-giving season given our Lighthouse around holiday. So, we feel like we have prepared ourselves well and with our assortments and our inventory buys, and we are going to, as we always do, have a very compelling marketing program leaning into value in Q4. So, we are going to control what we can control, and we feel like we are well-positioned to support the demand when it comes.
And Tamy, as you know, it is not fashion, style, and design apparel here, right? If the winter is soft here in Q4 and that carries all the way through into Q1, we just pack up the shovels. There is no need to kind of mark them down significantly and give them away. And we will give you that view, as we always do, coming out of Q4 around the carryover and dealer inventory, and that will impact the model with respect to revenue as we approach Q4 next year. So, this is all kind of standard practice for us, working through this with our dealers. But the good news is there is not a lot of, like you say, style, design, and fashion in shovels and snowblowers and road salt. So, that is a little bit of the beauty of the weather model as well.
Right. Thank you. That is it for me.
Thanks, Tamy.
Thank you. Our next question comes from Vishal Shreedhar with National Bank Financial. Please go ahead.
Hi. Thanks for taking my questions. Can you comment on how dealers typically respond during periods of rising rates and inflation and tougher consumer sentiment? The quarterly results were good, and that's a little bit in opposition to the comments that you were painting regarding the backdrop there. Dealers, do they typically order with sales, or do they have an economic view in mind when they order? Could we expect, if these tougher macro indications persist, could we expect them to lean out on inventory?
Yeah, Vishal, it's TJ. I'll take that one. I think being in this business for the last 20 years, I think what you can expect is what Darren described, is that over time, our shipments to dealers or our revenue to dealers tend to mirror consumption over time, and we've seen them kind of true up this year. As we go into the Q4 season and into Q1, I think you're going to see neither a build nor a burn strategy from the dealers. They're going to be supportive of what consumption they're seeing. What I can kind of unequivocally say is they are very much behind our True North strategy, and they continue to invest in inventory. They take the approach of they want to be there when the consumer demand shows up.
I think you're going to see our revenue more closely match POS as we go forward. There's some choppiness quarter to quarter, for sure, but I don't expect a major divergence between revenue and POS over the long haul.
Thank you for that. I just wanted to get a bit more color on insights and data, which has been more of a focus on the calls recently, given the strategy implementation, and certainly there's been successes there that you've been calling out. I wanted to get your thoughts on where we are with that, and are there other major levers that you're looking to pull that may drive this business further? I'm thinking maybe a media business or some other major lever related to those initiatives.
Vishal, it's Greg. I get the curiosity here. I think the world of AI, it's consumed the majority of my curiosity for many months now. I think it's certainly reshaping the retail experience in addition to just how we think about data as a retailer, how customers discover, evaluate, engage with brands. I think that all creates new opportunities for improving relevance, convenience, and scale. We feel really good about how we're deploying AI. We want to make sure it's not a thousand flowers blooming, so we're leaning into what I would call kind of building platforms at the intelligence layer. David and Mosaic would both be unbelievable examples of that.
I think the most important thing to think about that we've realized, especially through Mosaic, is the privileged dataset and capability we have, because we can provide LLMs context that they covet to create better outcomes, better understanding of our business. That's why we're so excited about Mosaic. I mean, it's essentially an artificial general intelligence of all of the occasions that drive every transaction across our entire retail system. I mean, it's an incredible understanding of how the customer engages with us, and we intend, as we've talked about, to use that platform to plug into all of our traditional retail capabilities, whether that's physical merchandising, digital merchandising, pricing, assortment, personalization. It goes on and on and on, all the retail capabilities you need to be able to deliver value. As it relates to what that means in terms of monetization, we have a retail media business.
I think we've been on record to suggest that it's small but mighty. It's growing. We're really thinking through how we point that to grow internally, our top line, and the value within our business, as opposed to thinking about it as a standalone P&L like others have. We're on the partnership journey, right? If you asked me even five years ago if I thought that we would have our Triangle Loyalty Program to a place whereby when a Canadian fills up their gas tank at Petro-Canada or banks with RBC or purchases a flight with WestJet or grabs their coffee from Tim's on their morning coffee run, that they were going to earn Canadian Tire Money and those unbelievable, strong Canadian brands were going to help pay for the issuance. I just wouldn't have handicapped that very high.
So that is a form of monetization, but remember, it's about bringing all of that back into our system and making us a stronger retailer. So all of our data capability and how we think, at least right now, about moving forward is, how does it make us stronger? How does it deliver value for the shareholder? If we have a big, great idea around monetization and a different profit pool that's outside of retail, we'll certainly entertain it, and we'll talk to you about it, but right now, it's all focused on creating value within the system.
Thank you.
Thank you. Our next question comes from Jonathan Matuszewski with Jefferies. Please go ahead.
Great. Good morning, team, and thanks for taking my questions. The first one was on cross-shopping activity. It feels like all the things you are doing with AI and then also some of these new partnerships are two of the main catalysts to really accelerate cross-shopping across your banners. Can you paint us a scenario of maybe how you see cross-shopping evolving 24, 36 months out based on some of the early wins you are seeing? I guess just internally, how do you think about the scale of the opportunity in terms of moving current cross-shopping activity higher? That is my first question. Thanks.
Yeah, that is a real kind of strategic question, Jonathan. I mean, I think we are certainly or we believe we are going to market differently and uniquely. This is not a uni brand go-to-market strategy, a la a lot of big global retailers. This is a system of businesses, and the intent of the True North strategy is to aggregate the scale that we have created for ourselves and to move from a holdco to an opco, all focused around those businesses rallying around what we believe to be world-class privileged capability in the form of our customer data and our understanding of life in Canada and of Canadians.
So we can easily track our progress in terms of engagement and spend at the CTC level based on more engagement across our businesses, more engagement across our partners, more engagement with respect to credit card channel, et cetera. So there is any number of ways that we are tracking engagement. What we feel really good about is we do truly believe we are providing scale to our smaller banners that they could not create on their own. If you look at Q3 as proof point, the loyalty penetration in SportChek, as an example, was the highest it has ever been. It was actually higher than Canadian Tire Retail. So that is a big move. It was, I think, a 400 basis point move in the quarter.
So our members are, many of them experiencing SportChek for the first time, and when they experience it for the first time, they go back because it is such a great experience now. I think we have talked quite a bit about our partnerships, right? There are two ways to think about your question coming at it from a partnership perspective, just from an illustration standpoint, Jonathan. One would just be absolute numbers, and two would be engagement. From a number standpoint, we are close to 3 million unique members engaged in our partnerships through mechanisms like offers, credit card, the simple act of linking. So that is a 50% increase, up from 2 million, sorry, and represents a significant portion of our existing membership. Therefore, we think we are tracking very well against our belief that this could reach 4 million over time.
But then you dig a little bit deeper, and there is only 15% that are linked to more than one partner. That just gives us tremendous opportunity to deepen the relationship, more ways to earn, use rewards, give customers more reason to engage with our banners. Whatever the measure, growing partnerships is going to be an important lever for us for growing sales, and we are making good progress. Over the last two years in the aggregate active membership, we have added 1 million Canadians to the program. There is a whole bunch of levers here. I feel like I am rambling on a little bit, but there is a whole bunch of levers here around engagement and trust that in our performance management that Darren is leading and has talked to, we are setting ambitious goals for ourselves, we are organizing our teams around those outcomes, and we are managing towards them.
That is helpful. Then just a follow-up if I could. Maybe just if we could double-click on freight and fuel. I think that in the prepared remarks, maybe those headwinds started to hit in Q3. Just if you could clarify any kind of expectations for Q4, and then just as we think about kind of the wrap into early 2027, are there any guardrails we should be mindful of in terms of gross margin in first half of next year, just from this industry-wide headwind? Thanks.
Yeah, it is TJ. I will jump in on that one. I think you hit it on the head. It is a headwind for us, right? When you think about fuel and transportation, it is going to be a headwind for us. We still have our North Star in mind of 35% plus margin rate, and that is going to continue to be our target. But it does present some headwind for us in Q4, and it will, to your point, wrap into at least the first half of 2027 as well. So, we will do what we do and kind of manage the balance of orchestrating the right balance between demand creation in terms of how we go to market with value and price perception and managing margins despite some of the headwinds that we have.
It is just one of many things that we have to overcome given what is a very difficult backdrop right now.
Thank you. I am showing no further questions at this time. I would now like to turn it back to Greg Hicks for closing remarks.
Thanks, Andrea. As always, I will close the call by acknowledging the hard work of our team, the tens of thousands of people in our stores, distribution centers, and offices who make CTC Canada's most trusted retailer. I also want to highlight the latest demonstration of CTC's commitment to sport, with all of the benefits it brings to kids, families, and communities. In 2023, our company made an ambitious commitment. By the end of 2026, half of our professional sports sponsorships would go to women's sport. For one of Canada's largest sports sponsors, this was no small feat. It required real choices and deliberate change. Last month, we reached our goal. For me, this demonstrates what Canadian Tire can do when we see an opportunity to make life in Canada better and commit ourselves to it.
I want to congratulate our team and the many women we have stood beside, keeping girls in sport and creating pathways to higher and higher levels of competition. Today, we are seeing just how exceptional women's sport can be, but it never lacked talent, it lacked investment. I am proud of our investment and our milestone, and I am excited about our next ambition, helping more Canadians become fans. Thanks for joining us today and for your questions. We look forward to speaking with you again in the new year. Bye for now.
This will conclude today's call. You may now disconnect.