Canadian Tire layoffs significant workforce, amounting to approximately 3% of its employees in the fourth quarter, as it navigates through a period of weakening consumer demand.
Why Is Canadian Tire laying off Its Workforce?
In addition to the impending workforce reductions, the company plans to eliminate the majority of its current job vacancies, which will result in an additional 3% reduction in staff. These strategic moves are expected to lead to cost savings, with the retailer projecting a charge of $20.0 million to $25.0 million in its fourth-quarter financials. On an annualized basis, these initiatives are anticipated to generate savings of around $50.0 million.
“In a more challenging economic environment, we are accelerating efficiency initiatives, prioritizing investments within our Better Connected strategy, and actively managing our resource allocation,” explained Canadian Tire’s Chief Executive, Greg Hicks, in a statement.
Why Did Canadian Tire Report a Loss in Its Recent Quarter?
The announcement of these workforce cuts coincides with Canadian Tire’s decision to increase its quarterly dividend and report a loss in its most recent quarter. This financial setback was mainly attributed to a one-time charge linked to the buyback of a 20 percent stake in Canadian Tire Financial Services, previously held by Scotiabank.
Canadian Tire’s new quarterly dividend will be $1.75 per share, marking an increase of 2.5 cents per share. However, the company reported a net loss attributable to shareholders, amounting to $66.4 million, or $1.19 per diluted share for the quarter ending on September 30. This represents a stark contrast to the profit of $184.9 million, or $3.14 per diluted share, that was reported in the corresponding period of the previous year.
This loss primarily stemmed from a significant $328-million charge connected to the Scotiabank transaction. To partially offset this charge, the company benefited from a $131-million insurance recovery related to a fire incident at one of its distribution centers in March.
Severance pay for Canadian Tire’s employees
In Canada, non-unionized workers and executives employed at Canadian Tire are entitled to receive their full severance pay if they lose their jobs due to downsizing or corporate restructuring. The severance package can extend up to 24 months’ worth of pay, contingent on various factors. Individuals who do not receive the complete severance amount have the right to seek compensation and are advised to consult with legal professionals to guarantee they receive their rightful entitlement.
At Whitten & Lublin, we recognize that dealing with job loss or termination can be a daunting and stressful ordeal. Our team of seasoned employment lawyers is ready to assist you in navigating the legal avenues available to you, ensuring that you obtain the compensation you are rightfully owed. We encourage anyone impacted by the recent layoffs in Canada to get in touch with us for a consultation, either through our online portal or by phone at (416) 640-2667 today.