All participants, thank you for standing by. My name is Elena, and I will be your conference operator today. Welcome to the Canadian Tire Corporation earnings call. All lines have been placed on mute to prevent any background noise. If you would like to ask a question, simply press star then the number one on your telephone keypad. To withdraw your question, press star then the number two. Now I will pass along to Karen Keyes, Head of Investor Relations, Canadian Tire Corporation. Karen? Thank you, Elena, and good morning, everyone. Welcome to Canadian Tire Corporation's Third Quarter 2022 Results Conference Call. With me today are Greg Hicks, President and CEO, Gregory Craig, Executive Vice President and CFO, and TJ Flood, President of Canadian Tire Retail. Before we begin, I wanted to draw your attention to the earnings disclosure available on the website, which includes cautionary language about forward-looking statements, risks, and uncertainties, which also apply to the discussion during today's conference call. After our remarks today, the team will be happy to take your question. 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, and we welcome you to contact investor relations if we don't get through all the questions today. I'll now turn the call over to Greg. Greg? Thank you, Karen. Good morning and welcome, everyone. I opened our call last quarter by stating that we'd entered a challenging environment. Today, there's no question we continue to operate in a dynamic economic climate. As we're all aware, interest rates have reached their highest level since 2008, and inflation continues to impact the cost of living for Canadian families. In general, we continue to see overall strength with the Canadian consumer. This perspective comes predominantly from our analysis of the more than CAD 5 billion that Canadians spent on their Canadian Tire credit cards in the quarter. Sales on our cards were up 14%, so in aggregate, spend remains strong. What we are seeing is a mix shift in that spend. Spend appears to be softening in non-grocery merchant sales and remains strong across grocery, gas, and services. At CTC specifically, customer spend and retail sales in Q3, while slowing relative to Q2 growth, remained well above their pre-pandemic levels. In fact, Q3 retail sales were up over CAD 700 million relative to 2019. Gregory will cover the numbers in more detail, but before he does, I will touch on some of the trends we saw through the end of Q3 and provide an update on the progress we're making against the pillars in our Better Connected strategy. As I mentioned in my prepared remarks last quarter, we saw good movement on our spring/summer products in July once the warmer weather arrived. Demand was strong in the early part of the quarter, trailed off in the middle, and then finished strong in the last few weeks of September. Overall, consumer demand across the quarter can best be described as choppy. The two-year stack for comp store sales in Ontario was strong at 24%, which contributed to us being down 4% in the province for the quarter. Outside of Ontario, where the comps were easier, we saw good albeit slower growth than 2021. As I'm sure you can appreciate, we've been analyzing our business performance in depth given the intensifying narrative of a looming recession, and we have identified three new insights that have emerged in the last 60 days or so. First, at CTR, there is evidence of more performance separation for essential and non-essential categories. Consumer demand is shifting to our essential product categories such as tires, automotive parts, plumbing, and pet. This shift is more pronounced among our non-loyalty customers who have decreased their spend in non-essential categories such as outdoor cooking, exercise equipment, electronics, and furniture. Second, our Triangle Rewards loyalty members are driving the majority of our sales growth, and our best members are driving a disproportionate share of growth. Third, our non-loyalty customers at CTR are looking for discounted value as our percentage of baskets in which all items in the basket are discounted is on the rise. Although these insights are relatively new and not yet trends, they will inform our tactics and resource allocation as we move forward. Being a resilient retailer means being equipped to respond to unpredictability. We are focused on running our business well, and in the short term, we will use our analytics capabilities and expect to double down on leveraging insights gleaned from our Triangle data to understand, engage with, and provide real value to our customers. At this time, as I have in previous quarters, I will discuss the progress we made against the pillars of our Better Connected strategy in Q3, starting with the customer. In Q3, we effectively engaged our loyalty customers and loyalty sales grew to CAD 2.7 billion, an increase of 4%. Overall, loyalty sales outpaced non-member sales in the quarter, a trend we expect to continue, so we are increasingly laser-focused on driving member engagement, and we know the number one driver of engagement is registration. Registration provides valuable first-party data that enables us to cultivate stronger, more authentic relationships with our customers. Registered members are more engaged and participate in more components of the program, including our one-on-one offers. Although the percentage of registered members is a solid 73% across all loyalty members, it's only 39% among the new to CTC members, those who have joined the program in the last twelve months. We believe that early registration has the potential to unlock considerable additional sales. A registered new to CTC member spends 2.5x more than a non-registered new member in the first twelve months post-registration. Armed with this knowledge, we recently created a new cross-functional team to design and implement specific tactics to improve registration. So far, we've been successful with 200,000 more registered members than last year. Given our awareness of the emerging trends that further reinforce the importance of our Triangle members, we will continue to adapt our playbook to put the requisite amount of required focus on driving registration. We are also honing our ability to surface the value that matters to customers, and one of the ways we're doing that is through offer widgets on our websites. As you may recall, earlier this year, we tested a widget on the CTR website that encouraged customers to activate a Triangle Rewards offer by dynamically showing exactly how much bonus eCTM they'd earn if they purchased a specific product. Now we've scaled this program to include mass promo items, and we've learned that by displaying the eCTM dollar amount to be earned on the product display pages drives results for both one-on-one and mass offers. We will continue to investigate ways to leverage the widget for future brand and category multiplier offers and identify new and innovative opportunities to meaningfully engage with our customers. Moving on to our investments in our stores and customer experience. Our investments continue to be aimed at delivering a better omni-channel customer experience, and we're making excellent progress. We recently opened the first two remarkable retail stores in Ontario, one in Welland and one in Ottawa. These new stores represent the next generation of Canadian Tire's large format retail store, and they are truly remarkable. We've connected the digital and physical worlds, enabling both channels to complement and amplify each other, ultimately delivering an enhanced customer experience through an expanded assortment and seamless omni-channel shopping options, including click and collect, curbside pickup, and deliver to home. For example, our new 135,000 sq ft store in Ottawa has a six-car customer pickup canopy area for customers to collect their online purchases, as well as in-store technology such as electronic shelf labels, employee-facing devices for real-time information, and scan and buy technology to help with bulkier items. Both our Welland and Ottawa stores have fantastic merchandising displays that proudly showcase our own brands and highlight our key national brands, bringing our products to life in an inspiring way. In Welland, specifically, we have over 1,100 items on display, which allows customers to see the breadth of our assortment. 3.8 million data points were considered when allocating space at a SKU level in this store. This store also features our most automated store warehouse with over 550 feet of conveyors, advanced product sortation capabilities, new wearable technology to improve efficiency, and the capacity to hold over 170 full truckloads of product. We also recently opened our replacement store in Chilliwack, BC. The store has been expanded from 45,000 sq ft to 94,000 sq ft and is now our largest store in British Columbia. The store has been outfitted with our full Concept Connect store design, and the sales results to date have been fantastic. The store has been the number one store in sales growth in the country and top three in absolute dollar sales the last two weeks. It's a great representation of our brand and a significantly enhanced omnichannel experience for our customers. Overall, we expect to complete 36 projects and will update just shy of 10% of CTR retail square footage and add more than 350,000 square feet to the network by the end of this year. We're just getting started. We have 22 projects that we expect to complete in the first half of 2023, and we have another 28 projects planned for the second half of next year. As you know, providing better experiences in our physical stores is just part of our omni-channel investment story. We continue to invest in ensuring customers have a seamless shopping experience no matter which of our channels they choose. For example, we have installed pickup lockers now in close to 80% of our CTR stores. Of course, our supply chain is critical to our ability to provide a seamless customer experience. As we mentioned in our last call, we took possession of inventory earlier this year. Costs related to our CTR inbound volume were up 15% in the quarter, and ocean rates were up more than 20% relative to last year. The associated costs impact both our margin rates and our OpEx in the quarter, which Gregory will speak to in more detail. We continue to incur incremental expense as a result of using 3PLs to process required throughput and the longer lead times we've built into our purchase orders. We see the magnitude of these expenses subsiding, both as a result of where we are investing and as some of the pressures ease organically. Starting with our investments, we expect relief to come as we fully operationalize our expansion in our Montreal DC and repurpose two central DCs which have traditionally supported Mark's and Sport Chek to CTR. All of this work will be completed by January 2023. To better service our CTR stores in BC, we recently signed a lease for a new DC in the Vancouver area, which we expect to be operational in 2024. Our new fully automated GTA DC was operational in Q3, processing small runs of both inbound and outbound, as well as storing inventory. This will continue throughout Q4 as we head towards full-scale operations in Q1 of 2023. As outlined at our Investor Day, we continue to focus on the modernization of our supply chain with the investments required to support the growth of our business over the long term. In terms of the organic relief we are expecting, freight rates started to come down in September and have continued to drop through the early part of this quarter. We are negotiating our contracted rates with carriers for 2023 as we speak. We are also seeing evidence of lead time shrinking based on modest improvements in the operations of the Port of Vancouver. Moving on to our product assortment. We are confident that our unique multi-category assortment sets us up well in every economic environment as it provides us with considerable flexibility as customers' shopping habits change. As mentioned earlier, we are seeing changes in spend in non-essential and essential goods. Triangle members continue to increase their spend across both essential and non-essential products. Non-members, however, are decreasing their spend on non-essential products. The essential product portfolio is a big part of our overall business, and you can expect us to adjust our resource allocation strategies to put more focus on this segment of our business going forward. We expect outpaced growth in the automotive business, and we will advance strategies to catalyze opportunities for our essential portfolio. I will illustrate this using our execution plans for our pet business as an example. Pet is currently a CAD 4.9 billion market in Canada. For CTC, it's a growth category and an essential trip driver that has considerable runway for us. We've started rolling out an enhanced Petco shop-in-shop across our CTR store network, and so far, the 31 stores with these new experiences have delivered POS rate growth rates of 19% in the category, as well as a 34% increase in customers shopping pet with us for the first time. We've worked with our associate dealers to accelerate our plans, and by the end of January 2023, over 80% of our Canadian Tire stores will feature this enhanced Petco experience. As you can see, pet is an opportunity for growth, and it's just one of many essential categories where you can expect us to increasingly add emphasis. Our own brands portfolio performed well in the quarter, and in Q3, sales increased as we continued to demonstrate our in-house innovation capabilities. We are really excited about one of the newest products within our own brands portfolio, the PWR POD, a universal battery system that powers a variety of exclusive brands, including Mastercraft indoor and outdoor tools, MotoMaster and SIMONIZ car care products, as well as Woods camping gear. Finally, I know you've heard me talk about Forward a lot these past few quarters, but it's important to note that Forward sales have reached CAD 14 million since its launch in April 2022, further proof that we can continue growing our successful own brands portfolio. At the same time, national brands continue to play a critical role in ensuring we have the right products for our customers, and in Q3, this was especially true at Mark's where standout brands like Levi's, Carhartt, and Timberland PRO. Finally, as we discussed in our Investor Day, a key objective of our Better Connected strategy is to make life in Canada better for our shareholders by delivering strong capital returns. This is a critical component of our value creation program. As I'm sure you know, today, we announced our thirteenth consecutive year of dividend increases with the annual dividend increasing to CAD 6.90 from March 2023. Along with the quarterly dividend increase we announced in May, this takes this year's cumulative dividend increase to 33% and continues to position us as one of the best-yielding dividend stocks in the sector. We also announced a renewal for our share buyback program and our intention to repurchase between CAD 500 million and CAD 700 million by the end of 2023. We are investing in our company because we have confidence in our future and our ability to achieve long-term growth through our Better Connected strategy. With that, I'll pass the call over to Gregory. Thanks, Greg, and good morning, everyone. Before I take you through the details of the quarter, I'm going to start with the EPS numbers. Reported diluted EPS of CAD 3.14 per share included CAD 0.20 or CAD 16 million of operational efficiency program costs. Normalizing for these costs brought normalized diluted EPS to CAD 3.34 per share. Within that normalized EPS, again, this quarter, we had an impact from foreign exchange losses driven by continued movement of the NOK compared to Helly Hansen's operational currencies, equivalent to CAD 0.15 per share. The difference in EPS relative to last year flowed through higher revenue in both the retail and financial services businesses, but it was offset by lower retail gross margin rate against a strong margin last year at CTR and Sport Chek and as we absorbed higher freight costs this quarter. I will elaborate on these items a little later, but before I do, I'll start with how the customer behavior this quarter translated into retail sales growth. Q2 was another strong top-line quarter, with retail sales continuing to run 20% above pre-pandemic levels. In the petroleum business, although volumes were down, higher prices at the pump translated into higher revenue. Retail sales growth, excluding petroleum, was just under 1%. On a regional basis, we saw higher growth outside of Ontario. As Greg mentioned, Ontario was down against a strong quarter in 2021 as we cycled last year's pent-up demand with the reopening of stores and a strong back-to-school season in that province. Now, let's look at the highlights for each of the banners, starting with CTR. At CTR, comparable sales were up 0.7%, with half our categories growing in the quarter. Seasonal and gardening was the strongest division as summer weather arrived in the second half of the quarter across most of the country, and we were well stocked with pools and pool maintenance products, patio furniture, and gardening. Automotive remained strong this quarter, driven by maintenance. Our living, fixing, and playing divisions were down in the quarter compared to last year due to supply challenges in areas like vacuums and portable power tools, and demand for some home items and exercise equipment also slowed. This was partially offset by areas of growth, particularly in camping and in paint. Sales in all divisions remain well above 2019 levels, and on a year-to-date basis, comparable sales at CTR were up almost 3%. Revenue was a highlight at CTR, up more than 5% in the quarter as dealers ordered for Christmas and replenished winter and non-seasonal categories after a strong end to winter last year. On a rolling 12-month basis, both revenue and sales were up. Revenue growth is leading sales growth by approximately 150 basis points, driven by strong revenue growth this quarter as well as in Q4 of 2021. As you know, given our dealer model, sales and revenue can be out of sync in any given quarter. Over the long term, however, the growth patterns for revenue and sales tend to converge. At SportChek, Q3 comparable sales were down 1% as we cycled an 11% comp last year when we benefited from pent-up demand as customers returned to stores in Ontario and team sports resumed. This quarter, growth in cycling and casual clothing partially offset the decline in athletic clothing and footwear against last year. Cycling growth was led by sales of our own brands, Diamondback and Nakamura. Strong sales in Quebec resulted in a higher mix of franchise sales, which contributed to a lower margin relative to last year when we were in a low promo environment and customers were shifting back to in-store shopping and inventory was less readily available. Mark's was a positive contributor to retail gross margin in the quarter and recorded its ninth consecutive quarter of positive performance. Comparable sales were up 4% despite the tough comp of 8% benefiting from growth in industrial and casual wear demand across most provinces. Helly Hansen had a strong quarter with revenue growth of 8% on a reported basis. On a constant currency basis, revenue growth was up 19%. North America and Scandinavia were the strongest regions, up 35% and 28% respectively. From a category perspective, Helly Hansen Sport was the strongest contributor to growth. Now, I'll return to our retail gross margin rate excluding petroleum, which I mentioned at the start of my remarks. On a year-to-date basis, we continue to be pleased with a retail gross margin rate that is running a little behind last year. The team has done a great job managing through product costs and freight headwinds. Margin rate in Q3, however, was down against an extremely strong margin rate in Q3 of last year as we were operating in a less intense promotional environment as we came out of lockdowns in Ontario. Consistent with what we saw in Q2 of this year, freight cost and cost inflation were our biggest headwinds in Q3. Freight at CTR had a negative impact of around 200 basis points on our retail gross margin rate, a bigger impact than any other quarter this year due to higher fuel and ocean rates. Let me explain why we see these headwinds ease starting in Q4, our biggest quarter. First, we had elevated comp freight costs beginning in Q4 of 2021, so we'll be cycling an easier comp. Second, based on what we're seeing in the market, ocean spot rates are meaningfully lower than they were last year. Fuel prices are coming down and product costs appear to be stabilizing. Major margin rates may vary from quarter to quarter, and I want to be clear, the decline we experienced in the quarter was not related to a shift in our promotional strategy to stimulate demand or incremental markdown activity to clear activity. As we said on our Investor Day, our goal continues to be to hold and protect our retail gross margin rates over the longer term while striking the right balance between demand creation and being price competitive as needed. Now I will move on to OpEx. Normalized consolidated OpEx ratio as a percentage of revenue was 25.9% on a year-to-date basis, or around 63 basis points higher than 2021. Normalized retail OpEx growth continued to run above retail revenue growth at the end of Q3, with retail normalized OpEx, excluding depreciation and amortization expenses, up 11% on a year-to-date basis as we continued to invest in the business. In the quarter, higher supply chain, IT, and marketing costs were partially offset by operational efficiency savings. In terms of what drove the elevated OpEx, first, as was the case in Q2, marketing and store operating expenses were elevated compared to last year. Higher supply chain costs were due to the inbound volumes that Greg mentioned, as well as inventory volumes, which were running above 2021 levels. Second, our IT spend increased as we rolled out our strategic and sustaining investments in our digital platform, including our transition to a cloud-based IT infrastructure. A major milestone was the implementation of Workday, which went live in Q3. The Workday implementation is an example of a significant OE initiative that contributes to the full run rate of CAD 300 million plus by year-end. Workday connects more than 32,000 CTC employees across our retail banners, distribution centers, contact centers, and corporate functions. In addition to the cost savings achieved by replacing eight individual platforms, Workday fundamentally helps us run a better company by enabling a single source for employee data and analytics, better and more streamlined processes, as well as more functionality for our employees. I will now provide an update on the financial services business, which had a good quarter. Pre-tax income was CAD 140 million on the back of solid operational metrics and increased customer activity. Credit card sales and average receivables remained healthy compared to last year, both up 14%, although the rate of growth in card sales has slowed. Ending receivables also continued to grow, but at a lower rate than the average receivables growth as we slowed new account acquisition compared to the first half of the year. We also experienced slower card sales and elevated payment rates. Employment, a key indicator, remains robust and the portfolio continues to perform well overall, despite ongoing economic uncertainty. Given the higher inflation and interest rate environment, we continue to monitor our key indicators very closely. The PD2+ rate and write-off rate ended the quarter up over last year at 2.8% and 4.5% respectively. We expect write-off rates will start returning to more historical levels as the increased investments in new accounts, a key strategic initiative that we outlined at our Investor Day, works its way through the portfolio. There was no change in the ECL allowance this quarter. Given the modest growth in receivables over the quarter, the existing balance adequately covered the risk in the portfolio. The allowance rate was 12.6% in Q3 and continued to be within our target range of 11.5%-13.5%. Operating capital expenditures were just over CAD 200 million this quarter and CAD 514 million on a year-to-date basis. We continue to invest in the store network, our supply chain, and the capital element of the IT transformation that I mentioned earlier. We did see the timing of a few projects shift into 2023, and as such, we now expect full-year CapEx spend to be a little higher than we had been previously guided to, around CAD 750 million. We expect next year's operating capital expenditures to be in the range of CAD 850 million-CAD 900 million. Now, moving on to inventory. Our inventory levels were up compared to last year, mainly as a result of higher prices. Consistent with last quarter, early receipt to fall/winter products and for CTR, some carryover in spring/summer inventory drove some volume increase. As it happens from time to time in the CTR model, we and the dealers ended somewhat heavier on spring/summer inventory, concentrated in a few categories where we had good sales once summer arrived. However, we did not sell through as much due to the late arrival of summer in many parts of the country. We expect to manage through that inventory, and we anticipate this to result in lower spring/summer sell-through to dealers next season. Before ending, I just wanted to touch base on capital allocation. As Greg said earlier, we are pleased to be announcing our 13th consecutive year of dividend increases with the annual dividend to increase to CAD 6.90 per share from March, which represents a cumulative increase of 33% this year. We also renewed our share repurchase program and are targeting to buy back between CAD 500 million and CAD 700 million in shares by the end of 2023 under our existing NCIB. The share buyback program we announced today is based on our belief in the long-term prospects for this business. In addition to the plans laid out as part of our Better Connected strategy, you may have seen a recent application by CTC, overseen on our behalf by CT REIT, for the redevelopment of our flagship Canadian Tire store at Yonge and Davenport, a key intersection in Midtown Toronto. As most of you know, this is only an initial step in a multi-year process, and at this stage, there's no guarantee that the project will be approved. That being said, we are really excited about the plan we have put forward for an innovative mixed-use development, including residential towers and a new Canadian Tire store on the ground and second levels. We expect this plan would be undertaken in conjunction with partners. As we move forward with our Better Connected strategy, we expect that there will be more opportunities to work with CT REIT and other partners to unlock value through selling, obtaining entitlements, or redeveloping existing properties across Toronto, Ottawa, Montreal, and the Calgary markets. We look forward to sharing these with you in due course. I want to close with something you've heard me say before. We are a more resilient company now more than ever, evidenced by the growth in our Triangle program, enhancements to our assortment architecture, our supply chain capabilities, how we operated with agility during the pandemic, and our stronger balance sheet. Whatever the economy brings, and we continue to watch all of our data carefully, Canadian Tire is a well-prepared, resilient company. We will balance controlling what we can in the short term with investing in our long-term initiatives, which we believe are important in building an even stronger company. With that, I'll hand over to Greg for his closing remarks. Thanks, Gregory. Before I close, let me touch on what we're seeing so far in Q4, which as a reminder, is our biggest quarter. Overall, I'd say that the new insights I mentioned are continuing early here in Q4. As you all know, seasonality plays a critical role in Q4, and we're seeing declines in our fall/winter businesses given the unseasonable weather. Where winter weather has shown up, as it did out west last week, we have been very pleased with the bounce back. Finally, I wanna provide a quick update on the community pillar of our Better Connected strategy. As I mentioned last quarter, Canadian Tire Jumpstart Charities is one of the first two national recipients of the federal government's Community Sport for All initiative, a CAD 6.8 million grant that enables Jumpstart to help an additional 50% more grassroots sport organizations. In September, the Ontario Ministry of Tourism, Culture and Sport committed CAD 1 million per year over the next two years to Jumpstart, further evidence of the public sector's trust in the charity's work. This funding, combined with Jumpstart's healthy reserves, will enable the charity to continue making life in Canada better for kids and families across the country. As families find themselves increasingly stretched by the impacts of inflation, they should know that Jumpstart can and will be there to help kids overcome the financial barriers to sport and play, just as they have since 2005. I'll end my prepared remarks this morning by saying, although we continue to manage in dynamic times, we have the capabilities to weather any storm. In the near term, we will face into changing consumer behaviors in a dynamic economic environment with confidence. We know that the market sentiment is that we're going to give back what we gained since 2019. We don't look at our business compared to 2019 beyond trying to challenge that sentiment. We have grown market share and will continue to focus on running the business well. We are resilient, have plenty of operating levers at our disposal, and hard-earned insight and perspective from which we can successfully operate our business in difficult times. Although we will always plan, adapt, and manage for different consumer demand environments, we will not take our foot off the gas with respect to our Better Connected strategy. We will continue to invest our capital in the priority areas identified at our Investor Day to create a more modernized and seamless omni-channel experience. We remain confident that by continuing to effectively invest the cash we generate into our long-term Better Connected strategy, we are well-positioned to serve our customers and create value for shareholders. With that, I'll pass it over to the operator to open it up for questions. Thank you. At this time, I would like to remind everyone in order to ask a question, please press star then one on your telephone keypad. You can withdraw your question by pressing star then two. We ask that you limit yourself to one question plus one follow-up question before cycling back into the queue. We'll pause for just a moment to compile the Q&A roster. The first question is from Irene Nattel with RBC Capital Markets. Please go ahead. Thanks, good morning, everyone. Really helpful discussion around the consumer insights and some of the shifts you're seeing in consumer spending behavior. How would you describe the current behavior relative to, let's say, what you saw in prior downturns, 2008-2010, for example? What are you thinking, and how should we be thinking about how demand evolves in Q4 next year? Yeah. Hi, Irene. I'll take that. What we tried to do is provide emerging insights. I think as I tried to suggest in my prepared remarks, it's too early, we believe, to extrapolate these to trends. Although as you did hear me say it, you know, we do believe that we need to, you know, contemplate and take action with operational tactics that react to the insights that we're seeing. You know, I think I'll just reinforce, you know, what I said in my prepared remarks. I mean, household spend is still robust, which I think is net different than 2008. You know, grocery, gas, dining, travel, everything services related. I mean, everything from hair and nail salons to fitness and wellness services all showing real strength. What we do see, as I said, are spend shifts from industries with more durable goods. For us, you know, we have the most amount of data with our Triangle membership, credit card, and base. As you can appreciate, we're trying to really get a handle, you know, looking back to 2008 and 2009, if there's any bifurcation in spend, a bifurcation in spend, from an income level standpoint. You know, what we know to be extremely different between where we are now and 2008 is employment, and how employment hits different income levels. We've looked everywhere we can with respect to teasing out any differences in spend from an income standpoint. You know, all income brackets within our known customers, both credit card and base, continue to grow their spend with us in the quarter. It's tougher to tease that out with our non-member sales, as we don't have much data on them, and our non-members, you know, the index on being much younger. You know, as we've talked about before, a very different picture. You know, our spend in CTR to think about it from an internal perspective, you know, it does really rely on employment. The employment picture is completely different than what it was in 2008. Hopefully that gives you a little bit more color, probably not everything you were looking for, but that's what we're seeing in the business right now. Yeah, that's helpful. I guess a related question is if we think about the increase in the inventory level, and again, the impact next year. You said, I guess, Gregory said some of it is carryover. What percentage of the increase is carryover? Should we be thinking about that as sort of an offset to whatever we might have expected the sell- through to the or the shipment to dealers to be? How comfortable are you that the inventory that you do have on hand right now is appropriate given some of the shifts in behavior? Why don't I start and then TJ can give a little color because it's really related to CTR. Why don't I contextualize inventory first in three buckets for you. First, as Gregory said, is the inflation impact. The inflation impact represents 50% of the increased inventory levels on the balance sheet. Second are our lead times. As we've discussed, we continue to manage with significantly increased lead times. In the height of this last quarter, Q3, our lead times from FOB Asia through the Port of Vancouver were three times longer than pre-pandemic lead times. Every purchase order we cut, we continue to add the required safety stock to account for this. Third, again, as indicated in our prepared remarks, we have, as you suggest, more carryover in spring/summer inventory and CTR than we would like, in a few categories. The dealers are overstocked in these categories as well. TJ can talk to the categories and the impacts, with the dealers. In aggregate, it's not an amount of inventory we're overly concerned about. There's, you know, very small, if any, obsolescence issues for us to be concerned with. Why don't, you know, TJ, why don't you just give a little bit more color? Yeah, I think. Hi, Irene, it's TJ. I think just to add a couple things. I think Greg kinda nailed it. If you look at dealer inventories, they're up versus last year, but slightly less than we are. That inflation is obviously playing a big role there. When you look at where they're heavy, it is in some of these spring/summer categories, kayaks and barbecues and outdoor furniture. That's kind of where we are today, and I think what's important is looking ahead. There's a couple things that I think are important to point out, and the first is, given how the dealers did end the season, we do expect this to affect revenue in the first half of the year on these spring/summer categories. As you know, a lot of these shipments in those types of categories, whether it's bikes or kayaks or barbecues or outdoor furniture, they happen in Q1. We are expecting some revenue impact for us in Q1. The second thing that I think is important to point out is that we are starting to see some signs of the congestion at the Vancouver port easing. I think that's important to note because that will hopefully allow us to reduce our lead times and which will allow us to bring down our overall inventory levels. Greg said it well in his upfront. There's things that are organically happening to us like that and things that we're doing ourselves to invest in infrastructure in the supply chain to manage our costs as we go forward. Despite all of this dynamic kind of backdrop, we're managing inventory very tightly, and this is what our teams are really adept at doing. That's how we're gonna manage it as we go forward here. That's really helpful. Thank you. Thank you. The next question is from Vishal Shreedhar with National Bank. Please go ahead. Hi, thanks for taking my questions. I just wanted to follow up on this inventory issue and thanks for your explanation. Some impact in H1 related to sales, but how about margins as you try to move this inventory and your dealers are already higher than inventory in those categories than you are as well? Yeah, Vishal, it's TJ. Maybe I'll take that one. As Gregory pointed out, it's very important to recognize that some of the margin impacts we had in Q2-Q3 were not related to markdowns. We operate with an inventory profile that's much different than some of our peers in the industry. We're not food that goes bad, and we don't have fast fashion in most of our categories, so our response to inventory is to generally carry it through. We're not expecting any impact on the margin line. Where it does affect us is as I described earlier, on the revenue line forward- looking. When we're higher in the spring/summer in dealer land in particular, you can expect to see some shipment kinda impact as we look into Q1 and Q2 of next year. Okay. Thank you for that. How do we think about the impact of FX? I know in the past, Tire has managed it well, but now, you know, there's so many challenges hitting from every angle, it's just another thing to contemplate. You know, what is management's perspective on the impact of FX? Is it in the manageable zone still, the change? Hey, Vishal, it's Gregory here. Yeah, I think let me separate that in a few different components. I think you know we have a very well-established Hedging program kind of in the existing kind of domestic retail businesses. I feel very comfortable with what that is. You know, it's ultimately a glide path of what the rate kind of ends up being. I think we're very comfortable with kind of what our hedge position is and the practices that we've followed for, frankly, a number of years in that regard. I will say there's been more noise as we've kind of, you know, brought Helly Hansen into the fold and we've started kind of hedge accounting with Helly Hansen more recently. You know, it's not every day we kind of experience the NOK depreciation that's been experienced in the last two quarters. You know, I think, you know, I'm not gonna give you a crystal ball on what's gonna happen on the NOK versus the U.S. Dollar, but hopefully that starts to subside or, you know, as we move forward. We feel we'll be in a good run rate, I think, once that element does calm down a little. But again, very comfortable with where we are with our overall hedge program, specifically on our domestic businesses. Okay, I appreciate that. You gave us some color on the mismatch between sales and SG&A growth, and this has been, you know, it was an issue last quarter as well. Just wondering when we should anticipate starting to see some favorable operating leverage at Tire come through as a result of all these initiatives, you know, culminating and starting to bear fruit? Yeah, I'll take that, Vishal. It's Gregory here. I think what we try to explain, again, go back to Greg's comments around what we experienced in well, frankly, the year as it relates to supply chain. You know, we have to run more 3PLs. We've taken more inventory sooner. The duration, the lead times of getting POs out there. I think as some of that starts to, you know, come back to more normal and it's not gonna be tomorrow. Let's be clear. I think we'll, you know, it's not gonna be tomorrow, but I think we see a path through to kind of seeing supply chain costs kind of, you know, fall over time. We're putting on new capacity as well. I think that will also help. I think kind of our marketing costs are kind of at a run rate that, you know, we are now kind of comping off of, I would suggest. I think the element that, as Greg mentioned, that certainly for the, you know, for the next few quarters till we comp through that, we're gonna continue to invest to support our strategic initiatives. I do think, you know, you'll see kind of the IT spend be a bit elevated over the next, you know, few quarters, again, as we continue to support what we laid out at Investor Day. As we now invest in more cloud-based, I think you know this by now, Vishal, but, you know, it causes a different recognition. We basically expense more versus capitalizing, putting on our balance sheet. That's also kind of in the mix a little. I would start to say, you know, we're seeing this, you know, the cloud starting to part, but we still probably have a few quarters, is what I would suggest before we're seeing anything, you know, in that regard. Okay. I know it's all systems go on your strategic initiatives, but you know, as the backdrop changes and maybe the demand for e-com isn't as high now as it was at the height of the pandemic, is there any way that management or considerations that management could have to maybe push back some of the initiatives and bring some relief to the P&L? You know, it's a great question. You know, I think the short answer is yes, but I think the more important answer is we don't wanna blink and react quickly. We think the initiatives we have are really important to the long-term strategy of CTC, and we had a great discussion on this with the board kind of yesterday and even into, and I'm sure we'll talk more about it later. So I think the reality is we know these initiatives are important to CTC's longer term. Greg talked to you about two real estates, look, you know, that just opened in the quarter. If you get a chance, go to Welland or go to Ottawa, if you can, or Chilliwack's maybe a little harder. Those stores are such impressive representations of the brand. I think what we're doing online is just as important. The short answer is yes. We have actions to take if we feel the need to, if it's necessary, but we also wanna remain pretty committed to these kind of long-term strategies, is how I'd answer your question. Thanks for that color. Thank you. The next question is from George Doumet with Scotiabank. Please go ahead. Yeah. Good morning, guys. I'm just wondering if the higher price point categories are driving an equal share of softness when compared to the lower price categories, I guess when it comes to non-essential categories? Yeah, George, it's Greg here. In aggregate, when we look at what we deem high ticket discretionary across the portfolio, which would be items over CAD 200, we're not seeing, you know, any material differences in the performance of the aggregate high ticket discretionary portfolio. But as TJ's talked about, there's lots of categories that we can dive into. We alluded to a couple of them in the prepared remarks, and those specific categories certainly are seeing softness, and they are of the more non-essential variety. Okay. Can you please talk a little bit about the promotional environment at SportChek and Mark's and maybe how you see that evolving over the next 12 months? Thanks. Yeah, I think it's Greg again. The promotional environment across all of our retail businesses, domestic retail businesses, is starting to get back into more normal course. Gregory talked about the fact that coming out of lockdowns in Q3 last year, I think in aggregate was less promotionally intense because scarcity was driving demand, you know, especially in Ontario. People were coming back into the stores and nobody really felt the need to sharpen their pencils. So there was like, you know, more of a margin delivery strategy that was apparent in the industry. Q3 this year felt more normal. I think going forward, let me do each banner really quickly. You know, CTR, you heard us talk about the fact where we're seeing the most promotional intensity to kind of win people coming through the front door is in non-essential categories. I think market share in those categories is gonna travel through more promotional intensity. You know, from a Mark's and Sport Chek standpoint, let me start with Sport Chek. National brand inventory availability has been a challenge since the start of the pandemic. That has led, in aggregate, to less promotional intensity. We have been with a concerted and conscious strategy to try and sell more inventory at regular price and buy and allocate differently with new systems that we've put into place in that banner. You're seeing more inventory become available from national brands. The service levels are going in the right direction. There's still quite a bit of room for improvement there. Until we get to steady-state service levels, I think we'll be playing catch- up a little bit in terms of real promotional intensity. All that to say, getting closer to normal, it'll get back to normal on the backs of national brand inventory supply. Mark's now has that dynamic, which is relatively new for them over the last few years in that 35% of their business now is national brand. Same dynamic with respect to service levels, maybe a little bit better than what we're seeing in Sport Chek. Overall, though, we're not seeing a requirement for, you know, being more intense in that business where I think we talked at length last call about our happiness with what we're seeing with respect to consumer demand in that business. You know, real consumer, a real younger demographic emerging, and they don't seem to be anywhere near as promotionally intense as an older demographic. We like the dynamics there from a promotional intensity standpoint in Mark's. Great. Thanks for that. Appreciate it. Thank you. As a reminder, we ask that you limit yourself to one question plus one follow-up question before cycling back into the queue. The next question is from Peter Sklar with BMO Capital Markets. Please go ahead. Hi, good morning. It's Emily for Peter Sklar. Thanks for giving us the insights into how the shift to non-essential categories and that you've got a higher promo mix, and that's for the previous question, that the CAD 200-dollar high discretionary items, there's no discernible differences. Is there any more you can give us about the average basket at CTR? Like, for example, maybe your average per- item prices or number of items on the ticket. Has any of those notice any noticeable change? Hey, Emily, it's TJ. Maybe I'll take that one. Yeah, as we've seen in Q1, Q2, and Q3 of this year, AUR has definitely risen. On price specifically, if you look at Q3, there was inflationary impact, but there was also upward drivers as well. Different from last quarter, the migration into our better best price range of the architecture had slowed. It's still up, but it has slowed. That has put some upward influence on our AUR. As Greg pointed out, we did see some declines in some of the higher- priced tiers, but that was more category- specific because we also saw increases in others. That one's a little bit more of a mixed bag. For us at CTR, despite some of the promotional intensity that Greg described in folks who are non-members, we actually were pretty flat on promo mix, and our depth of discount wasn't as pronounced as it was last year. The only other insight I might be able to provide is we gave a lot of kind of data for you guys over the last couple of years on what we were describing as boredom busters. Within that kind of non-essential category, you look at categories like bikes and backyard amusement, exercise, water, fun, and home entertainment. Those are the types of categories that we have been experiencing some declines. They're down about 30%, but still up 16% relative to 2019. What I think is most important to point out in that respect is the resilience and the power of the breadth of our assortment. Because although those categories were down 30% year to date, automotive alone has more than offset with its growth. It's more than offset all of those declines in those boredom- buster categories. We are definitely seeing a migration from a consumer standpoint, but we're also seeing our assortment stand up really well in the face of that. And we think that bodes well for us as we head into any economic environment. Thanks. That was very helpful. Just going back to the retail gross profit percentage being down considerably year-over-year due to higher freight and higher product costs. Wouldn't most of these costs been known in advance? Why weren't you able to build these costs into the pricing structure? Like, what happened since Q2 that's made this downward trend more pronounced in Q3? Yep. Emily, maybe I'll take that one. It's Greg. I think, you know, in aggregate, there's only so much price we can move to the customer. We feel like if you look specifically at that lever, we've got five or six margin levers at our disposal. You look at that lever, and I think the teams, the merchants, feel like they've pushed as much as they can, you know, to the customer. That's number one. Number two, we just keep coming back to the supply chain. You know, the reality is we're having to bring in significantly more inventory. Our aggregate inbound freight is much higher on a dollar basis, and that dollar basis is flowing through into rate from a gross margin standpoint. You know, I applaud the teams in terms of everything they've been able to do to mitigate when you look at gross margin on a year-to-date basis. Given the fact that we had to bring in so much inventory, you heard us talk about the amount of in-transit inventory we had for our fall/winter businesses on the balance sheet coming out of Q2. You know, that flowed through in Q3, and we don't sell that merchandise till Q4. I think that's the way I think about it, Emily. Thank you very much. Thank you. The next question is from Luke Hannan with Canaccord Genuity. Please go ahead. Thanks. Good morning. I just wanted to ask about the own brand development pipeline that you guys have. You touched on the success of Forward With Design. I'm curious as we think moving forward into 2023, could we see you know the development of the brands that you have in this pipeline being accelerated? Then how should we think about those introductions, either on you know the spectrum of good, better, best in terms of price or focusing on that essential versus non-essential kind of split? Luke, it's Greg again. We have such a robust pipeline in terms and it's a multi-year pipeline. The teams I kind of outlined a few that are launching, you know, here now or with us. We're launching a new special collection with Jillian Harris and a collaboration with CANVAS that's launching this weekend that I know the teams are incredibly excited about. We could probably spend the entire call on the innovation that's rolling out either this quarter or as we head to 2023. It's tough for the product development teams to pivot net new innovation to essential from non-essential in a kind of a twelve-month period. It's more our resource allocation, specifically inventory and marketing, that you could see more focus on own brand essentials. We've got big, you know, swaths of own brand penetration with strong margins. Think essentially the entire automotive business. MotoMaster is a, you know, multi-hundred- million dollar brand. You know, our fixing business with Mastercraft and MAXIMUM. We think we're well penetrated and essential with our own brand portfolio. Our net new innovation for 2023 will follow the same path as this year and previous years, which is more oriented towards better and best. Like I say, we just came through our big annual convention with our dealers, big trade show, and our own brands were on display. It's just unbelievable to see the innovation that's hit in the streets. Understood. For my follow-up here, you had talked about what the promotional environment looks like across your retail banners. I guess this sort of partially answers the question, I'm more curious on your ability to preserve the profit margin internally. How does that look across each of the different banners? You know, CTR, Helly, Sport Chek and Mark's. Is there any discernible differences between the banners that we should be thinking about heading into 2023, where you might be able to better preserve margin or not? You know, it's more of the same, I would say, Luke. Because we're starting from a different starting place from an own brand penetration standpoint in Sport Chek, there's potentially more of an opportunity to appreciate margin rates in that banner. You've heard us talk, you know, at Investor Day, we appreciated our margin rate by 100 basis points, you know, from 2019 to 2021. Big building block of the investor strategy is to hold that margin rate. That will most likely travel equally through each banner. Or our plans are for that to travel equally through each banner. I would say Sport Chek maybe has a little bit more opportunity and we think we can balance the teeter-totter a little bit more on margin rate and revenue in Helly Hansen with some, you know, investment and capability. That may see a little bit more of an appreciation. To Gregory's point, there's lots of noise going on there with NOK depreciation. I wouldn't say any banner. You know, we're not forecasting kind of a lot of variability in either depreciation or appreciation in margin rate by banner. Got it. Thank you. Yep. Thank you. The last question will be from Mark Petrie with CIBC. Please go ahead. Thanks. Just quick, with regards to the retail gross margin, can you talk more about the materiality of the other variables alongside the impact of freight, which I think you said was 200 basis points? It would also be helpful if you put that 200 basis points in context of what you saw in the first half of the year and maybe even in broad strokes, your expectations for what that would be in Q4. Yeah, Mark, it's Gregory. I can start. I would say, you know, if I look at your second half of the question first, it was a growing impact. There was certainly an impact in Q1. You know, I think we talked a little bit about this in Q2 as well, thinking back around, we mentioned that CTR had kind of the highest, you know, hill to climb in terms of margin recovery in Q2, and almost got there, but not quite. Q3, you know, clearly the highest increase and the highest absolute percentage as a total that we've seen, you know, going a long ways back. In terms of all the other elements, I mean, I don't think there's been much change in those, you know, from a growth perspective. I would say they've been fairly static kind of Q1, Q2, Q3. But as we've tried to you know, I say on the call a little bit, I think we see kind of those starting to turn the other way. I use kind of, you know, containers, excuse me, as the best example of that, right? We're negotiating and seeing kind of better prices right now in Q4, but we would've locked in our rates in Q4 a year ago. That would've been a pretty consistent increase you know, contingent on the amount of volume that you're moving on a quarter- by- quarter basis. The only thing I would add, Mark, is if you think about, you know, well, I guess essentially all of our retail businesses, but certainly CTR. I mean, you know, the teams are. The whole business kind of flips over for fall/winter, right? They're entirely different retail strategies that stand up in front of the customer when we move to outerwear and our clothing businesses. It, you know, it's Christmas and toys and snowblowers and salt and, you know, it's a different, it's a real changeover. You know, the teams would have been negotiating on a COGS base late last year or early this year before, you know, the war in Ukraine. We certainly saw more COGS impact in terms of negotiating through line reviews and schedules, et cetera, with factories. Now as we look to commodities, you know, you're starting to see the commodity charts kind of turn green. Green means it's good, means they're turning, you know, down on a year over year basis in most categories. You know, think textiles, plastics, metals, all trending lower. Keep in mind the commodity changes, again, have to work through our negotiation cycle. I think there's relief in sight. We have headwinds for sure relative to the US dollar, but there's tailwinds relative to the RMB depreciating. You put this all together, you know, the between freight and COGS inflation, you know, we feel more opportunistic going forward and hopefully gets us back to more of a normal course operating environment in terms of how the merchants deal with all the kind of levers at their disposal for margin management. Okay, thanks. I also wanted to ask about financial services. I'm somewhat surprised not to see the provisions up on a dollar basis, just given the growth in the portfolio and the increased loss rates and aging. I know the macro is a big factor, the job market's strong, but it would be helpful to hear about what your view is in terms of the factors that could push that ECL higher. Yeah, I think, Mark, it's Gregory. I think you hit. When we look at every quarter, there's, as you know, a number of variables. You know, one would be probability of recession as an example, which, you know, I don't think that's changed kind of our view from a financial service perspective quarter over quarter. You know, yes, there was some nominal growth in receivables between beginning and ending in the quarter, but it was, I think, you know, maybe CAD 100 million. You look at that, you look at changes in the risk profile and customers as they move between buckets. I will say this 'cause I think it's important, we continue to see an elevated payment rate, right? I think when you look at all those factors, we were really comfortable where we were in the third quarter, but as you know, we have to do this again in the fourth quarter. It is, you know, it can be and is dynamic depending on what changes. But it's risk factors, it's volume of receivables, it's payment behavior, and then kind of some assumptions more on the macroeconomic side of things, employment and probability of recession, et cetera. Those would be, you know, kind of a number of the variables that we look at in determining what the right ECL is for the quarter. Okay, thanks. All the best for Q4. Thank you. This concludes the question and answer session. I will now turn the meeting back over to Mr. Hicks. Thank you for your questions and for joining us today. We look forward to speaking with you when we announce our Q4 and full- year results on February 16th. In the meantime, stay well and enjoy the upcoming holiday season. Bye for now. Thank you. This will conclude today's call. 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