OTTAWA, March 4 (Reuters) - Canadian Tire Corp (CTC.TO) is bracing for a difficult year, but the country's biggest auto parts and household goods retailer believes it will benefit from its cautious approach, Chief Executive Stephen Wetmore said on Wednesday.
The retailer, which also operates gasoline bars and a financial services unit, will push for a better performance and bigger payback from its assets, Wetmore said.
"If you can execute well, you'll come out of this strong -- if you're managing your balance sheet well and you're able to take advantage of some of the opportunities," he said during a webcast from a retail conference held by CIBC World Markets in Toronto.
Wetmore said he is "not optimistic" about 2009 and believes that is the right way to run a business.
Canadian Tire beat analyst expectations in its recently announced fourth-quarter results, but issued only a limited forecast, citing economic volatility.
Capital spending in 2009 will drop sharply, to a range of C$380 million to C$400 million, from C$472 million in 2008. It plans 40 expansion projects, which will boost square footage by about 2 percent.
"Overall, we are very confident that we have sufficient liquidity to support our funding requirements through 2009," Wetmore said. "Given ongoing market volatility, we prefer a higher liquidity position, even if it costs us some profitability during the year."
Wetmore said that previous investments by the company, such as spending to improve its supply chain, should result in healthier earnings.
"Over the last couple of years our return on invested capital has dropped a bit. That's unacceptable," he said.
"I think we've got a lot of opportunity to make the assets that we currently have ... perform much better."
There are big growth opportunities from the chain's new small-store format, he said, while a program to help dealers at weakly performing outlets has produced double-digit growth in same store sales.
Canadian Tire is also able to negotiate better prices with suppliers during the economic downturn, which will help offset the impact of a stronger U.S. dollar, Wetmore said.
$1=$1.28 Canadian Reporting by Susan Taylor; editing by Rob Wilson