HOFFMAN ESTATES, Ill.—It's the same names but different business units for Sears, Roebuck and Co.'s National Tire & Battery (NTB) and Sears Auto Centers operations. In a corporate restructuring announced March 16, the mass merchandiser has realigned its automotive division under the umbrella of its off-the-mall specialty stores group.
The move ``just shows the commitment from the overall Sears corporation for the automotive business in terms of embracing it as an important and integral part'' of the company, explained David Albritton, public relations manager for the Sears Automotive Group. He described the realignment as a positive step to ``help us perform better and build some synergy'' in the marketplace.
The company's automotive business won't simply be presented to consumers as Sears Auto Centers or NTB, but as part of an overall marketing approach that includes a Sears Hardware or ``big box'' store alongside, he said.
``It brings all of our Sears formats to bear, so a customer can get the full benefit of Sears' products and services.''
As part of the realignment, Sears said Paul A. Baffico, president of the Automotive Group the past six years, will retire after 34 years with the firm. William C. White, senior vice president, Southeast region, has been promoted to president of the Sears Tire Group.
The firm also moved its specialty catalog operation under its marketing organization, and its direct response business—including insurance products, clubs and services—to Sears' credit organization.
Although sources within and outside Sears told Tire Business there is rumor rumors and rumors that the retailer's NTB chain might be for sale if the right offer came along, Mr. Albritton said that is ``unequivocally not true.''
Nor has Sears closed any underperforming NTB outlets.
``NTB is our growth format for the automotive side,'' he added. ``We are embracing this format and have no plans to sell it off.''
Paula Davis, a Sears corporate media relations spokesperson, said the firm actually is growing its automotive business, with 30 new stores, including Sears Auto Centers and NTB outlets, planned this year.
At the company's 1999 analyst meeting Feb. 17, Mr. Baffico reported that Sears opened 51 new NTB stores last year, developed a state-of-the-art logistics network dedicated to the tire business, and implemented new systems, including a business-specific point-of-sale procedure.
However, the Sears Automotive Group's 1998 revenue dropped from the previous year, according to the report. At year-end, the 789 Sears Auto Centers had sales totalling $1.6 billion—a drop of 3.9 percent, while the 347 NTB outlets' revenue was $700 million, down 2.1 percent. In comparison, the company's tire, automotive and parts business amassed total revenue of $3.4 billion in 1996.
``Business has been pretty OK this year. I'm not going to say it's the greatest,'' Mr. Albritton admitted. ``We have the same challenges as the rest of the industry. But we're very hopeful this will be a very productive business for us in the future.''
Providing a balance of tire sales between Sears Auto Centers (SACs) and NTB, Mr. Baffico told analysts that 48 percent of the SACs' sales are in broadline tires vs. 38 percent for NTB. In touring tires, NTB holds the edge, 23 percent to 22 percent, while in high performance tire sales, the chain beats its SAC cousin 21 percent to 12 percent. Both units tie at 18 percent for light truck tire sales.
According to Mr. Baffico, NTB ``competes intensely'' with regional names that include industry heavyweights Tire Kingdom Inc., Discount Tire Co., Morgan Tire & Auto Inc., Belle Tire Distributors, Team Tires Plus Ltd., Merchant's Inc., the Heafner Group, Big O Tires Inc. and Les Schwab Tire Centers.
He called NTB the company's ``category expert,'' telling analysts it offers competitive prices on branded product; experts at solving customer problems; attracts customers who do not generally consider Sears Auto Centers; has ``no material cannibalization'' from the SACs; and provides a ``more convenient'' location strategy.