FORT SMITH, Ark.—The past 12 months have brought both growth and consolidation for Tire Distribution Systems, the subsidiary Bandag Inc. created out of the acquisition of five of its largest franchisees two years ago. Throughout 1998, TDS spent more than $20 million on acquisitions, according to its latest 10K report. Among them were more than a dozen commercial sales locations and a half-dozen retread plants through six separate acquisitions.
But at the same time, it sold ``selected stores and facilities to other members of the Bandag Strategic Alliance in certain locales where it made sense to do so,'' Bandag told shareholders in its 1998 annual report.
Bandag declined to elaborate on how many units were sold in 1998 or to whom, citing confidentially agreements between the company and the purchasers.
Bandag normally doesn't comment on its plans, but recently the company clarified the role of TDS, saying it was organized in 1998 ``to make sure there are no holes in our distribution network, and never will be. Having a consistently strong distribution network from coast to coast benefits all Bandag dealers.''
By latest count, TDS operates 89 commercial tire sales and service operations and 42 precure retread shops—an increase of two commercial outlets and a drop of three retread shops from a year earlier. It also operates 11 outlets defined as primarily retail.
TDS' five initial business units, assembled from the acquired dealerships, were consolidated last year into three divisions, each supervised by a management member of one of the former franchisees.
Gary McNally, who directed Columbia, Miss.-based Southern Tire Mart's sales efforts in the eastern U.S., now heads the eastern division of TDS. Tom Duff, former Southern Tire Mart president/CEO, now runs the central division; and Lex Brewer, former president of J.W. Brewer Tire Co. in Wheat Ridge, Colo., and son of former chairman, Alex L. Brewer, is in charge of the western division.
Meanwhile, the operations of Universal Tire in Nashville, Tenn., and those of Oklahoma City, Okla.-based Joe Esco Tire Co.—also among the five dealerships originally making up TDS—have been folded into the company's eastern and central divisions respectively. The fifth such dealership, Sound Tire Inc. of Auburn, Wash., has been made a part of TDS' western division.
A Bandag spokesman said the consolidation was undertaken by TDS to make its commercial tire sales and retreading operations ``easier to manage.''
In 1998, TDS recorded a profit of $2.5 million on sales of $376.6 million. This year, TDS reported a first-quarter net loss of $1.9 million before interest and taxes, vs. a loss of $1.1 million for the 1998 period.
TDS' quarterly net sales of $84.6 million were up 6.2 percent from $79.7 million reported in 1998.
The businesses acquired during 1998 were: Denali Bandag, Anchorage, Alaska; Tire Team Inc., Fort Worth, Texas; Deas Tire Co. of Gulfport, Miss.; Athens Bandag in Athens, Ga.; Kitchen & Haynie Royal Tire Co. of Atlanta; and a Fletcher's Cobre Tire outlet in Atlanta formerly owned by Bridgestone/Firestone Inc.