CHARLOTTE, N.C.—A significant decline in the operating results of its retail division cut Heafner Tire Group Inc.'s second-quarter operating earnings by more than one-third, despite an increase in sales.
For the three months ended July 1, Heafner posted operating earnings before interest, taxes, depreciation and amortization (EBITDA) of $7.5 million, down 36.4 percent from the comparable 1999 quarter.
Sales for the period climbed 8 percent to $287.7 million. While some of that increase was attributed to the company's recent acquisitions of T.O. Haas Tire Co. and American Tire Distributors (formerly the wholesale division of Merchant's Inc.), even with those results excluded, "sales were still well in excess of the underlying industry growth rate," said Heafner President and CEO Donald C. Roof.
Mr. Roof attributed the entire fall in operating earnings to "significantly less than anticipated" results in the company's retail division, caused by difficulties in rolling out a new point-of-sale computer system.
Heafner operates 240 retail outlets, primarily under the Winston Tire name. However, the firm's wholesale/distribution operations account for about 85 percent of Heafner's total revenues and "continue to achieve strong results," Mr. Roof said.
For the first half of 2000, Heafner's operating earnings fell 26.2 percent to $14.1 million, while net sales rose 7.2 percent to $542.1 million.