TROY, Mich. (Jan. 30, 2002)—A week after Kmart Corp.'s filing for Chapter 11 bankruptcy protection, Penske Auto Centers Inc. is maintaining a wait-and-see stance.
It's still business as usual for the nation's largest tire retailer.
“I haven't heard anything new,” a Penske spokeswoman told Tire Business. Immediately after the Jan. 22 announcement by Kmart, the spokeswoman said nothing had changed as far as Penske was concerned and that the retailer would be conducting business as usual.
“We're obviously respectful of Kmart's issues and what they have to deal with…We can't react until Kmart makes decisions,” she said. “When decisions get made we'll obviously have to review the decisions.”
After filing for Chapter 11 protection, Kmart said its 2,114 stores would remain operational. Thirty percent of those stores have Penske centers tied to them. Kmart also still owns 22 percent of Penske Auto Centers, according to Kmart´s bankruptcy filings.
Analysts expect Kmart to close between 200 and 400 stores, according to Automotive News, a sister publication of Tire Business.
Nonetheless, Penske is refusing to speculate about what might happen, the spokeswoman said, choosing rather to await Kmart's next move. She said that while Penske has no doubt given thought to options in the near future, the company will continue to provide automotive care.
“As things progress and things change, then we'll comment about things,” she said.
Penske bought Kmart's 860 Auto Centers for $112 million in 1995. More than 200 of the centers were closed within two years. In May, Penske signed a 10-year agreement with Kmart to run the auto service shops in or on Kmart property. The deal could be modified pending the bankruptcy ruling. Kmart must give a one-month notice before closing a store.
According to news reports, Kmart stock has lost 85 percent of its value since the start of the year, and incurred a 50-percent swoon after the mass merchandiser's Chapter 11 announcement.
“I think the whole situation has caused uneasiness with everyone. It's not a pleasant subject,” the Penske spokeswoman said, but added: “It's not uneasy on our behalf. It's not impacting us.”
Troy-based Penske, as of late October, topped the national list of independent tire retailers with 629 outlets. As many as 40 new stores were on the drawing board at that time.
In November, Penske launched Penske Express Auto Service Centers, which it planned to add to Kmart's KExpress convenience-type stores that also feature gasoline service. Penske opened two of its smaller outlets, in Cambridge, Ohio, and Ionia, Mich., in rural areas.
Last year Penske also opened a stand-alone store in Ft. Myers, Fla., the company's first outlet not affiliated with a Kmart location.
President and CEO Jim Wheat announced last Fall that Penske planned to open 30 to 40 stores in 2002. The spokeswoman said all indications are that the plan is still in place.
“Time's going to tell,” she said. “…Things are always subject to change. We publicly said that's what we were going to do. Right now I don't have a good sense that we're going to back off (the number) or up it.”
The spokeswoman said those stores would likely not be free-standing locations.
“That doesn't mean we're not looking at free-standing stores,” she said. “We're always looking to grow our business. We always look for new opportunities, whether that's an existing building or whatever they may be.”