MEMPHIS, Tenn. (Oct. 21, 2003) — Strong retail growth propelled TBC Corp. to a record third quarter with a 37.7-percent increase in net income on a 22.7-percent net sales gain over last year.
The Memphis-based private brand marketer reported net income of $10.5 million, up from $7.65 million for the same period in 2002. Net sales grew to $362.4 million from $295.5 million. Same-store sales in TBC's retail network—consisting of Big O Tires Inc. and Tire Kingdom Inc.—increased 1.7 percent. Total unit tire sales increased 12.1 percent, compared with tire makers' preliminary reports of a 7.5-percent increase in unit shipments this quarter, TBC said.
“Our record third quarter results were driven by the successful execution of our retail strategy as well as the expected rebound in wholesale demand,” said Larry Day, president and CEO. “Within the retail segment, our Big O franchised store network and our Tire Kingdom company-owned retail locations again turned in solid quarters, with both contributing to the positive comparable store sales results.”
TBC ended September with 918 outlets between Tire Kingdom and Big O. In late September, TBC also announced a $260 million deal to buy Sears, Roebuck and Co.'s 226-store National Tire & Battery (NTB) chain. Tire Kingdom, which will absorb NTB after the deal is closed later this year, also added 112 Merchant's Inc. locations earlier this year.
Mr. Day said the retail segment opened 12 stores in the third quarter, and another 20 to 25 more are likely in the fourth quarter. By year-end, he expects to oversee 580 franchised Big O stores and 590 company-owned stores under Tire Kingdom, including the NTB stores. Those figures represent a 54-percent increase in the company's combined store base from the beginning of the year, TBC said.
“We are very positive about our near-term prospects and believe that 2004 will be another record year, with strong top- and bottom-line growth for the company,” Mr. Day continued in the statement. “With the dramatic growth of our retail business in 2003, we see tremendous opportunity to drive future retail sales and increase profitability.”
He said the wholesale business had a strong quarter although it's expected to level off in the coming months. Mr. Day expects the trend of the wholesale business to be improved from the first half of the year.
For the first nine months of the year, TBC reported net income of $23.9 million, from $19.3 million last year. Net sales grew to $947.8 million from $831.9 million.