ITASCA, Ill. (Oct. 30, 2003) — Costs related to outsourcing its wholesale business in Canada pushed Midas Inc. to a loss of $11.8 million in the third quarter, the company said.
In the quarter, the automotive service chain recorded charges of $15.9 million relating to outsourcing the wholesale work to Uni-Select in Canada. Midas reported substantial charges in the second quarter for a similar arrangement with Auto Zone in the U.S. The company had announced in April that it would exit the wholesale distribution business.
The company said 1,078 of its 1,680 U.S. shops are now receiving weekly shipments from Auto Zone distribution centers around the country. The transition to Uni-Select for the 225 Midas shops in Canada began the week of Oct. 20, and 54 Midas shops are now receiving shipments from Uni-Select warehouses.
Last year, Midas reported net income of $1.1 million for the third quarter.
“The third quarter results are in line with our expectations,” said Alan Feldman, president and CEO.
He called 2003 "a transition year for Midas, as we restructure our operations to enable the company to focus on the profitable franchise retail business."
In the quarter, the company closed its 12 remaining Parts Warehouse Inc. sites and reduced the number of its company-owned stores to 73 from 90. The company plans to close all but one of its distribution centers by the end of 2003.
Also in the quarter, Midas announced an agreement with Bridgestone/Firestone for Midas' 1,900 outlets in North America to sell Bridgestone- and Firestone-brand tires. The company expects a “significant” number of its franchise dealers to offer these tires by the end of the first quarter.
Sales in the third quarter were $77 million compared with $86.4 million last year.
For the first nine months of the year, Midas reported sales of $229.4 million, down from $258.2 million last year. The company also reported a net income loss of $50.9 million for the nine-month period, compared with net income of $6.8 million last year.