MEMPHIS, Tenn. (April 27, 2004) — TBC Corp.'s stepped-up integration of 225 National Tire & Battery (NTB) stores—finished more than two months ahead of schedule—carried higher costs that pulled on net income despite a record 69.1-percent increase in first quarter sales.
TBC reported net income for the quarter of $5.98 million, up 9.3 percent from $5.47 million last year. Selling, administrative and retail store expenses were $131.2 million, up almost 150 percent from last year's $53.1 million, leaving pre-tax operating income 9.3 percent ahead of the 2003 quarter at $9.35 million.
TBC reported record sales at $433.8 million, up from $256.5 million last year. Same store sales for TBC's retail segment grew 6.2 percent in the quarter, and total tire unit shipments increased 32 percent.
“During the quarter, we carried out an aggressive conversion and integration plan for the 225 (NTB) stores acquired from Sears (Roebuck and Co.) late last year,” said Larry Day, TBC president and CEO.
“We decided to step up our integration efforts so we could more quickly begin to realize the benefits of selling our private brand tires and offering a greater number of mechanical services at these locations. Although we incurred greater costs during the first quarter as a result of this strategy, we believe these costs should be more than offset during the second quarter by improved operating results in the converted stores.”
Mr. Day said TBC's company-owned retail system sustained only minimal business disruptions though personnel were involved in the NTB conversion.
TBC also reported “strong” sales in its wholesale business and said its Big O Tires Inc. franchised retail network “continued to perform well, spurred by some new sales initiatives” during the quarter.
The Memphis-based company also operates retail centers under the Tire Kingdom Inc. and Merchant's Tire & Auto Centers Inc. banners.