In its first full quarter since finishing the integration of National Tire & Battery, TBC Corp. said it already has reversed the 225-store chain's comparable store sales slide of the past three to four years.
Overall, TBC's same store sales in the retail segment grew 1.1 percent in the second quarter. Larry Day, president and CEO, said in a conference call with analysts that Tire Kingdom Inc.'s performance was better than that figure, NTB was slightly positive and Merchant's Inc. was about the same or less.
The company-operated retail segment also had mixed regional performance, with Texas and Florida strong while the Northeast was weaker.
Mr. Day said the company also has moved private label tires into the NTB stores, whose first-phase integration was completed in early April. Private label tires now make up 27-28 percent of NTB's sales, more than 45 percent at Tire Kingdom and approximately 40 percent at Merchant's.
Mr. Day said he thinks 50 percent is a reasonable target for all three networks. He added these figures could be boosted in the future as tire manufacturers give the growing TBC opportunities to sell exclusive lines of flag brand products.
``Overall I'd give us a B+ at this point,'' Mr. Day said of TBC's progress with the integration. He noted that TBC had some minor ``distribution miscues'' early on getting private label tires into NTB.
For the second quarter, TBC reported net sales of $456.5 million, up 38.8 percent from $328.8 million a year ago.
Net income rose 14.5 percent to $9.1 million from $8 million last year.
TBC's total unit tire sales increased 18.4 percent compared with preliminary industry shipments of 6.9 percent. Revenue from the retail segment hit $294.4 million, and wholesale sales were up about 13 percent.
In the first six months of the year, TBC reported sales of $890.3 million, up 52.1 percent from $585.4 million last year.
Total unit tire sales increased 24.8 percent compared with the industry estimate of about 7.3 percent. Net income for the half grew 16.2 percent to $14.6 million from $12.6 million a year ago.
Company executives said TBC's debt-to-capital ratio was 51.4 percent by the end of the second quarter due primarily to high inventory levels. Executives predict the ratio will be closer to 45 percent by the end of the year.
Mr. Day said the second quarter's strong results came in spite of a ``challenging'' retail environment.
``I believe that consumers are stretching out their tire usage and delaying purchasing new tires until the last minute,'' he said. ``Fortunately they cannot defer tire purchases indefinitely.''
He added private label sales should be strong as consumers try to stretch their money.
Mr. Day said the company is on track to deliver 20 new stores to its company-owned system by the end of the year, 13 of which will come in the second half.
TBC also is continuing its plans to grow NTB in the Texas, Illinois and New England markets, with the ``first wave'' of new stores coming on board in 2005.
New store development at the franchise Big O Tires Inc. got off to a slow start this year, Mr. Day said.
``We remain cautiously optimistic that we will deliver the announced 25 to 30 new stores this year,'' he said.
TBC also recently moved its corporate headquarters to Palm Beach Gardens from Memphis, Tenn.
Mr. Day said the private brands division and its warehouse, the purchasing division and customer service division-which is part of the private brands division-remain in Memphis.
TBC's retail subsidiary Tire Kingdom is based in Juno Beach, Fla., and its Big O subsidiary is based in Englewood, Colo.