As Monro Muffler Brake Inc. continues to increase its stance in the retail tire business, another dealership is exiting it altogether.
Monro said it has agreed to buy Donald B. Rice Tire Co.'s five retail outlets in the Baltimore area. Terms were not disclosed for the sale, which is expected to be finalized this month. The stores have combined annual sales of about $6.5 million.
For Rochester, N.Y.-based Monro, the deal moves the company a step deeper into the retail tire market. Earlier this year, the primarily automotive service chain-which for years had focused on brakes and undercar work-acquired 34 Mr. Tire stores, also in the Baltimore market. The Rice Tire outlets will be added to the Mr. Tire division, and Monro President and CEO Robert Gross said the stores will be rebranded as Mr. Tire within about 90 days.
``Store expansion remains a significant part of our growth and profitability objectives, and the recent weak marketplace provides the opportunity to acquire businesses at advantageous prices,'' Mr. Gross said in a statement.
``We continue to evaluate attractively priced targets which would further expand our market share and be accretive to earnings in a timely manner.''
In this fiscal second quarter, tires accounted for about 20 percent of Monro's sales-a year ago they counted for about 11.5 percent.
``Our tire business is strong, profitable and growing,'' Mr. Gross told analysts.
For Rice Tire, the deal marks its refocus on the commercial tire business though retail was the first component of the dealership.
According to a statement by Rice Tire, founder Donald Rice started the business in 1933 with a Gulf Oil service station, which he expanded into the dealership. He began offering commercial and wholesale tire sales and service in 1956.
``It's painful letting the retail stores go,'' President Ken Rice said in the statement. ``I run into lots of people who tell me how many generations in their family have dealt with our automotive service stores, for which we're certainly grateful.''
The five retail stores represent 15 percent of Rice Tire's business.
``This sale will enable us to focus our resources so we can continue expanding our commercial truck tire service centers and wholesale division, with annual sales of over $40 million and 150 employees,'' Mr. Rice said.
Monro said it continues to look for acquisitions and may announce another soon. Mr. Gross said during a conference call with investors that he expects four of the next five acquisitions to be for tire stores.
The company is in a good position to further its strategy to buy out competing retail tire dealerships, officials said, because-at 25 percent-Monro's debt-to-capital ratio is the lowest in its history. Yet new acquisitions likely will be in Monro's existing markets.
``You certainly won't see us in California in my lifetime,'' Mr. Gross said.
Monro operates 603 stores and seven kiosks plus 16 dealer locations in 18 states in the eastern U.S. Monro operates sites under the names Monro Muffler Brake and Service, Speedy Auto Service by Monro, Mr. Tire and Tread Quarters Discount Tires.