Higher raw materials prices, slow sales and this summer's hurricanes impacted financial results for tire industry-related companies.
Pep Boys-Manny, Moe & Jack reported a 4-percent increase in net sales for the third quarter as retail sales grew but service sales-including tire sales-fell.
The automotive chain reported sales of $559.2 million, up from $537.7 million a year ago. Comparable sales rose 4.1 percent. Retail sales, which includes do-it-yourself and commercial sales, rose 10.3 percent while service sales, which includes labor, installed merchandise and tires, fell 3.4 percent.
Pep Boys reported net earnings of $7.81 million, down from $13.4 million last year.
``While the current quarter's sales and margins in our service and tire business were unacceptable, we are making concerted and significant strides in rebuilding our service capabilities and infrastructure,'' said Larry Stevenson, chairman and CEO.
``It will, however, take us a number of quarters before that progress is apparent.''
For the nine months, Pep Boys reported sales of $1.72 billion, a 7.1-percent increase from $1.6 billion a year ago. Comparable sales rose 7.2 percent. Retail sales grew 15 percent, while service revenue fell 2.5 percent. The company reported net earnings of $38.7 million-improved from a loss of $7.5 million last year.
TBC reported a net sales jump of 31.5 percent in the third quarter as net income grew 9 percent.
The Palm Beach Gardens, Fla.-based marketer reported net sales of $476.5 million, up from $362.4 million last year. Net income in the quarter improved to $10.9 million from $10 million last year.
TBC said about 90 percent of its Florida stores were affected by Hurricanes Charley, Frances, Ivan and Jeanne. The company reported an overall negative impact of 12 cents per diluted share from the hurricanes.
TBC said it continued to gain market share in the quarter with a 9.9-percent jump in unit tire sales compared with the 3.6-percent decline in unit shipments by tire makers. Same store sales in TBC's retail segment fell 1.7 percent, primarily from the hurricanes' impact.
Officials said the sales increase came primarily from the inclusion of the recently acquired NTB business, which accounted for $109 million of the $113 million of additional retail revenue. Total retail revenue in the quarter was $304 million. Wholesale sales in the quarter were up about 1 percent to $172.5 million.
For the nine months, TBC reported sales of $1.37 billion, up 44.2 percent. Total unit tire sales increased 19.1 percent, and same store sales grew 1.7 percent. Net income hit $25.6 million, up 13 percent.
TBC had at quarter's end 1,171 stores in its retail network-602 company-owned Tire Kingdom Inc., Merchant's and NTB stores plus 569 franchised Big O Tires Inc. outlets. The store count represents a 28-percent increase over last year.
TBC expects to add 30 to 60 Big O stores and 20 to 25 new Tire Kingdom stores next year.
Bridgestone Corp. reported strong growth in most of its geographical operating regions through the first nine months of fiscal 2004, yielding net income of $724 million on sales of $15.8 billion.
This is the first time the tire maker has reported financials for the nine months, so comparisons with earlier years are not possible.
Bridgestone Americas Holding Inc. recorded operating income of $235 million on sales of $6.8 billion, as passenger, light truck and medium truck tire sales in North America were strong in both the replacement and original equipment markets.
In addition, sales and earnings benefited from strong performances in other segments. The strong business trends offset the adverse effect of rising raw materials costs.
In Japan, Bridgestone recorded operating income of $726 million on sales of $6.8 billion, as domestic sales were up but exports were down.
At Bridgestone/Firestone's Nov. 2 retailer meeting during the Specialty Equipment Market Association Show in Las Vegas, BFS Chairman and CEO Mark Emkes said the Tokyo parent company is projecting it will finish 2004 with net income of $959 million and sales of $21.8 billion. Operating income is expected to reach $1.71 billion.
Mr. Emkes said Bridgestone/Firestone's North American operation still isn't profitable, largely due to rising raw material and oil costs. He did not provide figures but said the Latin American and Diversified Products units are expected to post profits in the Americas for 2004.
He noted that BFS's sales through its Family Channel dealer network have increased by 1 million units over 2003.
Yokohama Rubber Co. Ltd. suffered declines in operating and net profits in the first half of fiscal 2005 despite solid sales gains in its tire business.
For the six months ended Sept. 30, Yokohama reported operating earnings of $38.8 million, a 6.3 percent drop from fiscal 2004. Yokohama cited higher costs for raw materials and logistics for the decline.
Net earnings fell 51.6 percent to $6.5 million as a result of inventory losses and a loss on the devaluation of securities investments. Sales rose 4.3 percent to $1.71 billion.
Yokohama said tire sales were particularly strong in Europe, the Middle East and Asia outside of Japan, leading to a 6.5-percent increase in sales to $1.22 billion and a 73-percent jump in operating income, to $31.6 million.
For the fiscal year ending March 31, 2005, Yokohama management projects a 4.6-percent gain in sales, a 9.1-percent rise in operating income and a 3.2-percent drop in net income.