ITASCA, Ill. (Aug. 4, 2005) — Midas Inc.'s comparable store sales in North America were up 2.5 percent in the second quarter though the company posted a loss overall because of charges related to its exit from the exhaust manufacturing business.
Itasca-based Midas reported a net loss of $2.5 million, compared to a gain of $2.6 million for the same period last year. Sales fell to $50.3 million from $52 million, and retail sales at Midas' 70 company-owned stores in the U.S. were $9.6 million in the quarter. Midas oversees about 1,600 shops in the U.S., most of which are franchise outlets.
Midas reported restructuring charges of $9.5 million for severance costs for exhaust manufacturing and distribution employees plus the write-down of some assets. Other items also affected the bottom line. This year Midas signed an agreement for AutoZone to supply its shops with Arvin-brand exhaust products, and in late 2003 Midas signed a deal for some outlets to become authorized Bridgestone/Firestone dealers.
“We are generally pleased with the performance of our core franchising and real estate business and the continuing momentum in retail sales, as comparable shop retail sales in U.S. shops were up by 2.5 percent in the quarter and the ninth consecutive quarter of increases,” said Alan Feldman, Midas' president and CEO.
For the first half of the year, Midas posted net income of $100,000 from breakeven in 2004. Sales in the half grew slightly to $99.8 million vs. $98.9 million a year before.
Midas reaffirmed its 2005 guidance of operating income of $24 million to $26 million, excluding losses from manufacturing and special charges. It estimated it will lose approximately $4 million operating the exhaust manufacturing and distribution business in 2005.
“The company has regained its financial strength and we will build on this momentum as we continue to grow retail sales in existing Midas shops as well as prepare to add new franchised shops to the North American system in the future,” Mr. Feldman said.