American Tire Distributors Holdings Inc. (ATD) plans to sell the 37 retail stores it acquired last year as part of its acquisition of Am-Pac Tire Distributors Inc., ATD said in its fiscal 2008 10K filing with the Securities and Exchange Commission.
As these stores are not core to the company's business, management's intention is to divest of these stores during 2009 and thus, has classified these stores as held for sale within the accompanying consolidated balance sheet at Jan. 3, 2009, ATD said in the filing.
The stores, operating under the Tire Pros umbrella, are in Southern California and the St. Louis metropolitan area. The 26 stores in St. Louis were part of Autotire Car Care Centers until Am-Pac acquired that firm in 2005. Those stores go to market as Autotire Tire Pros.
The stores generated approximately $55 million in sales revenue last year, ATD said, with roughly 335 employees.
Also in the 10K filing, ATD reported a sevenfold increase in net income last year to $9.7 million on 4.4-percent higher sales, improved gross profits and lower interest expenses.
The sales increase to $1.96 billion was driven by the pass-through of manufacturers' price increases ($115.9 million), new revenue from acquisitions ($73.2 million) and a 53-week fiscal year, but were offset by lower unit sales ($98.8 million). Operating income rose 23 percent to $81.4 million, or 4.2 percent of sales.
The company made no projections for fiscal 2009 other than to say integrating Am-Pac's distribution business is a top priority. ATD acquired Am-Pac last December for $75 million.
Am-Pac generated wholesale-related revenue last year of $264.5 million and retail-related revenue of about $55 million, ATD said in SEC filings, but was $9.6 million in the red for the first nine months of the year.
Regarding the firm's 2008 performance, ATD said it outperformed the market and therefore gained market share. ATD's unit sales fell 2.5 percent last year vs. an 8.7-percent drop by the market as a whole, based on Rubber Manufacturers Association data.
However, ATD's performance was aided by the first-time inclusion of sales by a number of acquisitions and the extra week of a 53-week fiscal year. The company noted its sales of high-profit-margin performance tires increased 14.3 percent last year vs. an industrywide slump.