Tire and auto service chain Pep Boys—Manny, Moe & Jack has agreed to buy the assets and assume the property leases of Florida Tire Inc. to help solidify Pep Boys' presence in the Orlando, Fla., area and expand its business relationship with Goodyear.
Orlando-based Florida Tire is a predominantly Goodyear dealer with 10 outlets in central Florida.
“This acquisition fits squarely within our stated strategy to grow through service and tire centers,” said Pep Boys CEO Mike Odell in a prepared statement. The 10 Florida Tire outlets will complement eight Pep Boys Supercenters already operating in the Orlando area, he added.
The $4.35 million deal, expected to close Oct. 30, will boost Pep Boys' annual sales by more than $14 million and be accretive to earnings in its first year of operations, the Philadelphia-based company said.
With this deal, the chain now expects to open 25 Pep Boys Service & Tire Centers in fiscal 2009, ahead of its original target of 15 stores. Through individual location and small-chain acquisitions, Pep Boys is now shooting for the high end of its previously announced targets—40 new locations for fiscal 2010 and 80 for fiscal 2011.
Joe Cirelli, senior vice president of corporate development for Pep Boys, said the purchase of Florida Tire marks the first time that Pep Boys has bought an existing company to integrate it into its “hub and spokes” business model. That plan pairs existing Pep Boys Supercenter “hub” stores with a surrounding network of smaller “spoke” stores to leverage existing inventories, distribution and advertising dollars.
Before buying Florida Tire, all of Pep Boys' spoke stores have been either built from the ground up or were unused locations that Pep Boys retrofitted.
Mr. Cirelli said Pep Boys became interested in Florida Tire because its stores had very little overlap with other Pep Boys locations in the Florida area and because the company was very impressed with the way Florida Tire ran its business.
Florida Tire owner Doug Bolt—who established the dealership in 1987 and built it into a 10-store chain over the following 22 years—will join Pep Boys to serve as a liaison between the retail chain and Goodyear. Mr. Cirelli said historically Pep Boys has not done a lot of business with Goodyear, and given Mr. Bolt's experience working with the Akron-based tire maker, it seemed like a good opportunity.
“It took a lot to get me off my president of Florida Tire chair to go work for somebody,” Mr. Bolt said. “I've been my own boss for 30 years.”
At first, Mr. Bolt—who told Tire Business that Florida Tire will always have “a warm place” in his heart—had no interest in selling to Pep Boys, but “management and responsibility pressures were mounting.”
“We grew for five years very nicely and (selling the business) gave me an opportunity to grow further and shrug off a lot of responsibilities that I felt need to be done—day-to-day things—but it allowed me to grow individually and grow with (Pep Boys),” Mr. Bolt said.
Mr. Bolt added that a “huge component” of his decision to sell his chain to Pep Boys was when the company revealed it wanted him to stay on to help build a stronger relationship with Goodyear. “I think that's what really won me over,” he said.
Mr. Bolt's career in the vehicle service industry dates back to 1973 when he won first place in New Jersey in a “Plymouth Trouble Shooting Contest.” He worked as an automotive technician at his uncle's service station in that state before moving on to a different service station, where he was promoted to assistant shop manager after seven years.
In 1979, he purchased his first business, a small service station in New Jersey with two bays, which soon developed a reputation for top quality auto service and repairs. He moved his family to Florida in 1987 and opened his first Florida Tire outlet.
Among the stores that Mr. Bolt sold is one in Celebration, Fla., a planned community near Orlando that was the vision of Walt Disney when he was developing Walt Disney World in the late 1960s.
That store—resembling a Kentucky horse stable, complete with a tin roof, cupolas, barn doors and gooseneck-style lighting—was designed to fit into Celebration's architecture. The 10-bay outlet has on display a 1/14th-scale replica of a Goodyear blimp built to withstand hurricane-force winds.
Pep Boys said it plans to retain all 111 Florida Tire employees in their current roles. Mr. Bolt will continue to work from Orlando and will report to Pep Boys' Ray Griffin, who will serve as vice president and general manager of the former Florida Tire outlets and oversee day-to-day operations.
Mr. Bolt added that all of his former locations will continue to offer the same Goodyear automotive products and warranties and will integrate Pep Boys' Futura and Cornell private brands. Cooper Tire & Rubber Co. makes Pep Boys' Cornell, Futura and Definity private labels, with Hankook Tire America Corp. making a select line of the latter brand.
The stores also will continue to offer the same automotive maintenance and repair services it did under Mr. Bolt's ownership.
“We do a pretty darn good job of running our service department and (Pep Boys) would like to learn a little bit of how we do that,” Mr. Bolt said. “If we were to match up their service department to ours, I think there's a lot of places we outshine them, and one of the messages that was given to our people over the last few days was, 'You guys really do a lot of things right, we need to learn how you're doing them, you need to teach us.'”
In addition to his role with Pep Boys, Mr. Bolt said he will continue to have a hand in the business operation of his former stores and also will continue to operate his franchised Mighty Auto Parts wholesale business. The company operates one warehouse in Orlando that serves the central Florida area.
Pep Boys operates more than 570 retail outlets with approximately 6,000 service bays in 35 states and Puerto Rico. Mr. Cirelli said the company has continued interest in acquiring other tire and automotive service stores in its various markets.
Special Projects Reporter Bruce Davis contributed to this report.
Copyright 2009 Crain Communications Inc. All Rights Reserved.