M&A time — Discount's top retailer but Monro's buying spree rolls on
AKRON (Oct. 31, 2014) — What took center stage in the tire retailing arena in the past year? That would have to be M&A — mergers and acquisitions — with more than 100 retail stores changing hands in more than a dozen transactions.
Monro Muffler Brake Inc. continued as the king of M&A, adding 61 stores in the past year through five acquisitions, moving into Florida and Michigan for the first time.
Pep Boys – Manny, Moe & Jack added 19 locations but lost its top executive, Mike O'Dell, who resigned Sept. 26 as the firm fell into the red in the first half of its current fiscal year. The Philadelphia-based auto service, tires and parts retailer named John Sweetwood, a director since 2002, to replace him as interim CEO.
Rent-to-own tire/wheel chain Rent-A-Wheel/Rent-A-Tire expanded its network by nearly a third in the first quarter by buying the assets of the Rimco tire-and-wheel leasing business — comprising 32 company-operated and franchised stores in 11 states — from rent-to-own specialist Aaron's Inc.
Cerritos, Calif-based ATV Inc./American Tire Depot was in the mix as well, adding 18 stores both via acquisition and new constructions, expanding its network to 72 locations throughout southern California.
Discount Tire/America's Tire regained No. 1 bragging rights by opening 28 stores over the past 12 months, expanding its network to 893 stores in 28 states, including its first stores in the U.S. Heartland, in Iowa, Kansas, Missouri and Nebraska.
Scottsdale, Ariz.-based Discount Tire started its push into the Heartland in June 2013 with two stores in Missouri, in the Kansas City metro area, followed by stores in Davenport and Coralville, Iowa, in the third and fourth quarters. The dealership has added stores this year in Lawrence, Kan., and Omaha, Neb. — where it now has five stores — continuing the firm's strategy of opening stores in clusters.
Its most recent opening was in September in Cedar Rapids.
Rob Wise, regional vice president for Discount Tire, said on several occasions the dealership's main focus is to service the communities where it has put down roots.
“The need for tires is always growing and it is more important than ever…to have a reliable tire expert to educate them about the basics of tire safety,” he said in prepared statements.
Discount Tire regained the top spot among tire retailers in North America in part because TBC Corp.'s Retail Division re-franchised dozens of Big O and/or Midas outlets, as well as consolidated its Retail Division — Tire Kingdom, National Tire & Battery (NTB) and Merchant's Tire brands — to 769 stores from roughly 800 a year ago.
Together with the company-owned Big O and Midas locations, TBC's adjusted retail holdings is 810 stores. TBC's total reach in the retail aftermarket, however, exceeds 2,400 stores when the Big O Tires and Midas International franchised outlets are considered.
Monro's acquisition binge since October 2013 added the Tire Choice Total Car Care brand to its portfolio of company names. Starting with the 35 Tire Choice stores in south Florida it acquired in July, Monro sees the potential for as many as 150 retail stores in the Sunshine State using both the Tire Choice and Monro brand identities.
Dan Hennelly, owner of the Tire Choice stores through Hennelly Tire & Auto Inc., will consult with Monro for at least three years on site selection/development of new locations, according to Monro President and CEO John Van Heel.
Monro slotted in at No. 3 with 469 tire-centric stores; it also operates 544 Monro Muffler-badged outlets, for a total network reach of 1,013 locations.
Les Schwab Tire Centers Inc. and Pep Boys – Manny, Moe & Jack round out the Top 5, with 384 and 230 company-owned tire stores, respectively. Both have extended reach, however, through Les Schwab's 64 franchised outlets and Pep Boys' 571 traditional auto-parts-focused locations.
New to the top echelon of America's top retailers is Express Oil Change & Service Center L.L.C., the Birmingham, Ala.-based operator of the Express Oil franchise network. The firm is morphing its business model with the addition of a tire retail component under the “Tire Engineers” identity.
Express Oil acquired Tire Engineers of Birmingham in February and promptly set about recasting its 100-plus company-owned Express Oil outlets as quick lube and tire retail locations.
Express accelerated the process this summer with the acquisition of Epperly Tire Co., the Columbus, Ga.-based dealership with four outlets. Express Oil Senior Vice President Josh Henderson said the acquisition was both strategic and opportunistic.
Express Oil intends to keep operating Epperly Tire stores under that name, owing to its strong local identity, he said.
Epperly Tire founder and owner David Epperly sold his entire interest in the dealership 25 years after founding it and is no longer involved in the business.
Tire Business could not reach Mr. Epperly for comment.
Express Oil plans to keep Epperly Tire's “Changing Oil, Changing Lives” philanthropic effort going, Mr. Henderson said, noting that Express Oil has had a similar charitable program of its own for the past several years.
Others growing measurably in the past year were:
Clark Tire & Auto Service of Hickory, N.C., which added six stores via acquisition to expand to 24 locations throughout the Smokey Mountains of North Carolina.
Mavis Discount Tire added nine stores in the past year, expanding its network of Mavis Tire and Cole Muffler & Brake outlets to 155 throughout Connecticut, New Jersey, New York, Massachusetts and Pennsylvania, predominantly in New York and clustered around New York City.
The Millwood, N.J.-based dealership also lists a dozen locations on its website under the heading: “Coming Soon.”
Other individual retailers' moves in the past year worth noting:
Sullivan Tire & Auto Service has opened and closed a number of outlets in the past year to extend its network of retail stores to 66 throughout New England.
The most recent opening was in Saugus, Mass., where Sullivan converted a 6,400-sq.-ft. former Meineke Car Care franchise outlet into a Sullivan store with nine service bays. The outlet is Sullivan's 36th in Massachusetts. Saugus is a town of about 26,000 in Essex County north of Boston.
The Norwell, Mass.-based dealership also closed two stores — in Watertown, Mass., where the lease became too expensive, and in Biddeford, Maine, where it was determined the former Haley's Tire location acquired in 2012 was too close to an existing Sullivan store.
Plaza Tire Service reopened a store in Kennett, Mo., that had been rebuilt after being destroyed by fire in February.
The outlet originally was built in 2002. After the fire, which was determined to be accidental, the dealership demolished the burned-out structure and built a larger facility with six service bays, while continuing to offer tire and auto services at a temporary site a few blocks down the same street.
All five Kennett store employees remained employed through the reconstruction process to avoid any interruption in customer service, the company said.
Plaza Tire Service operates 57 locations in Missouri, Illinois, Kentucky and Arkansas.
Belle Tire Distributors Inc. relocated its Flint, Mich., retail store to a renovated 10,000-sq.-ft. building, which it said offers improved accessibility and customer-focused features like free Wi-Fi and mobile device charging stations.
Allen Park, Mich.-based Belle Tire said the new store houses eight service bays, including a full-alignment pit and a mezzanine warehouse designed to store more than 3,000 tires.
The relocated store, in southwest Flint, keeps Belle Tire's presence in the area at five locations; the others are in Fenton, Grand Blanc and Burton, along with a second store in Flint. The new store is part of Belle Tire's plan to renovate all of its Michigan and Toledo, Ohio, stores, an initiative it began in the spring of 2012.
“Belle Tire continues to be an industry leader by differentiating ourselves from our competitors with auto care options that include everything from tires and custom wheels to auto repair and glass services,” said Jeff Kruse, senior vice president of retail operations. “And now we are aggressively working to make our consumers' experience match our robust menu of products and services.”
Belle Tire also recently promoted Don Barnes III, grandson of dealership patriarch Don Barnes Sr., to president of retail operations.
Mr. Barnes, 31, will be responsible for the day-to-day operations at all retail stores and will oversee Belle Tire's commitment to “top-shelf” customer experience, lowest tire price possible standards and ensuring Belle Tire's place as one of Michigan's outstanding family companies, the dealership said in a press release.
“The continued success of the company is my highest priority,” he said. “We want to have an even greater impact than years past, and I look forward to creating more growth and opportunities here at Belle Tire.”
He had been vice president, retail, since October 2012, and prior to that he was marketing director from June 2008. Mr. Barnes started with his family's company in September 2005 as operations and marketing manager after earning a bachelor's degree in marketing from Michigan State University.
Flynn's Tire & Auto Service opened a 19th retail location, in Niles, Ohio, that pairs a retail tire store with an auto parts outlet in what Flynn's calls an “efficiency-type footprint” designed for convenient tire service as well as auto repair and maintenance services, according to the dealership.
Delta World Tire Co. opened its 16th location — a newly constructed 9,600-sq.-ft. facility in Hattiesburg, Miss.
The retail outlet, the New Orleans-based dealership's seventh location in Mississippi, features 10 service bays, a showroom and is managed by Mike Carlisle Jr.
The Hattiesburg location is the northernmost of Delta World's seven stores in Mississippi, roughly 60 miles north of the next closest one, in Picayune. The others are all in the Gulf Coast cities of Biloxi, Gulf Port (two locations), Pascagoula and Waveland.
Pugh's Tire & Service Centers opened a store in Williamston, its sixth in and around its Greenville, N.C., base, and the dealership is looking to add a seventh in the near future.
Capital Tire Group sold four of its nine Tom's Tire retail stores in the Toledo, Ohio, area to Goodyear, which converted them to Goodyear Auto Service Centers.
The stores — three in Toledo and one in Perrysburg, Ohio — are Goodyear's first company-owned retail outlets in this northwest Ohio market.
Financial terms of the deal were not disclosed. Goodyear said it offered the stores' 30 employees the opportunity to continue under its ownership.
Capital Tire continues to operate five Tom's Tire retail stores in the same area along with six commercial locations in western Ohio and eastern Indiana and nine warehouses in Indiana, Michigan and Indiana.
Fountain Tire converted eight Royal Tire-brand affiliated dealership locations in northern Ontario to the Fountain Tire banner to help support growth of the Fountain Tire brand across Canada.
The conversion affected Royal Tire's consumer and commercial tire locations in Sault Ste. Marie, Sudbury, Timmins, Marathon, Huntsville, New Liskeard and Wawa, Ontario, Fountain said. With these conversions, Fountain Tire will have 163 branded locations in six provinces, predominantly in western Canada.
At the same time, Fountain Tire began transitioning the Royal Tire stores to its shared ownership structure, which allows store managers who demonstrate superior service the opportunity to obtain a 50-percent stake in their operation.
New to the Tire Business rankings this year are:
Express Oil Change/Tire Engineers at No. 12, with 102 outlets flying the Tire Engineers flag, including the Epperly Tire stores acquired recently.
Leeds West Group at No. 25, with 50 Big O tires and Midas International franchise locations.
Pete's Tire Barns — the Orange, Mass.-based, predominantly commercial dealership, has been increasing its retail content the past few years — tied for No. 55 with 19 outlets.
BBAC Partnership Group, the Woodland Park, Colo.-based Big O Tires franchisee headed by Scott Koldenhoven, and Car-X Enterprises, the franchisor of the Car-X Tire & Auto business, both tied at No. 75 with 13 company-owned locations.
Clark Tire Co. Inc. of Versailles, Mo., Martino Tire & Auto Service of Miami and TF Tire of Tulare, Calif., all tied for 90th with 11 stores.
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