Sector: Retail
Organised Retail in Tyres: Global Examples
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Sep 2013
Index
US Europe ROW Transactions 3 12 16 20
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Global Tyre Retail
US
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Discount Tire (unlisted)
Started in 1960 Claims to be the worlds largest tyre retailer, with over 850 stores The company remains privately owned Has stuck to the knitting sells only tyres and accessories like alloy wheels
Store Count - Discount Tire
790 850
418 209 1 1960 7 1970 36 1980 1990 2000 2010 2013
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Global Tyre Retail
TBC Corporation (was listed, now acquired)
Traces origin to 1956, then called Cordovan Associates. Cordovan Associates changed its name to Tire & Battery Corporation in 1972 Brands include Tire Kingdom, National Tire and Battery, and franchised stores under Big O Tires. Has close to 850 outlets Markets and sells nine proprietary brand of tires Also does tyre distribution through Carroll Tire wholesale distribution centers, where it markets to independent tire dealers across the United States. In 2005, TBC Corporation was purchased by Sumitomo Corporation of America (SCOA) in a $1.1bn transaction
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Global Tyre Retail
Les Schwab (unlisted)
Started in 1952, in Pinedale, Oregon Close to 450 stores, present in nine states in Western USA Employs 7000+ people, highly regarded for its employee friendly policies In addition to tires, the company sells a variety of other auto parts and auto related services, including brakes and shockers. Privately held Revenues reportedly around $1.6bn
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Global Tyre Retail
Monro Muffler Brake and Service Inc (listed)
Started in 1952, listed in 1991 935 stores in 22 states, of which, 397 tire stores are tire stores, and the rest are service stores Has the following business areas: Tyres (42%), Maintenance (29%), Brakes (15%), Steering (10%), Exhaust (4%) 2012 turnover - $686mn, EBIDTA margin 16.8%, Net Margin 8% Tyres 42% of total sales, from 434 stores. Has done 24 acquisitions in 11 years to build the tyre vertical. Aiming for 1300 tire stores Market cap: $1.38bn. Valuation (www.finance.yahoo.com)
EV/EBITDA: 14x Price/Sales: 1.8 P/E: 32 (trailing) P/E (FY15): 20x ($mn) Revenues FY11 637 FY12 687 FY13 732
Growth (%)
EBITDA Margin (%) Net Income
12.8
101 15.9 46
7.8
116 16.9 55
6.6
101 13.8 43
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Global Tyre Retail
The Pep Boys (listed)
Started in 1921 Has 750+ stores in 35 states of US, and 19,000 employees 12.8 million sft of retail space, 7300 service bays Apart from tires, provides a variety of automotive repair services including: Scheduled maintenance services, oil changes and tuneups, brake repair and replacement, air conditioning, financial services Tires are 19% of revenue, other parts and accessories are 60%, and service is 21% Market cap: $639mn. Valuation (www.finance.yahoo.com)
EV/EBITDA: 7.8x Price/Sales: 1.15x P/E: n.a P/E (FY15): 18x ($mn) Revenues Growth (%) EBITDA Margin (%) Net Income 83 4.2 36 FY11 1989 FY12 2063 3.7 66 3.2 29 FY13 2091 1.4 12 0.6 13
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Global Tyre Retail
TCi Tire Centers (unlisted)
A wholly owned subsidiary of Michelin North America Inc. 58 retail locations 77 wholesale distribution centers 10 retreading plants Has two divisions: distribution and commercial.
The distribution division serves passenger and light truck tire retailers across the country. TCi supports its truck and earthmover customers from its 68 commercial centers located throughout the United States.
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Global Tyre Retail
S&S Tire
Started in 1974 Current size:
8 Retail Tire Stores 18 Commercial Truck Tire Centers, 3 Tire Retreading Plants, 10 Wholesale Tire Distribution Centers Over 1 million square feet of inventory space
Does business in 15 states.
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Global Tyre Retail
10
Tire Distribution Systems (TDS)
44 locations in 8 states Formed in 1996, when Bandag, worlds largest supplier of retreading materials, acquired 100 percent interests in five Bandag dealerships through a newly formed subsidiary, Tire Distribution Systems, Inc. In 1996, these dealerships had aggregate pre-tax earnings of $16 million, net sales of approximately $366 million Aggregate cash purchase price of the transactions was approximately $158.5 million In 2006, Bandag itself got acquired by Bridgestone Americas Holding, Inc., the U.S. subsidiary of Japans Bridgestone Corporation
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Global Tyre Retail
11
Europe
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Euromaster
Fully owned subsidiary of Michelin Started in the 1967 in UK, known as ATS then. In 1991, the brand Euromaster is created, ATS network became ATS Euromaster. In 1992, the first center branded Euromaster is opened in France Network now present in 17 countries, and over 2200 outlets Key countries:
UK: 476 France: 408 Germany: 352 Spain: 350 Italy: 105 Netherlands: 101 Sweden: 76
In 2011, Euromaster reported turnover of 1,872m, and had 11,500 employees Sells over 9 million car tyres per year, of all brands (not just Michelin)
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Global Tyre Retail
13
Kwik Fit
Started in 1971 1,218 directly-managed tyre fitting centres in the UK, France and Holland. Market leader in UK and Holland In 1995 Kwik Fit Insurance Services was launched to offer Kwik Fit branded motor insurance on behalf of a panel of leading insurance companies. The Groups turnover in 2010 was 875 million, of which the Groups major business, Kwik-Fit UK, with 673 centres, represented 561 million
Ownership changes at Kwik Fit 1999: Acquired by The Ford Motor Company for more than $1billion 2002: Ford divests to CVC Capital Partners 2005: Acquired by PAI Partners, which sold sold its German subsidiary PitStop and also sold Kwik Fit Financial Services to Fortis UK. 2011: Acquired by Itochu Corp
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Global Tyre Retail
14
Vianor Tyres
Owned by Nokian Tyres, a leading Nordic tyre manufacturer Vianor is the biggest tyre chain, in terms of size and reach, in the Nordic countries, Russia and the CIS countries. In year-end 2012, the chain comprised 1,037 sales outlets in 26 different countries in Nokian Tyres core market regions. The Nokian Tyres Group owns 182 Vianor outlets, while the rest operate on a franchising/partnership principle. In 2012, the chain grew with 127 new outlets. Net sales in 2012 was Euro 315 mn Apart from tyres and related accessories (like rims), its outlets sell other car parts like: car batteries, shock absorbers, exhaust pipes, oils and other car parts. Its service selection includes tyre storage, oil change, air conditioner service, brake adjustment and adjustment of steering angles.
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Global Tyre Retail
15
RoW
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Indian Dental Services Market
Canadian Tire Corp (listed)
Started in 1922 490 tire outlets, all in Canada Has moved much beyond tire retail, into areas like gasoline retail, home products, garments Does not disclose tire revenue separately. Total retail revenue was C$10.4bn in 2012. Market Cap: $7.5bn Valuation (www.finance.yahoo.com)
EV/EBITDA: 12x Price/Sales: 0.68 EV/Sales: 0.88 P/E: 15 (trailing) (C$mn) Revenues Growth (%) EBITDA Margin (%) Net Income 2011 10,387 2012 11,427 10.0 803 7.0 499
762 7.3 467
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Global Tyre Retail
17
Beaurepaire (unlisted)
Started in 1922 Australia's leading tyre retailer, with approximately 300 stores nationwide. Merged with Dunlop Group in 1980
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Global Tyre Retail
18
Bob Jane T Mart (unlisted)
Started in 1965 Has 156 outlets currently through Australia Apart from tyres, sells car batteries as well
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Global Tyre Retail
19
Transactions
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Japanese conglomerates entering US, Europe
TBC Corp Sumitomo Corporation
In 2005, TBC Corporation was purchased by Sumitomo Corporation of America (SCOA) in $1.1bn transaction Was listed on Nasdaq prior to this
Kwik Fit many Itochu Corp
Sold in 1999 by the promoter to the Fort Motor Company for US $1.6b. Ford sold in 2002 to CVC Capital Partners In 2005, Kwik Fit was sold for 800m to PAI Partners, a leading French-based private equity firm. The Kwik Fit Financial Services arm of the business was sold by PAI to Fortis Insurance UK, now Ageas (UK) Limited, for a figure of 215m in 2010, while the tyre retailing and service centre business was sold to ITOCHU Corporation for $1bn
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Global Tyre Retail
21
Acquisitions by Tyre Cos
Pirellis several acquisitions
Dckia Holding AB, Sweden, 2011: Acquired Swedens multi-brand tyre distribution from the private equity group Procuritas Capital and minority shareholders for 625 million kronor, or approximately 70 million euro. Campneus, Brazil, 2012: Acquired 60%, 54 outlets Abouchar, Brazil, 2013: Abouchar had 29 outlet
Michelin - TCi
Michelin acquired USAs largest commercial tyre retailer and retreader TCi in 1999 At that time, TCi had revenues of around $500mn, from 163 locations
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Global Tyre Retail
22
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Global Tyre Retail
23
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