Les Schwab Tire Centers for sale

Post Reply
Super S
Valued Contributor
Valued Contributor
Posts: 1687
Joined: April 1st, 2009, 9:27 pm
Has thanked: 9 times
Been thanked: 21 times
Status: Offline

Les Schwab Tire Centers for sale

Post by Super S » December 24th, 2019, 1:14 pm

It looks like Les Schwab Tire Centers is seeking a buyer:

https://www.oregonlive.com/business/201 ... -sale.html

An interesting development as Les Schwab himself previously had stated he wanted to keep the business in the family.

storewanderer
Valued Contributor
Valued Contributor
Posts: 4774
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 85 times
Contact:
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by storewanderer » December 24th, 2019, 10:37 pm

I am seeing so many long-time family held companies selling out the past couple of years. The multiples are just too high to ignore, and the recent changes in the tax law have also made selling more favorable than it would have been in the past for these closely held businesses.

Too bad Les Schwab did not pursue an ESOP which would have kept the company independent. ESOPs do not seem very popular in the west though for some reason.

It is sad, but it is a sign of the times I guess.

jamcool
Platinum Member
Platinum Member
Posts: 352
Joined: March 5th, 2009, 10:27 pm
Been thanked: 2 times
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by jamcool » December 26th, 2019, 6:43 am

I imagine Pep Boys or Discount Tire buying the chain

Super S
Valued Contributor
Valued Contributor
Posts: 1687
Joined: April 1st, 2009, 9:27 pm
Has thanked: 9 times
Been thanked: 21 times
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by Super S » December 26th, 2019, 7:59 am

jamcool wrote:
December 26th, 2019, 6:43 am
I imagine Pep Boys or Discount Tire buying the chain
Discount Tire I could maybe see as they have a presence in the area already. Pep Boys not so much. Pep Boys did operate in Oregon and Southwest Washington for a very short time before they closed. They do have a few locations as you get closer to Seattle though. It would fill in a big gap Pep Boys has, but I do know that their business model is nowhere close to Les Schwab's business model and could potentially alienate a lot of customers and employees in the process.

I wonder if they could transition to an employee-owned model like WinCo, Bi-Mart, etc.

Brian Lutz
Veteran Member
Veteran Member
Posts: 693
Joined: March 1st, 2009, 5:51 pm
Location: Lake Stevens WA
Been thanked: 9 times
Contact:
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by Brian Lutz » December 26th, 2019, 9:31 am

Pep Boys already bought and rebranded a lot of the formerly Goodyear branded tire centers (I believe these were under Elliott Tire and Service) in the Seattle metro area. They have a handful of full line stores here (one in Everett), but not enough to really compete with O'Reilly (formerly Schucks) or AutoZone in the parts business (then again, neither of those two sell tires.) In the meantime they mostly seem content to just stick to operating tire centers.

As for Les Schwab, I've never quite figured them out. Their products seem to be almost exclusively store brand (with a handful of Toyo stuff in the mix) which is probably good for people looking for inexpensive tires for their car, but anyone who wants brand name tires would immediately cross them off the list. Even so, they seem to do pretty good business, and some of their locations are a lot nicer than you would expect from someone selling mostly cheap tires.

babs
Gold Member
Gold Member
Posts: 208
Joined: December 20th, 2016, 3:08 pm
Been thanked: 20 times
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by babs » December 26th, 2019, 5:00 pm

Brian Lutz wrote:
December 26th, 2019, 9:31 am
Pep Boys already bought and rebranded a lot of the formerly Goodyear branded tire centers (I believe these were under Elliott Tire and Service) in the Seattle metro area. They have a handful of full line stores here (one in Everett), but not enough to really compete with O'Reilly (formerly Schucks) or AutoZone in the parts business (then again, neither of those two sell tires.) In the meantime they mostly seem content to just stick to operating tire centers.

As for Les Schwab, I've never quite figured them out. Their products seem to be almost exclusively store brand (with a handful of Toyo stuff in the mix) which is probably good for people looking for inexpensive tires for their car, but anyone who wants brand name tires would immediately cross them off the list. Even so, they seem to do pretty good business, and some of their locations are a lot nicer than you would expect from someone selling mostly cheap tires.
This is a classic private equity play. I don't see another chain buying them. They have strong cash flow, a strong brand that has lots of room for expansion and most importantly they own most of their real estate that can be monetized. I recall reading that their average location location does 3x the business of any other tire chain. Private equity will probably destroy them in the long run but short-term this is an obvious PE play.

Personally, I think the family should have taken them public which would give them some liquidity.

storewanderer
Valued Contributor
Valued Contributor
Posts: 4774
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 85 times
Contact:
Status: Offline

Re: Les Schwab Tire Centers for sale

Post by storewanderer » December 26th, 2019, 10:54 pm

babs wrote:
December 26th, 2019, 5:00 pm
Brian Lutz wrote:
December 26th, 2019, 9:31 am
Pep Boys already bought and rebranded a lot of the formerly Goodyear branded tire centers (I believe these were under Elliott Tire and Service) in the Seattle metro area. They have a handful of full line stores here (one in Everett), but not enough to really compete with O'Reilly (formerly Schucks) or AutoZone in the parts business (then again, neither of those two sell tires.) In the meantime they mostly seem content to just stick to operating tire centers.

As for Les Schwab, I've never quite figured them out. Their products seem to be almost exclusively store brand (with a handful of Toyo stuff in the mix) which is probably good for people looking for inexpensive tires for their car, but anyone who wants brand name tires would immediately cross them off the list. Even so, they seem to do pretty good business, and some of their locations are a lot nicer than you would expect from someone selling mostly cheap tires.
This is a classic private equity play. I don't see another chain buying them. They have strong cash flow, a strong brand that has lots of room for expansion and most importantly they own most of their real estate that can be monetized. I recall reading that their average location location does 3x the business of any other tire chain. Private equity will probably destroy them in the long run but short-term this is an obvious PE play.

Personally, I think the family should have taken them public which would give them some liquidity.
This will be an interesting play. Also some of the rural Les Schwabs are (were?) dealer locations.

Too bad the Schwab family can't just find people who understand the business, let them run it, and continue to collect the cash. I am sure they see what looks like the top of the market right now combined with the new tax law making it favorable to sell now, like many other long term family businesses are doing right now. In the end, the customers and employees are the ones at risk to lose the most in this sort of transaction. I do think Les Schwab's reputation with customers has fallen somewhat in the past decade, but in many rural areas they are the only choice and customers are very loyal.

Post Reply