MTD Exclusive: Dealers React to Possible Les Schwab Sale
The potential sale of Les Schwab Tire Centers Inc. could have a major impact on the tire retailing landscape, particularly in the northwestern U.S., where the dealership has 492 locations across 10 states.While the company’s board and shareholders continue to look for a buyer, MTD recently caught up with several independent tire dealers, as well as Walter Lybeck, CEO of Point S USA (Tire Factory Inc.), to hear their thoughts on the development. Many Point S member-dealers operate in the same geography that Les Schwab covers.
Several dealers contacted by MTD said they were unable to comment on Les Schwab’s potential sale.
Lybeck speculated that an ownership change at the Bend, Ore.-based company could “create uncertainty and disruption. “What do you do when you buy such a large retailer? Do you significantly change the way you go to market? Do you change your pricing strategy? There are a lot of ‘what ifs.’"
When asked to speculate what could happen if a manufacturer acquired Les Schwab, he said that a tire maker could “be motivated to put their own branded products into the stores, which would be an interesting cultural change” and could alter Les Schwab’s current product screen.
Les Schwab currently carries the Continental, Dean, Federal, Hankook, Cooper, Bridgestone, Mastercraft, Toyo and Pirelli brands.
If a private equity firm acquires the chain, “how will they be able to grow it? And if (the buyer) is a large distribution organization, that could be a whole different model. All of those things can change the way Les Schwab affects us in the marketplace.”
A possible sale “is obviously a huge deal and a question mark,” according to Lybeck.
Ron Sutton, owner of Sutton Tire & Chain, which is based in Portland, Ore., doesn’t think a sale would create “a drastic change" for his dealership.
But he believes a change in ownership could impact the Les Schwab organization itself. “I think the culture at Les Schwab has changed a little already with not having a family member in management of the company,” he says.
“I think some of the culture has changed in the last few years and I think it’s going to get even more so. There’s a lot of legacy guys there that are going to decide to retire. I see a possibility of picking up a new employee or two. I know there are a lot of service guys in my area who have changed positions to different companies lately.
“I think Les Schwab is a great competitor,” he continues. “They do a heck of a job. I’ve maintained all along that when somebody drives off their parking lot and you ask them what kind of tires they bought, they never say they bought (a particular brand.) They bought ‘Les Schwab Tires.’ They’ve done an incredible job of promoting Les Schwab.”
Craig Bruneel, president of Boise, Idaho-based Bruneel Point S Auto & Tire, which has 11 locations, says a possible sale could give his company an opening to pick up market share and even a few employees.
“Les Schwab has been a competitor of ours in every market we’re in. They run a good, clean business and have a unique culture.”
But if a new owner moves in, "they will put their stamp on it,” which could “create new opportunities for us.”
In late December, Les Schwab’s board of directors and shareholders, who are all relatives of the dealership’s founder and namesake, announced they had hired Goldman Sachs Group Inc. to find a buyer for the dealership, which is the fifth largest independent tire store chain in the U.S., according to the 2019 MTD 100. (Les Schwab is also the fourth largest independent commercial tire dealership in the country, according to MTD research. And it is the 11th largest retreader in the U.S.)
At the time of the announcement, a local media outlet, the Oregonian, reported that Les Schwab expects a selling price of at least $3 billion.