Monro Will Purchase Most Tires From ATD
Monro Inc. will buy “at least 90%” of its tires from American Tire Distributors Inc. (ATD), a deal that gives the wholesaler 865 new tire stores to serve in 32 states.
The two companies signed a “distribution and fulfillment agreement” in conjunction with ATD buying Monro’s wholesale business. That $105 million sale allows Monro to focus on its retail-centric operations, though the tire dealer continues to have a presence in the commercial tire business as well, including three retread plants.
In Monro’s most recent fiscal year, which ended in March 2022, tires accounted for 53% of the company’s $1.3 billion in overall sales. (Tire sales totaled $716.3 million, though that figure also includes the sales of tire and road hazard warranties.)
Monro’s total tire sales grew by $98 million compared to fiscal 2021.
The agreement with ATD requires Monro’s company-owned stores “to purchase at least 90% of their forecasted requirements for certain passenger car tires, light truck replacement tires, and medium truck tires” from ATD.
In the event ATD isn’t able to supply particular tires, they won’t be included in the calculations to meet the requirement. However, Monro has agreed to designate ATD “as the distribution and fulfillment partner for orders for tires, wheels and related products” that are supplied by manufacturers or other suppliers. The company has also agreed to encourage its franchisees to purchase tires from ATD. (As of the end of March, Monro has 79 Car-X Tire & Auto locations that are owned by franchisees.)
Monro has said the distribution deal with ATD will give its stores improved delivery service, as the company previously wasn’t able to offer daily delivery to every location from its seven facilities in Kentucky, Tennessee and the Carolinas.
While Monro has more than 1,300 retail locations, 865 of them are classified as tire stores. The others are more focused on automotive repair services — though Monro has identified its tire stores as more profitable, and is working to transition more locations from being repair focused to selling tires.