Derek Wessels, recently appointed CEO of Leeds West Groups (LWG), has big plans for the company, which has grown to encompass more than 120 retail locations across 18 states – most of them acquired Big O Tires and/or Midas franchise stores.
Wessels – who has more than two decades of automotive retail management experience, including 13 years with Bridgestone Retail Operations before he joined LWG in 2019 – steps into the role of longtime LWG CEO Judd Shader, who was named executive chairman of the well-capitalized, Greenwood Village, Colo.-based firm this past January.
In this MTD exclusive, Wessels discusses LWG’s strategy, why he thinks the market for tire store acquisitions will remain healthy, where LWG could be five years down the road and more.
MTD: LWG has evolved into one of the largest independently owned and operated tire chains in the country - primarily through the acquisitions of single-store Big O and Midas locations. That’s an interesting approach to growth. Why are you picking up Big O and Midas locations rather than engaging in larger acquisitions?
Wessels: We look at a lot of opportunities when it comes to growth. Obviously, the easiest is a current Big O or Midas location. That enables us to quickly drop in operations and we’re ready to go. That’s very easy for us to do. We’ve done it a lot. And we’re still excited about it. There are still a lot of opportunities that exist within those two groups.
And we do have a greenfield program. We have four projects in the works right now. We started that last year. We also have picked up other (properties.) We’ve picked up some Tires Plus locations. We purchased, here in Colorado, a Tires Plus location. They vacacted and we bought it. It’s now a Midas. I just did one in Broken Arrow, Okla. It was a Tires Plus that’s now operating as a Midas. We did a three-store acquisition in Des Moines and added a fourth store just south of Des Moines. It was a Goodyear store. We took on that property and re-imaged it and it’s now a Big O.
I’m very open-minded when it comes to growth, but has to be smart growth, It has to fit our model. We have to see the opportunity to either add to an existing market or grow a new market. Putting one store somewhere doesn’t really excite me. But putting in one store with plans of adding five, 10, 15 or 20 – that's exciting.
MTD: Why pursue acquisitions through TBC rather than picking up more traditionally independent tire dealerships? Is that due to LWG’s familiarity with TBC and its programs?
Wessels: TBC works hand in hand with us. They bring opportunities to us. We’re looking at opportunities they present to me all the time. I also have brokers bringing deals to us all over the U.S. But again, we’re only going to do deals that are smart, fit our model and we’re excited about. We don’t have to just increase store count. We want to increase store count with stores that are profitable. It has to fit our DNA and who we are.
MTD: A lot of LWG’s acquisitions tend to take place in the western U.S. Any plans to move east or north?
Wessels: Absolutely. We're looking at every and any opportunity that we’re presented with. We have big plans for growth and expansion. Anything that fits our model, we're going to pursue it.
MTD: What do you look for when considering acquiring a potential location, other than geography? Can you tell us about some of LWG’s criteria?
Wessels: One of the first things we look at is, ‘Do we have an existing footprint and how does it complement our core business?’ If it complements our core business, it’s a no-brainer. If it doesn’t complement our current business or footprint, but I feel like we can expand and grow the market, then we’ll pursue it.
MTD: What’s your take on all the M&A activity that’s happening in our market? It didn’t slow down last year and we’re still seeing deals made. Do you think this is something that will continue?
Wessels: I think it will. The automotive business is a great business to be in and a lot of people are entering this space. I think we’ll continue to see the major players within our industry expand. I’m excited about it. We’re going to be expanding. I’m sure a lot of other people are looking at the business through the same lens we look at it.
MTD: What’s your take on retail tire demand in the U.S. right now? What are some of the challenges you see? What are some of the bright spots? Do you think demand will remain robust throughout the rest of 2023?
Wessels: I think demand will be strong throughout the rest of the year. It’s all about operations and people. Those who are staffed and have good, strong operations – those who are ready to do business – will be successful and those who aren't will not.
A lot of the challenges I hear about and see across the industry (revolve around) staffing. Do they have the staffing? Do they have the talent? Do they have the training? That's where we’re focused. That’s where operations wins. You have to have that talent and staffing. It’s not (only about) demand. It’s about everyone's ability to attract and retain talent. We can have plenty of demand, but if you don’t have the capability to do the work, you can’t capitalize on the opportunities.
MTD: Having a wealth of experience in tire retail, including nearly four years at LWG and your tenure at Bridgestone Retail Operations, what opportunities do you see for LWG? Do you see any similarities between what you accomplished at Bridgestone and what you want to accomplish at Leeds?
Wessels: I’m focusing on our culture. I’m focusing on our talent. I’m focusing on our ability to execute on our plans. When we call a play, we can run the play. You can have the best plans in the word, but if you can’t execute on those plans, it’s hard to be successful.
I stay close to our stores. I work very closely with our vice presidents, our board of directors and our field operations. I’m very dialed in on our bench strength across the organization. Our teams are excited about working for our organization. We’re providing lots of opportunities for growth. And that’s what employees want. They want to be part of an organization that values them. Our teammates in the stores and our teammates here at our office really make the difference day in and day out. They determine our success.
MTD: How will you work with Judd in your new capacity and his new capacity?
Wessels: Judd and I work hand in hand. We have for the past four years. Our relationship has not really changed. We’ve always talked a lot. We’re both focused on growing the company and our company’s culture. That’s how we spend our time when we meet and talk. Where are we at? What are we doing to make our company a great place to work? What are we doing to capitalize on our opportunities?
MTD: Where do you see LWG five years down the road? Do you have a store count goal?
Wessels: We’ve always looked at 10% growth annually from a store count standpoint. We’re very comfortable at that level, so that’s one of our goals. But we look at all deals. And we’re going to do the deals that work for us. We’re in this business for the long term. Every acquisition and every new store has to make good sense and fit our long-term 10, 15 and 20-year goals as an organization.
If I had to look five years down the road, having 250 to 300 stores would be great. We also could be significantly larger. It all depends on the opportunities. We don’t have any capital restraints, so we’re able to do pretty much any deal that we look at. It’s just, ‘Does it make sense on a 10, 15 and 20-year timeframe?’ We’re not building store count to sell stores. We’re building store count to complement our core business and drive the growth of our company.
