Pit Stop Closed Essay

1238 WordsNov 4, 20125 Pages
Case 09-5a Pit Stop Closed Auto World Inc. (“Auto World”), a calendar year-end SEC registrant, is a leading automotive retail and service chain. Auto World operates exclusively in the automotive aftermarket industry. Auto World is engaged principally in the retail sale of automotive parts, tires, and accessories, automotive repairs and maintenance, and the installation of parts. Auto World has two primary operating unit formats: (1) Auto Boyz Retail Centers (“Auto Boyz Centers”) and (2) Pit Stop Service & Tire Centers (“Pit Stop Centers”). As of April 15, 2007, Auto World operated 120 stores consisting of 90 Auto Boyz Centers and 30 Pit Stop Centers. Auto World operates approximately 1,800,000 gross square feet of…show more content…
As a result, Auto World plans to close its 30 freestanding Pit Stop Service & Tire Centers and begin providing these services out of its existing Auto Boyz Retail Centers. Ricky Bobby, chairman and chief executive officer, said, “Overall, we have made considerable progress in the last three years in strengthening our portfolio of businesses at Auto World. The actions we are announcing today will further enhance our ability to increase market share and improve sales and earnings at our company by providing our customers with ‘one stop’ shopping for our ‘do-ityourself’ retail customers and our ‘do-it-for-me’ customers.” The 30 facilities are expected to be closed on or before June 30, 2007. It is also expected that Auto World’s Auto Boyz Retail Centers will be fully prepared to take Copyright 2009 © Deloitte Development LLC All Rights Reserved.Case 09-5(a): Pit Stop Closed Page 2 over all of the automotive service and tire business currently handled by the Pit Stop Service & Tire Centers by June 30, 2007, and that there will be minimal loss of customers during this transition. These actions are expected to generate significant cash flow in 2007 and to increase free cash flow in 2008 and beyond. In addition, these actions are expected to yield improvements in operating

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