Retail entrepreneur seeks to launch auto warehouse club - Robert A. McNulty, Auto Giant

Discount Store News, July 17, 1989

Retail Entrepreneur Seeks to Launch Auto Warehouse Club

LONG BEACH, Calif. -- The warehouse merchandising concept promises to catch up with the automotive aftermarket.

Robert A. McNulty is attempting to raise up to $27 million from the public to launch an automotives warehouse chain called Auto Giant, DSN has learned.

In previous warehouse club ventures, McNulty founded the HomeClub home improvement chain, the now-defunct All-American SportsClub sporting goods warehouse chain, the HQ Office Supplies Warehouse chain, and a chain of international office supply warehouses in Canada.

The $27 million would finance several of the 50,000-square-foot warehouses contemplated, said Frank Roberts, who will be president and chief executive officer of the new venture. McNulty will be chairman.

The first unit will be located in San Bernardino, Calif., in the Los Angeles market, Roberts confirmed.

Auto Giant has signed leases for a number of additional sites, but Roberts declined to disclose either the exact number or their locations.

"I hope for a lot more than two stores," he said.

Auto Giant will operate as a membership club, but Roberts refused to say whether members would pay a fee. For an indication of fees, however, Roberts pointed to McNulty's past practices, charging a fee at HomeClub and SportsClub.

The corporate name of the venture is A.G. Automotive Warehouses Inc., a spin-off of McNulty's start-up venture operation, American Business Ventures.

Auto Giant is constrained about what it can say to promote the new venture because of Securities and Exchange Commission regulations, said Douglas McLellan, director of investor relations for American Business Ventures. The SEC imposes a "quiet period" of 60 days prior to filing an initial public offering (IPO) with the SEC, McLellan said.

Since Auto Giant is within that 60-day quiet period, the indications are that it will file its IPO sometime in August.

For HQ Office Supplies Warehouse, McNulty raised an initial $7 million in an IPO last October and $20 million more by this June. It has opened about seven stores.

Auto Giant will offer several brands of tires, along with complete automotive service, McLellan said. It also expects to make a statement in light truck, van and 4X4 accessories, the fastest growing segment of the aftermarket.

In March, a bankruptcy trustee ordered the liquidation of McNulty's SportsClub. At one time the chain operated eight sporting goods warehouses, but was down to four when the hammer fell.

The SportsClub bankruptcy will have absolutely no effect on the Auto Giant venture, McLellan predicted. As a basis for his optimism, he pointed to the ease with which McNulty raised $27 million from the public for his office supplies warehouse start-up.

McNulty's reputation is built largely on his success with HomeClub, a home center chain he subsequently sold to the former Zayre Corp.

In a restructuring last month, Zayre spun off HomeClub and BJ's Wholesale Club into Waban Inc. Wall Street valued the new corporation's stock at $508 million. While no breakdown of that value is available, HomeClub obviously accounted for the lion's share, with 49 units to 22 for BJ's.