Schuck's Group buys Auto Works - Northern Automotive, formerly Checker-Schuck's-Kragen

Discount Store News, Feb 15, 1988 by Richard C. Halverson

Schuck's Group Buys Auto Works

In one leap, Northern Automotive has jumped into the No. 2 slot in the automotives aftermarket by acquiring the 252 stores of Perry Drug Store's $133 million Auto Works division.

On a consolidated basis, sales for the five chains Northern Automotive has acquired over the past three years would be "in excess of $600 million" for the retail year ended January 1988, said Charles Engel, vice president of its corporate parent, Northern Pacific Corp.

The privately-held company, owned by Eddie and Julius Trump (no relation to New York developer Donald Trump), refuses to disclose exact sales figures or profits.

Total store count for Phoenix-based Northern Automotive, which formerly called itself Checker/Schuck's/Kragen after the first three chains were acquired, is 760, said Fred Nelson, director of advertising and public relations.

The rough sales figures and store count excludes the estimated $16 million in sales and eight stores of the U Save Chain, Los Angeles. U Save owner Merv York, chairman of the Automotive Parts and Accessories Association, has signed an agreement in principle to sell his chain to Northern Automotive and a definitive agreement to sell was pending at presstime.

Primarily through acquisition, Northern Automotive appears to have surpassed Philadelphia-based Pep Boys--Manny, Moe & Jack as the second largest auto parts chain in dollar volume and store count.

Pep Boys is expected to report $561 million in sales from 212 stores for the fiscal year just ended, estimated William Block, an analyst for New York & Foreign Securities, New York. That would represent a 15.4 percent gain over $486 million in 1986.

When Northern Pacific got its start in automotives by acquiring Seattle-based Schuck's in 1984, Schuck's was considered one of the most profitable chains in the business, a Wall Street investment banker said.

On the other hand, its latest acquisition, Auto Works, probably lost money last year, a Prudential-Bache analyst said.

Berl Falbaum, a spokesman for Perry Drugs, refused to comment on Auto Work's profitability. "It has not performed up to our expectations," he said. As part of the $51 million deal, Northern also got Auto Work's new 312,000-square-foot automated distribution center in Dayton, Ohio.

That will help support the newly-announced expansion of Schuck's into the Kansas City, Mo., market, home base of Western Auto, Nelson said. In sales and store count, Western Auto is the largest automotives chain, including both company-owned and associate stores.

Auto Works operates in eight Midwestern and border states: Michigan, Illinois, Indiana, Wisconsin, Kentucky, Missouri and West Virginia.

The acquisition vastly extends Northern's territorial reach from the Pacific Northwest for Schuck's, and Los Angeles and the Southwest for the Checker and Kragen chains, totaling 378 stores, acquired in 1986 for $155 million from Lucky Stores.

Northern Automotive will operate Auto Works out of its Pontiac, Mich., headquarters, Nelson said, and will transfer Larry Branter, its Rocky Mountains regional manager, from Denver to Pontiac to oversee the transition, he said. John Saar also is transferring to Pontiac to assume operational management of Auto Works.

Peter Murray, a Perry Drug official who last fall replaced replaced Jack Gallagher as president of Auto Works, will remain on board during the transition and probably will return to the Perry Drug fold, Nelson said. In another personnel change, Robin Fisher has left his merchandising post at Auto Works to become vice president of merchandising for Crown Auto, Minneapolis.

Nelson acknowledged that his company had acquired Auto Works at a bargain price. Falbaum said he was unable to determine Perry's capital investment through both acquisition and new construction in Auto Works but said Perry Drugs will take a write-off on its loss of an as yet undetermined amount.

Northern will continue to operate Auto Works as dry centers, without offering automotive service. Auto Works' operation is similar to that of Checker/Schuck's/Kragen stores, Nelson said. At 5,500 square feet, the Auto Works stores are slightly larger than the 5,000-square-foot Northern Automotive average, and offer a similar merchandise mix, Nelson said.

For the past year, Northern has been standardizing the merchandise mix at its first three chains, Nelson said. Now, "we'll look at the merchandise mix at Auto Works," he said.

All chains in the group will continue to operate under their original names, Nelson said.

Northern Automotive has set a goal of 1,000 stores by 1990, Nelson said. Last year, it opened 72 stores and closed 42, for a net increase of 30 units.

Photo: Northern Automotive, in a $51 million deal, acquired the 252 units of Auto Works from Perry Drug Stores.