Tyre specialist Micheldever is deserving winner of Deal of the Year award
Micheldever Tyre Services, the UK’s leading independent retailer and wholesaler of tyres and seventh on the Solent 250, secured the Deal of Year award at The Business Magazine’s Thames Valley and Solent Deals Awards. Chief executive Paul Fox spoke to The Business Magazine’s Sue Hughes
The Micheldever deal (in the more than £25 million category) voted for by more than 300 business representatives at the The Business Magazine’s Thames Valley and Solent Deals Awards, was chosen for its refinancing strategy, which supports the group’s expansion programme. A major player in the retail tyre industry, it has grown throughout the recession: “When we bought it in 2006, we thought we were bullet proof – because everybody needs tyres, and it has weathered the downturn and grown,“ observes Paul Fox, “but the market has been affected by economic conditions.“
Drivers have embarked on a mixed cost-saving strategy: reducing their mileage, buying lower quality tyres and stretching the point at which they change tyres. Measuring 1,000 tyres a week for residual tread depth, 54% are illegal, an issue which Micheldever is lobbying the Department of Transport and Highways Agency over, to better publicise the safety message.
“Despite the general market conditions we continue to grow at 4% volume growth per year and gross profit growth of 15% a year, consistently over six years, and all the key measurements are very solid. The tyre market has dropped by 14.8% compared to last year, which, when it usually moves up or down by around 2-3%, was virtually unknown. Whilst car registration numbers were fairly flat in April, the private motorist market increased by around 15% in May and June, hopefully an encouraging sign,“ says Fox.
Having grown both organically and by acquisitions since Fox and investors bought Micheldever in 2006 – from 16 retail and seven wholesale warehouses to 63 retail outlets in the UK together with a wholesale distribution network of 14 sites – 10 more retail and two additional wholesale sites are being looked at currently. “The company will continue to grow and there is enough scope to continue expanding across the country, as well as moving into the car dealer market, selling via
Paul Fox
franchised dealers. The national contract with Volkswagen Group is a huge coup and puts us in 750 retail dealer locations across their five marques.“
Against ’competitors’ it’s not hard to benchmark the UK’s biggest independent player, on the wholesale side regular independent market research demonstrates that it outperforms the market across 10 key performance criteria. The retail side of the business undergoes regular independent retail assessments, scoring highly and having 10 of the top 100 garages in the country in its network.
The 2011 refinancing package had the support of four banks – RBS, HSBC, Santander and GE Capital – and has enabled Micheldever to continue its expansion strategy, which uses cash already generated, but with the extra security of an acquisition facility.
From 500 staff in 2006, Fox has grown the business to a headcount of 1,200, with six directors on the board: “All are shareholders and it’s a very dynamic organisation, able to move rapidly – that’s the incentive. For the senior management team there is a phantom share scheme, while for the rest of our staff we base bonuses on profit share, plus we have a pension facility, matched by the company.“
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – SEPTEMBER 2012
www.businessmag.co.uk SOLENT 250 SPONSORS
Fox joins the ranks of featured Solent 250 company directors who cite employment legislation as the one regulatory issue holding back business. Big employers are vulnerable, yet he is more optimistic than many: “The nonsense of the tribunal set-up is damaging for business. The cost to British business is considerable. Thankfully the Government is looking to try to do something about it. I’m a firm lobbyist and I believe the message has been heard. It’s also got to take note of personal taxation and address issues to incentivise people who work, to see them rewarded accordingly.“
His personal ambitions lie firmly around the business. A key player, Micheldever is on course to achieve sales of £350m this year and conquer the area of channel development it is opening up. Away from work, Fox and two other directors have an interest in a racehorse, three-year-old Gusto, who won his past five consecutive races.
From the sport of kings to a king-size ambition, Fox – who bought his tyres from Micheldever in the 1970s before commencing a 19-year career with Mercedes-Benz and ultimately buying Micheldever – believes in fate: “I watched it over the years. I had a feeling I’d buy it one day, when the time was right.“
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