Less than a day after announcing that it would close 40 stores and cut 160 non-sales positions, CSK Auto Corp's stock value rose nearly 8 percent on the New York Stock Exchange. CSK shares rose as much as 95 cents to $13.26 after the initial excitement generated by the announcement died down. CSK, which named Lawrence Mondry chief executive officer three months ago, also announced that it has begun a comprehensive, strategic review of the company to improve profitability and restore top line growth. Mondry will work with the company's management team and its board of directors to evaluate all aspects of the company's operations, but has already developed a plan to reduce the number of new store openings planned for 2007 and 2008, expand estimated store closures for 2008 and immediately reduce staff within the company's general and administrative areas to better align its cost structure with current business trends and initiatives. "Among my primary objectives since joining CSK was to initiate a comprehensive review of the company's operations to help us identify opportunities to improve our competitive position, our operational and financial performance, and our ability to deliver value to our stockholders," says Mondry, in a prepared statement. "CSK is a fundamentally sound company. Our initial focus will be to defend our core retail business so that we are not out-positioned in any of our current markets and aggressively grow our commercial sales business, which we believe has significant opportunity for further expansion." The retailer has cut 160 non-sales positions and plans to open only 48 stores in fiscal 2007, down from a planned 64 previously. The staff cuts, store closings and other changes are expected to reduce net pretax expense by $7.6 million over the rest of fiscal 2007 and by $34 million in fiscal 2008. In addition, the company announced that it has completed the closure of its two remaining Pay N Save stores and that, at this time, it anticipates closing approximately 40 stores in fiscal 2008. "These initial steps to strengthen our business will be difficult, but they are critical to setting CSK Auto on the right path for the future,” Mondry adds. “We look forward to further discussing our key initiatives and strategies later this year upon the completion of our strategic review." CSK has retained the retail-consulting firm Kurt Salmon Associates to help with this comprehensive, strategic review. And, with the assistance of Korn/Ferry International, the company has begun searching for a new chief financial officer. According to Mondry, the appointment of the company's new CFO will happen in the near future. In the meantime, Steven Korby, the company's interim CFO, will work with Tatum, LLC, to complete all remaining late periodic SEC reports. In a previous interview with Aftermarket Business, David J. Solomon, managing director and partner at Goldsmith-Agio-Helms, an independent middle-market investment bank, speculated that Mondry's appointment would allow CSK to clean house and emerge as a healthier operation, while at the same time improving its management team. And, if the jump in CSK's value on the nation's stock exchange is any indication, the company is well on its way to becoming an even stronger aftermarket player with a viable future. |
