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Speedemissions Inc. Message Board

  • originalfred66b originalfred66b Jul 18, 2008 6:41 PM Flag

    Sears was a dud

    It looks like the Sears inspection stations were a dud...

    In the fourth quarter of 2007, Speedemissions, Inc. (the "Company") announced its intention to open 13 new vehicle emissions testing and safety inspection stations within Sears Auto Centers in the Dallas-Ft. Worth, Texas trade area. The Company has opened 12 of the stores.

    Based on the Company's analysis of initial test volumes for the first six months of 2008 across all of these new stores, the Company identified 8 stores it believes will not generate enough test volume over time to produce a reasonable expectation of positive cash flow. On July 15, 2008, the Company committed to closing 8 of the 12 vehicle emissions testing and safety inspection facilities in the Greater Dallas-Ft. Worth area by the end of the month as part of its initiative to improve financial performance. These facilities were all opened within the last 8 months. The Company also decided not to open the 13th store.

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    • I think the basic business model for this company is flawed. They seem to be unable to make a profit. I am sure they could be profitable if they could get enough steady volume through their stores every day, but that is not how a non-appointment consumer business works. People show up in spurts, and the rest of the time the place sits idle. Another problem is that even loyal customers only visit once or twice per year.

      Here are some numbers.

      Number of testing stations = 50
      Expenses = $2650k x 4 = $10,600k per year
      Expenses per store = $212k per year
      Sales = $2483k x 4 = $9,932k per year
      Sales per store = $199k per year

      With just 10% more throughput, the company would likely be profitable. But they seem to be unable to make that happen.

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