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Tyre firm stays on track as revenue takes off

ONLINE tyre firm Blackcircles, which counts former Tesco chief Sir Terry Leahy among its shareholders, has seen a 30% hike in revenue from £17.9 million to £23.2m.

GROWTH: Blackcircles founder Mike Welch has big plans for the future. Picture: Colin Hattersley Photography
GROWTH: Blackcircles founder Mike Welch has big plans for the future. Picture: Colin Hattersley Photography

The Peebles company has ambitious plans to grow into a £100m business in the next five years.

The latest financial report from the retailer, which has a partnership with Tesco, said earnings before interest, tax, depreciation and amortisation had more than doubled to £600,000 while pre-tax profits were likely to be more than £400,000.

Across 2012 the average amount customers spent was £220 – up from £200 the previous year – while monthly visitors to its website hit 250,000.

The number of tyre-fitting centres Blackcircles works with increased from 1200 to 1400. Founder Michael Welch said the business employs 50 people in Peebles with more working "on the road" to manage relationships with tyre fitters.

Further new recruits in supply chain and logistics functions are expected to join in the coming months.

The investment in people should bring long-term benefits but meant profits for 2012 were short of Mr Welch's expectations.

He said: "We took the decision to invest early so started to plough some of the profit coming through back into the business. It is high-end, high-calibre people to accommodate the growth we have had and capitalise on that."

A plan to engage with customers at Tesco stores is on the drawing board with Mr Welch looking at other "tweaks" to how Blackcircles operates.

He said: "The next year is about how we develop the infrastructure in the field to make sure we are not turning customers away and making sure we have the right stock in the shed.

"We are also speeding up the time it takes to get tyres from warehouses to the network so we can offer faster fittings for customers.

"We don't want to be in a race to the bottom on price. We want to offer customers something better on service and value like Clubcard points."

While Mr Welch would like to add more sales around the M25 area, he said the focus is more on improving existing sites. He said: "We are concentrating on increasing the capacity of our sites. At a lot of Premier Franchise stores, which carry additional branding, we are providing them with 40% of their orders now.

"We want to make sure we provide them with the tools so they can handle more custom."

If current levels of growth are maintained, Mr Welch believes UK sales can be between £75 million and £80m five years from now.

To reach the £100m figure he plans to grow operations into Europe with acquisitions and joint ventures being discussed.

Mr Welch said: "Our aim is to grow our share internationally as well as in the UK.

"We are in talks with a couple of parties in Central Europe and hope to be able to announce something before the end of the year."

Mr Welch, originally from Liverpool, set up the company in 2001 and has steadily built it up from its base in the Scottish Borders.

The senior team includes Macfarlane Group and Interbulk board member Graeme Bissett who is chairman of Blackcircles.

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