By Denna Bowman
High Street tyres retailer Kwik-Fit is under financial pressure and has been forced to warn of a risk of breaching banking covenants, the Sunday Times revealed yesterday.
The private-equity owned company’s borrowings have ballooned and it saw net debt rise by £96 million to £822 million last year.
A third of the tyres and car-repair firms loans are in euros, which have appreciated sharply against sterling, according to the article.
The Sunday Times reports: “At the same time, Kwik-Fit’s earnings form the Continent have been hit and the carrying value of its loss-making German business has been written down to zero.”
The company warned it was vulnerable if the recession knocked earnings growth and the pound remained weak against the euro.
Kwik-Fit announced in its annual accounts that “Should either or both of these factors work against the group, compliance with financial covenants may be threatened.”
Etyres, the UKs leading online tyres retailer, has seen double-digit like-for-like growth during the past 12 months.
Sales are booming because etyres operates a mobile fitting service and because its overheads are low savings are passed on to customers in the form of cheaper prices for tyres – up to 40% less than the leading high street depots, including Kwik-Fit.