Goodyear Retail Closures Viewed Positively, Comment DB Analysts

A Deutsche Bank analyst report indicates that Goodyear’s decision to close 92 “underperforming” retail locations in the US is a good thing. “Overall, we view this announcement positively,” says the report, “as it demonstrates additional cost savings as GT (Goodyear).” The closure of the retail stores is expected to result in after-tax charges of US$40 million and generate savings of $9 million per annum. This level of savings, says Deutsche Bank, could potentially add $0.03 to $0.04 to its earning estimate.

With its positive comments, however, the bank analysts issue the following caution: “We believe that macro issues, such as industry volume, pricing, and raw materials will continue to be the biggest determinant of GT earnings. As we’ve noted previously, a 1 per cent change to either NA (North America) industry volume or raw materials drives a $0.07 change in GT earnings and a 1 per cent change in NA pricing drives a $0.20 change to earnings.”