Cardis Plans to Sell Northern California Operations to Pay Off $28-Million Debt

Cardis Corp. said Tuesday that it hopes to sell its Northern California operations to Auto Parts Wholesalers in Bakersfield to help pay off more than $28 million in debt.

The announcement by the financially pinched auto-parts distributor and retailer marks the second time that Cardis has said it is negotiating a sale of its warehouse and distribution system, which serves an area stretching from Ventura to Sacramento. In December, the company said a monthlong negotiation had been halted by the potential buyer, which it did not identify.

Cardis, which completed a bankruptcy reorganization in December, 1989, also announced earlier this month that it will move its headquarters from Orange County to San Diego. It will close its Buena Park warehouse and lay off 90 employees. When that move and the sale of the Northern California operations are completed, Cardis will be left with 260 employees at two Southern California warehouses, its administrative offices and a chain of 22 Carquest retail auto-parts stores.

As part of its ongoing effort to slash costs and increase cash flow, Cardis has just completed the consolidation of its three largest Northern California warehouses--in Hayward, Sacramento and Fresno--into a single operation in Fresno. A small warehouse in Ventura also is part of Cardis’ Northern California operation. The two remaining warehouses have a total of 75 employees.

Kenneth C. Cleveland, Cardis president and chief executive, said the company expects to sign a sale agreement with Auto Parts Wholesalers by March 10. The sale, he said, would be contingent on approval by the banks that extend Cardis its line of operating credit.

Cardis’ Northern California operations account for about 35% of its annual sales, or $26 million of its $73.3 million in revenue for the fiscal year that ended April 30.

Cleveland said the company’s retail stores accounted for about 25% of sales--about $19 million--with the Southern California distribution operation providing the remaining 40%, or about $30 million, last year.

For the first six months of Cardis’ current fiscal year, the company posted a loss of more than $1.3 million on sales of $34 million.

Sale of the Northern California operations, Cleveland said, “would significantly reduce our debt position. Together with the recently announced consolidation of our Southern California warehouse operations to San Diego, we see this as an excellent opportunity to build operational and financial strength for our company.”

Cardis Corp. is one of California’s largest distributors and retailers of automotive parts, supplies and accessories. In addition to the 22 Carquest stores that it owns, the company supplies parts under the Carquest name to several hundred unaffiliated auto-parts retailers and auto-repair shops across the Southland. It is also a supplier for a network of 100 independently owned Carquest stores in Southern California and Baja California.