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December 10, 2013

Pep Boys on the ‘Road Ahead’ in Q3 2013

The Pep Boys – Manny, Moe & Jack announced that in the third quarter ended Nov. 2, 2013, the company had net sales of $507 million, a decrease of $2.6 million for the same period last year, and net income of $1 million compared to a net loss of $6.8 million for the third quarter of fiscal 2012.

Comparable sales decreased 2.8%, consisting of a 0.5% comparable service revenue increase and a 3.6% comparable merchandise sales decrease. Re-categorizing sales into the respective lines of business from which they are generated, comparable service center revenue decreased 2.5%, while comparable retail sales decreased 3.1%.

On a pre-tax basis, the 2013 results included a $2 million asset impairment charge and a $0.6 million severance charge, while the 2012 results included $11.2 million in debt refinancing expense and an $8.8 million asset impairment charge, partially offset by the reversal of $0.9 million of compensation expense.

For the first nine months of 2013, net sales increased by $11 million, or 0.7%, to $1,570.8 million from $1,559.9 million for the 39 weeks ended Oct. 27, 2012. Comparable sales decreased 1.0%, consisting of a 1.6% comparable service revenue increase and a 1.7% comparable merchandise sales decrease.

Net income for the first nine months of 2013 was $10.2 million ($0.19 per share) as compared to $27.4 million ($0.51 per share) for the first nine months of fiscal 2012. On a pre-tax basis, the 2013 results included a $4.9 million asset impairment charge and a $0.6 million severance charge.

“Our strategically important maintenance and repair service business grew in sales for the sixth consecutive quarter,” said CEO and President Mike Odell. "As the weather has turned colder, tire sales have started to improve, with mid-level price points and branded tires leading the way. Competitive pressures, however, continue to challenge sales of lower price point tires."

Odell said the company’s “Road Ahead” format is expanding with the 18 recently acquired Service & Tire Centers in Southern California being converted and the grand reopening of six Supercenters and five Service & Tire Centers in Tampa, Florida.

“The performance out of the gate of the nine new Service & Tire Centers previously opened this year in the Road Ahead format has been ahead of original projections. And while it has only been a few weeks, we are very encouraged by Tampa's results. While monitoring results, we have begun plans to convert three additional smaller markets (20 Supercenters) in the first half of 2014."

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