Pep Boys – Manny, Moe & Jack reported net earnings of $11.9 million on net sales of $542.3 million for the first quarter of 2015, ended May 2, 2015. Both figures were up from the same period in 2014, when earnings were $1.6 million and sales were $538.8 million, though the 2015 numbers were helped by a $10 million sale of a leasehold interest.
Merchandise sales and service revenue were both up compared to 2014, the company said, with merchandise up 0.6% and service up 1.3%. Tire sales were up 4% in comparable stores compared to the first quarter last year.
David Stern, executive vice president and chief financial officer, said, “We’ve been pleased with our tire performance.” He noted unit sales were up 1.5% and prices were up 2.5%.
“We’re seeing this continued shift toward branded tires,” Stern said, and added the company recently added Pirelli tires to its lineup. Branded tires now make up 60-65% of Pep Boys’ inventory, and less than 20% are house brands, Stern said.
Interim CEO John Sweetwood pointed to good sales number at comparable stores. As of the close of the first quarter, the company operates 803 stores, including 235 service and tire centers which have opened since 2009.
“We are pleased to report the third consecutive quarter of positive comparable stores sales. Once again tires, commercial, fleet and digital led the way.”
Sweetwood added, “During the quarter we also generated $10 million from the sale of a leasehold interest, a portion of which was reinvested into our next Road Ahead market – Baltimore – that is scheduled to be grand re-opened in July.”
The ‘road ahead opportunity’ is what Pep Boys sees as “the void in the marketplace created by customers’ perception of the gap between the price and convenience of the aftermarket providers and the quality and experience of the (auto) dealerships.” One of the company’s key initiatives is to reformat its stores for ‘the road ahead.’ So far 97 stores have completed that process.
