Pep Boys hopes new CEO will produce better results in 2007
Pep Boys-Manny, Moe & Jack posted a net loss of $2.5 million on sales of nearly $2.3 billion for its 2006 fiscal year ended Feb. 3, 2007. That compares to a net loss of $37.5 million on sales of $2.2 billion for its previous fiscal year.
Following the release of its financial results, Pep Boys introduced Jeff Rachor as its new CEO and president. He succeeds interim CEO William Leonard, who took the helm when former CEO Larry Stevenson resigned last July.
The 1.5% increase in sales was aided by an extra week in fiscal 2006. The fourth quarter of fiscal 2006 was 14 weeks long, while the fourth quarter of 2005 was 13 weeks long.
Pep Boys recorded net earnings of $7.7 million on sales of $586.1 million for the fourth quarter ended Feb. 3, 2007.
Excluding the 14th week of Q4 2006:
* comparable merchandise sales decreased 1.5% and comparable service revenue increased 2%. (Merchandise sales includes merchandise sold through both its retail and service center lines of business; service revenue is limited to labor sales.)
* comparable retail sales (DIY and commercial) decreased 2.2% and comparable service center revenue (labor plus installed merchandise and tires) increased 1%.
"During Q4, our team made significant progress in improving our operating margins, through reduced discounting, improved labor sales and reduced operating costs," said Leonard.
Thanks to a "substantially improved last half of the year" and the hiring of Rachor, Pep Boys is "well positioned to deliver on its immediate priorities," according to Leonard. They include the following:
1. posting positive comparable store sales in its service center operations.
2. making continued progress on our retail margins.
3. continuing to reduce its cost structure to help support overall results.
"We had a strong finish to the year," said Harry Yanowitz, chief financial officer. "Efforts to improve performance in our service business, including offering fewer discounts, have started to take hold -- yielding improved margins without reducing comparative store sales.
"As we noted last quarter, our retail margins reflect the substantial efforts our merchants have made to improve mix and reduce acquisition costs. In addition, we believe substantial opportunities to improve efficiencies and reduce our operating costs still remain for fiscal 2007."