Pep Boys-Manny, Moe & Jack recorded a net loss of $922,000 on sales of $555.9 million for the first quarter ended April 29, 2006. That compares a net loss of $2.4 million on sales of $563.5 million for the same period a year ago.
While comparable retail sales (DIY and commercial) decreased 3%, comparable service center revenue (labor plus installed merchandise and tires) increased 2.2%.
"The Pep Boys team continues to make steady progress against the significant operating challenges we faced last year," says CEO Larry Stevenson. "Our first-quarter operating profit increased from $3.2
million to $7.2 million year over year.
"In particular, as our field team has stabilized service center operations, we were able to report a substantial sequential improvement -- not just the service center sales improvement
we reported in Q4, but also an improvement from Q3 and Q4 last year in bottom line contribution."
"In our retail operations, despite lower sales (which Stevenson says is due in part to the grand re-opening of the Los Angeles market in 1Q 2005) and higher depreciation expense, we achieved improved operating results through tight SG&A expense controls and improved product margins."
Pep Boys focused on its most productive inventory during the quarter. According to CFO Harry Yanowitz, that resulted in an ending inventory
balance slightly below the first quarter of fiscal 2005.
"Operating results were helped through the settlement of a product liability legal reserve (approximately $2.3 million pre-tax) that
reduced SG&A in this quarter," he adds.
