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More information on Pep Boys, Continental partnership

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During yesterday's conference call, Larry Stevenson, CEO of Pep Boys -- Manny, Moe and Jack, announced not only that the company would be adding major brand tires to its lineup, but also that most SKUs would be Continental and General brands.

(See "Pep Boys to carry major brand tires" on www.mtdealer.com.)

In addition to Continental and General, Pep Boys will begin selling Goodyear, Michelin and Hankook tires through its 595-store chain on May 16. Pep Boys will continue to offer its Futura and Cornell private brands.

"We are adding branded tires to our own top-quality private label brand because it is consistent with Pep Boys' strategy of offering top brands at a great value across all of our major categories," said Hal Smith, executive vice president of merchandising and marketing for Pep Boys.

He said the auto parts chain wanted to partner with a major national brand player, and made a point of Continental AG's original equipment presence.

"We'll be running chain-wide promotions to highlight Continental and General products," he added.

Ed Marohn, director of mass retail sales for Continental Tire North America Inc. (CTNA), said the partnership provides "an unprecedented opportunity" for CTNA to expand its replacement business.

"Branded tires represent over one half of the industry's sales, and this is a natural extension of our tire and service offering. With Pep Boys' national presence, we are uniquely positioned to offer motorists across the country name brand tires at very competitive prices."

According to CTNA, private brand tires account for 18% of Pep Boys total revenue and nearly a quarter of its profits.

Pep Boys successfully introduced branded tires at its stores in the Denver, Colo.; Houston, Texas; Jacksonville, Fla.; Tucson, Ariz.; New Orleans, La.; and Fresno, Calif. markets prior to the national launch.

Pep Boys posted sales of $566 million during the first quarter of 2004, a 10.8% increase over last year's first quarter.

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