Pep Boys' tire sales continue to fall
Pep Boys - Manny, Moe & Jack's third quarter service sales dropped 7.6% from the same period in 2004 to $217 million, and tires played a big part in that decline, Pep Boys CEO Larry Stevenson told investors this morning.
"We continue to struggle with our service and tire business," he says.
"The disappointing peformance has been driven by (low) unit volume in tires. Tire units declined double digits (11.6%).
"We sell at the low price end of the spectrum... our tire sales are (mainly) touring tires. We are being very aggressive with pricing so we can maintain our position as the value player in the market."
Stevenson reports that Pep Boys customers are postponing their tire purchases.
"There are more people buying just one tire, which is an unusual thing to do.
"We have a long way to go on the service side of the business."
For the third quarter ended Oct. 29, 2005, Pep Boys posted a net loss from continuing operations of $11.4 million on sales of $545.2 million (a 2.4% drop compared to the same period last year). Other third-quarter financial highlights, compared to 3Q 2004, are as follows:
* merchandise sales: down 0.6%.
* service revenue: down 8.2%.
* retail sales (DIY and commercial): up 2.1%.
* service center revenue (labor plus installed merchandise and tires): down 7.6%.
Sales for the nine months ended October 29, 2005, totaled $1.68 billion, compared to $1.72 billion recorded last year. Comparable sales decreased 1.6% -- including a decrease in comparable merchandise sales of 0.5% and a decrease of 6.7% in comparable service revenue.
The company posted a net loss of $13 million through the first three quarters.
Pep Boys stock price on the New York Stock Exchange closed at $12.95 a share on Thursday, Nov. 10. That compares to a 52-week high and low of $18.80 and $11.75, respectively.