Retail Service

UP, up, up for Pep Boys in the third quarter

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Pep Boys - Manny, Moe & Jack recorded revenue of $5.7 million on sales of $496.4 million for the third quarter ended Oct. 30, 2010. That compares to income of $2.1 million on sales of $472.6 million for the same period last year.

The company's income-to-sales ratio improved from  0.4% to 1.1%. Comparable store sales at its more than 600 stores in the United States and Puerto Rico increased 3.5%, broken out as follows:

* merchandise sales: up 3.9%

* service sales: up 1.9%.

Comparable service center revenue -- labor plus installed merchandise and tires -- increased 3%.

“Our third-quarter results reflect sales growth, improved overall gross margin rate and operating
expense leverage, which is consistent with our long-range goal of achieving a mid-to-high single-digit operating margin,” says CEO and President Mike Odell.

“Our knowledgeable and enthusiastic associates and compelling tire, service and DIY offerings are delivering increases in comparable store sales and customer counts, while our disciplined spending ensures that those sales translate into improved profitability. We also opened an additional six Service & Tire Centers and two Supercenters during the quarter, and remain on target to open 35 new locations this year while simultaneously refining our operating model."

For the first 39 months of its fiscal year, Pep Boys posted earnings of $28.2 million (up 36.1%) and sales of $1.5 billion (up 3.6%). 

Tony Cristello, managing director of equity research for BB&T Capital Markets, says the 3Q results are impressive.

"The upside in the quarter stemmed from better than expected top-line results -- in both merchandise and service -- and well-managed costs.

"Overall, third-quarter sales trends have continued into Q4 with the expected weakness in sales of GPS and power sport products having been offset by strength in its core tire and service offerings," he adds.

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