Pep Boys had a tough fourth quarter, including earnings loss

March 26, 2008

Pep Boys - Manny, Moe & Jack posted sales of $517.6 million during the fourth quarter of 2007, down from $578.9 million during the first quarter of 2006. Pep Boys also suffered a loss of $18.5 million in earnings during the fourth quarter of 2007 compared to net earnings of $7.9 million during the same period in 2006.

The net loss included $8.5 million of margin reductions related to the exiting of non-core merchandise, plus $6.2 million in store closure costs and other items. (Pep Boys closed the first of a series of lease-back transactions on 34 stores during the fourth quarter.)

Pep Boys' comparable fourth quarter merchandise sales fell 4.4% and its comparable service revenue decreased by 1%.

For its fiscal year, which ended on Feb. 2, Pep Boys' sales totaled $2.1 billion versus $2.2 billion posted for 2006. Year-over-year, the company's comparable merchandise sales dropped 4.2%. However, its comparable service revenue increased by 1.8%.

The chain's net loss for the full year of 2007 totaled $37.4 million.

"It is important to note that despite fourth quarter challenges, the current quarter-to-date results indicate that retail gross profit margins have rebounded to first quarter 2007 rates and that (our) service center operations remain strong," sys Pep Boy's CFO Harry Yanowitz. "Our efforts to reduce indebtedness and strengthen the balance sheet are continuing."