Second Quarter Earnings Up Significantly at Pep Boys

    PHILADELPHIA--Aug. 16, 2001--The Pep Boys - Manny, Moe & Jack , the nation's leading full-service automotive aftermarket chain, announced a significant increase in earnings per share for the thirteen weeks ended August 4, 2001.
    The Company earned $.24 per share (basic and diluted) as compared to the $.07 per share (basic and diluted) reported last year, before inclusion of a $.02 per share net gain on the early retirement of debt.

    Operating Results

    Second Quarter
    Sales

    Sales for the quarter ended August 4, 2001, which reflected the impact of 38 store closures and other steps that were taken in October 2000 in conjunction with implementing the Company's previously announced "Profit Enhancement Plan," were $572,874,000, 9.6% less than the $633,887,000 recorded last year.
    Service labor revenue, exclusive of installed product, was $109,541,000, 6.5% less than the $117,124,000 recorded last year.
    The impact of the steps that were taken in October 2000 contributed to the 6.7% decline in comparable store sales. During the quarter, comparable service labor revenue and comparable merchandise sales declined 3.1% and 7.6%, respectively.
    Service labor revenue, installed product, tires and commercial delivery accounted for approximately 55.4% of total revenue.

    Earnings

    An improvement in merchandise and service center margins as well as lower operating expenses more than offset the decline in sales.
    As a result, the Company achieved net earnings of $12,519,000 ($.24 per share - basic and diluted), which included $234,000 net gain on the early retirement of debt, compared to $4,376,000 ($.09 per share - basic and diluted), which included $967,000 ($.02 per share - basic and diluted) net gain on the early retirement of debt, earned last year.

    Six Months
    Sales

    Sales for the six months ended August 4, 2001, which reflected the impact of 38 store closures and other steps that were taken in October 2000 in conjunction with implementing the Company's previously announced "Profit Enhancement Plan," were $1,124,257,000, 10% less than the $1,248,696,000 recorded last year.
    Service labor revenue, exclusive of installed product, was $218,015,000, 6.9% less than the $234,213,000 recorded last year.
    The impact of the steps that were taken in October 2000 contributed to the 7.2% decline in comparable store sales. During the period, comparable service labor revenue and comparable merchandise sales declined 3.5% and 8.0%, respectively.
    Service labor revenue, installed product, tires and commercial delivery accounted for approximately 55.7% of total revenue.

    Earnings

    An improvement in merchandise and service center margins as well as lower operating expenses more than offset the decline in sales.
    As a result, the Company achieved net earnings of $21,627,000 ($.42 per share - basic and diluted), which included $234,000 net gain on the early retirement of debt, compared to $10,823,000 ($.21 per share - basic and diluted), which included $3,007,000 ($.06 per share - basic and diluted) net gain on the early retirement of debt, earned last year.

    Commentary
    Pep Boys' Chief Executive Officer, Mitchell G. Leibovitz, made the
    following comments:

    "We are pleased to report another very positive quarterly performance. Although many of the steps that we took last October to enhance our future profitability have had a negative impact on sales, they have had a very positive impact on earnings.
    "As was the case in the first quarter, we achieved significant improvements in our merchandise margins, gross profit from service operations and general and administrative expenses. Although we have been impacted by a weak replacement tire market, we are encouraged by the trends in the balance of our retail business and enter the third quarter with optimism."

                     Pep Boys Financial Highlights


                               Thirteen                 Thirteen
                             Weeks Ended               Weeks Ended
                            August 4, 2001            July 29, 2000
                            --------------            -------------
Total Revenues              $  572,874,000          $  633,887,000
Net Earnings                $   12,519,000 (a)      $    4,376,000 (b)
Average Shares-Diluted          52,033,000              51,075,000
Basic Earnings Per Share    $          .24 (a)      $          .09 (b)
Diluted Earnings Per Share  $          .24 (a)      $          .09 (b)


                               Twenty-Six             Twenty-Six
                              Weeks Ended            Weeks Ended
                             August 4, 2001         July 29, 2000
                             --------------         -------------
Total Revenues              $1,124,257,000          $1,248,696,000
Net Earnings                $   21,627,000 (a)      $   10,823,000 (c)
Average Shares-Diluted          51,649,000              51,038,000
Basic Earnings Per Share    $          .42 (a)      $          .21 (c)
Diluted Earnings Per Share  $          .42 (a)      $          .21 (c)


(a) Includes $234,000 net gain on the early retirement of debt
(b) Includes $967,000 ($.02 per share-basic and diluted) net gain on
    the early retirement of debt
(c) Includes $3,007,000 ($.06 per share-basic and diluted) net gain on
    the early retirement of debt