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Pep Boys Reports Earnings

    PHILADELPHIA--Nov. 15, 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 November 3, 2001.
    The Company earned $.21 per share before extraordinary items, including $.01 per share of net income due to the reduction in the "Profit Enhancement Plan" reserve and excluding a $.02 per share net loss on the early retirement of debt, as compared to a loss of $1.22 per share before extraordinary items, including a $1.21 per share net loss for the "Profit Enhancement Plan" reserve and certain other expenses and excluding a $.02 per share net loss on the early retirement of debt, reported last year.

    Operating Results
    Third Quarter
    Sales

    Sales for the quarter ended November 3, 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 $551,255,000, 11.4% less than the $622,382,000 recorded last year.
    Service labor revenue, exclusive of installed product, was $103,799,000, 11.9% less than the $117,849,000 recorded last year.
    The impact of the steps that were taken in October 2000, the decline in retail spending that followed the events that occurred on September 11 and extremely challenging prior year tire comparisons resulting from last year's Firestone recall all contributed to the 8.4% decline in comparable store sales.
    During the quarter, comparable service labor revenue, which is impacted by tire sales, and comparable merchandise sales declined 8.7% and 8.4%, respectively.
    Service labor revenue, installed product, tires and commercial delivery accounted for approximately 56% 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 earnings before extraordinary items of $11,016,000 ($.21 per share) including $358,000 ($.01 per share) of net income due to the reduction in the "Profit Enhancement Plan" reserve and excluding a $994,000 ($.02 per share) net loss on the early retirement of debt, as compared to a loss of $62,271,000 ($1.22 per share) before extraordinary items, including a $61,763,000 ($1.21 per share) net loss for the "Profit Enhancement Plan" reserve and certain other expenses and excluding a $938,000 ($.02 per share) net loss on the early retirement of debt, reported last year.

    Nine Months
    Sales

    Sales for the nine months ended November 3, 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 $1,675,512,000, 10.5% less than the $1,871,078,000 recorded last year.
    Service labor revenue, exclusive of installed product, was $321,814,000, 8.6% less than the $352,062,000 recorded last year.
    The impact of the steps that were taken in October 2000 and the decline in retail spending that followed the events that occurred on September 11 contributed to the 7.6% decline in comparable store sales. During the period, comparable service labor revenue, which is impacted by tire sales, and comparable merchandise sales declined 5.3% and 8.1%, respectively.
    Service labor revenue, installed product, tires and commercial delivery accounted for approximately 56% 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 earnings before extraordinary items of $32,408,000 ($.63 per share) including a $1,396,000 ($.03 per share) net loss due to increases in the "Profit Enhancement Plan" reserve and excluding a $758,000 ($.02 per share) net loss on the early retirement of debt, as compared to a loss of $54,455,000 ($1.07 per share) before extraordinary items, including a $61,763,000 ($1.21 per share) net loss for the "Profit Enhancement Plan" reserve and certain other expenses and excluding a $2,069,000 ($.04 per share) net gain on the early retirement of debt, reported last year.

    Commentary

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

    "Despite an extremely challenging retail environment, we are very pleased to report our fourth consecutive quarter of significantly improved earnings.
    "When we implemented our "Profit Enhancement Plan" last year, we fully understood that our actions would have a negative impact on sales but a positive influence on earnings. As was the case during the prior three quarters, we expected a decline in comparable store sales again this quarter. Unfortunately, the tragic events of September 11 further depressed sales. Nevertheless, the continued improvement in merchandise margins, gross profit from service operations and general and administrative expense once again enabled us to significantly improve our quarterly earnings.
    "We enter the fourth quarter with optimism. Comparable store sales in all four areas of our business - "do-it-yourself," "do-it-for-me," tires and commercial - have improved significantly since the beginning of November and should continue to improve over the course of the fourth quarter and into next year as we anniversary the implementation of last year's "Profit Enhancement Plan," enhance our marketing as well as improve our customer offering and service.
    "With our unique, one-stop shopping and service format, we believe that the economic environment and an increased dependence on vehicular travel could be beneficial for Pep Boys."



                     Pep Boys Financial Highlights

                                Thirteen                Thirteen
                             Weeks Ended             Weeks Ended
                        November 3, 2001        October 28, 2000
                        ----------------        ----------------

Total Revenues            $  551,255,000          $  622,382,000

Net Earnings (Loss)
 Before Extraordinary 
  Item                    $   11,016,000(a,e)     $(  62,271,000)(c,g)

Net Earnings (Loss)       $   10,022,000(a,e)     $(  63,209,000)(c,g)

Average Shares-Diluted        52,254,000              51,112,000

Basic and Diluted 
 Earnings (Loss) 
 Per Share
  Before Extraordinary 
  Item                    $          .21(a,e)     $        (1.22)(c,g)

Basic and Diluted 
 Earnings (Loss) 
 Per Share                $          .19(a,e)     $        (1.24)(c,g)


                              Thirty-Nine            Thirty-Nine
                             Weeks Ended             Weeks Ended
                        November 3, 2001        October 28, 2000
                        ----------------        ----------------

Total Revenues            $1,675,512,000          $1,871,078,000

Net Earnings (Loss)
 Before Extraordinary 
  Item                    $   32,408,000(b,f)     $  (54,455,000)(d,g)

Net Earnings (Loss)       $   31,650,000(b,f)     $  (52,386,000)(d,g)

Average Shares-Diluted        51,851,000              51,055,000

Basic and Diluted 
 Earnings (Loss) 
 Per Share
  Before Extraordinary 
   Item                   $          .63(b,f)     $        (1.07)(d,g)

Basic and Diluted 
 Earnings (Loss) 
 Per Share                $          .61(b,f)     $        (1.03)(d,g)



(a) $994,000 ($.02 per share) extraordinary loss on the early
    retirement of debt.
(b) $758,000 ($.02 per share) extraordinary loss on the early
    retirement of debt.
(c) $938,000 ($.02 per share) extraordinary loss on the early
    retirement of debt.
(d) $2,069,000 ($.04 per share) extraordinary gain on the early
    retirement of debt.
(e) $358,000 ($.01 per share) of income due to a reduction of the
    "Profit Enhancement Plan" reserve.
(f) $1,396,000 ($.03 per share) of expense due to an increase of
    the "Profit Enhancement Plan" reserve.
(g) $61,763,000 ($1.21 per share) of expense due to non-recurring
    charges and other related items.

    Notes: Certain statements made herein, including those discussing management's expectations for future periods, are forward-looking and involve risks and uncertainties.
    The Company's actual results may differ materially from the results discussed in the forward-looking statements due to factors beyond the control of the Company, including the strength of the national and regional economies and retail and commercial consumers' ability to spend, the health of the various sectors of the market that the Company serves, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, location and number of competitors' stores and product and labor costs.
    Further factors that might cause such a difference include, but are not limited to, the factors described in the Company's filings with the Securities and Exchange Commission.
    In accordance with the SEC's recently adopted Regulation FD (fair disclosure), investors will now have an opportunity to listen to the Company's quarterly conference calls discussing its results and related matters. The calls will be broadcast live over the Internet at Broadcast Networks' Vcall web site, located at http://www.vcall.com.
    The call for the third quarter will be broadcast live on Friday, November 16, at 9:00 AM EST. To listen to the call live, please go to the web site at least 15 minutes early to register, download and install any necessary audio software.
    For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Supplemental financial information is available on Pep Boys web site at www.pepboys.com.