Earnings Continue to Rebound at Pep Boys; 4th Quarter Earnings up 185%
PHILADELPHIA--March 21, 2002--The Pep Boys - Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, announced a 185% improvement in earnings for the fourth quarter ended February 2, 2002.Operating Results
Fourth Quarter
Sales
Sales for the quarter ended February 2, 2002, which included one less week than the comparable quarter last year, were $508,203,000, 7% less than the $547,390,000 recorded last year. Comparable store sales were essentially unchanged during the quarter, with positive comparable merchandise sales being offset by a decline in comparable service labor revenue.
Earnings
An improvement in gross profit margins as well as lower operating expenses more than offset the decline in sales. As a result, the Company reported net earnings for the period of $3,686,000 ($.07 per share-basic and diluted), which includes $1,929,000 ($.04 per share-basic and diluted) of expense to increase reserves associated with the "Profit Enhancement Plan." This represents a 185% increase in net earnings when compared to the $1,292,000 ($.03 per share-basic and diluted) recorded last year, which included $986,000 ($.02 per share-basic and diluted) of expenses associated with the "Profit Enhancement Plan, " reserves and certain other expenses.
Fiscal Year
Sales
Sales for the fiscal year ended February 2, 2002, which included one less week than last year and which were negatively impacted by the steps that were taken in October 2000 in conjunction with the Company's "Profit Enhancement Plan," were $2,183,715,000, 10% less than the $2,418,468,000 recorded last year. Comparable store sales, which were negatively impacted by the steps that were taken in October 2000 in conjunction with the Company's "Profit Enhancement Plan" and which included decreases of 6% in comparable merchandise sales and 5% in comparable service labor revenue, declined 6% during the fiscal year ended February 2, 2002.
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, net earnings before extraordinary items were $36,100,000 ($.70 per share-basic and $.69 per share-diluted), which includes $3,325,000 ($.06 per share-basic and diluted) of expense to increase reserves associated with the "Profit Enhancement Plan," as compared to a loss of $53,148,000 ($1.04 per share-basic and diluted) before extraordinary items, which includes $62,921,000 ($1.23 per share-basic and diluted) of expenses associated with the "Profit Enhancement Plan," reserves and certain other expenses.
Store Expansion
Pep Boys opened one Supercenter during the fiscal year ended February 2, 2002, and currently operates 628 stores and 6,507 service bays in 36 states and Puerto Rico. The Company anticipates opening two Supercenters (Commack, NY, Watchung, NJ) during the fiscal year ending February 1, 2003.
Commentary
Pep Boys CEO, Mitchell G. Leibovitz, made the following comments:
"We are very pleased to report our fifth consecutive quarter of significantly improved earnings as well as a very successful fiscal 2001.
"Over the course of the year, earnings have rebounded, our balance sheet has been strengthened, our stock achieved the 7th highest percentage increase on the NYSE and we celebrated our 80th birthday.
"Benefiting from our "Profit Enhancement Plan," we began fiscal 2002 with optimism. Merchandise margins and operating expenses continue at improved levels and, although our new advertising campaign is just getting started, comparable store sales are positive and improving on a quarter-to-date basis."
Pep Boys Financial Highlights
Thirteen Fourteen
Weeks Ended Weeks Ended
February 2, 2002 February 3, 2001
---------------- ----------------
Total Revenues $ 508,203,000 $ 547,390,000
Net Earning Before
Extraordinary Item $ 3,691,000(a) $ 1,292,000(b)
Net Earnings $ 3,686,000(a) $ 1,292,000(b)
Average Shares-Diluted 52,585,000 51,187,000
Basic and Diluted
Earnings Per Share
Before Extraordinary
Item $ .07(a) $ .03(b)
Basic and Diluted
Earnings Per Share $ .07(a) $ .03(b)
Fifty-Two Fifty-Three
Weeks Ended Weeks Ended
February 2, 2002 February 3, 2001
---------------- ----------------
Total Revenues $2,183,715,000 $2,418,468,000
Net Earnings (Loss)
Before Extraordinary
Item $ 36,100,000(c) $ ( 53,148,000 ) (d)
Net Earnings (Loss) $ 35,335,000(c,e) $ ( 51,094,000 )(d,f)
Average Shares-Diluted 52,035,000 51,088,000
Basic Earnings (Loss)
Per Share Before
Extraordinary Item $ .70(c) $ ( 1.04 )(d)
Basic Earnings (Loss)
Per Share $ .69(c,e) $ ( 1.00 )(d,f)
Diluted Earnings (Loss)
Per Share Before
Extraordinary Item $ .69(c) $ ( 1.04 )(d)
Diluted Earnings (Loss)
Per Share $ .68(c,e) $ ( 1.00 )(d,f)
(a) $1,929,000 ($.04 per share) of expense due to an increase of
the "Profit Enhancement Plan" reserve
(b) $986,000 ($.02 per share) of expense due to an increase of the
"Profit Enhancement Plan" and certain other expenses
(c) $3,325,000 ($.06 per share) of expense due to an increase of
the "Profit Enhancement Plan" reserve
(d) $62,921,000 ($1.23 per share) of expense for the "Profit
Enhancement Plan" reserves and certain other expenses
(e) $765,000 ($.01 per share) extraordinary loss on the early
retirement of debt
(f) $2,054,000 ($.04 per share) extraordinary gain on the early
retirement of debt
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 fourth quarter will be broadcast live on Thursday, March 21, at 8:30 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.
Internet:http://www.pepboys.com