Pep Boys Reports Lower Fourth Quarter Results; Increase in Fiscal Year Earnings
PHILADELPHIA--March 13, 2003--The Pep Boys - Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, announced the following results for the fourth quarter and fiscal year ended February 1, 2003.Operating Results
Fourth Quarter
Sales
Sales for the thirteen weeks ended February 1, 2003, were $482,786,000, 5% less than the $508,408,000 recorded last year. Comparable store sales, which were negatively impacted by a 12.5% decline in comparable tire sales, declined 5.2%.
Earnings
Improved merchandise and service center margins and effective expense control did not offset the decline in sales. As a result, the Company reported comparable net earnings of $1,470,000 ($.03 per share basic and diluted) as compared to $5,615,000 ($.11 per share basic and diluted). The Company's comparable results for the thirteen weeks ended February 1, 2003, do not include non-recurring charges and "Profit Enhancement Plan" reserve changes as reconciled on the accompanying "Financial Highlights." The Company believes that the reporting of comparable net earnings is a more accurate representation of its operating results. On a GAAP basis, which includes non-recurring charges and "Profit Enhancement Plan" reserve changes, net earnings declined from $3,686,000 ($.07 per share diluted) to a net loss of $1,834,000 ($.04 per share diluted).
Fiscal Year
Sales
Sales for the fiscal year ended February 1, 2003 were $2,172,488,000, 0.6% less than the $2,184,560,000 recorded last year. Comparable store sales declined 0.7%.
Earnings
An improvement in merchandise and service center margins as well as effective expense control more than offset the 0.7% decline in comparable store sales. As a result, comparable net earnings were $48,740,000 ($.95 per share basic and $.90 per share diluted), 26% greater than the $38,660,000 ($.75 per share basic and $.74 per share diluted) that was earned last year. The Company's comparable results for the fiscal year ended February 1, 2003, do not include non-recurring charges and "Profit Enhancement Plan" reserve changes as reconciled on the accompanying "Financial Highlights." The Company believes that the reporting of comparable net earnings is a more accurate representation of its operating results. On a GAAP basis, which includes non-recurring charges and "Profit Enhancement Plan" reserve changes, net earnings increased from $35,335,000 ($.68 per share diluted) to $43,800,000 ($.82 per share diluted).
Commentary
Pep Boys CEO, Mitchell G. Leibovitz, made the following comments:
"After eight consecutive quarters in which earnings increased at least 30%, we are disappointed with our fourth quarter results. Unfortunately, higher merchandise and service margins and effective expense control were offset by the sales impact of extremely low consumer confidence and a very depressed replacement tire market.
Despite a very challenging retail environment, we were pleased to achieve a 26% increase in comparable net earnings for the full year.
Going forward, our main focus is to improve sales in all four areas of our core business. Given the progress that we have made in merchandise and service margins, expense control and the ongoing improvement of our balance sheet, we are positioned for growth when the economy and replacement tire market normalize."
Pep Boys Financial Highlights
Thirteen Thirteen
Weeks Ended Weeks Ended
February 1, 2003 February 2, 2002
---------------- ----------------
Total Revenues $ 482,786,000 $ 508,408,000
Net (Loss) Earnings $ (1,834,000) $ 3,686,000
Add:
Non-Recurring Charge, Net of Tax
(a) $ 3,347,000 $ -
Profit Enhancement Plan Reserve,
Net of Tax $ (43,000) $ 1,929,000
---------------- ----------------
Comparable Net Earnings $ 1,470,000 $ 5,615,000
================ ================
Average Shares-Diluted 51,598,000 52,585,000
Basic Earnings Per Share $ (.04) $ .07
Diluted Earnings Per Share $ (.04) $ .07
Comparable Basic Earnings Per Share $ .03 $ .11
Comparable Diluted Earnings Per
Share $ .03 $ .11
Fifty-Two Fifty-Two
Weeks Ended Weeks Ended
February 1, 2003 February 2, 2002
---------------- ----------------
Total Revenues $2,172,488,000 $2,184,560,000
Net Earnings $43,800,000 (b) $35,335,000 (c)
Add:
Non-Recurring Charge, Net of Tax
(a) $ 3,347,000 $ -
Profit Enhancement Plan Reserve,
Net of Tax $ 1,593,000 $ 3,325,000
---------------- ----------------
Comparable Net Earnings $48,740,000 (b) $38,660,000 (c)
================ ================
Average Shares-Diluted 57,199,000 52,035,000
Basic Earnings Per Share $ .85 (b) $ .69 (c)
Diluted Earnings Per Share $ .82 (b) $ .68 (c)
Comparable Basic Earnings Per Share $ .95 (b) $ .75 (c)
Comparable Diluted Earnings Per
Share $ .90 (b) $ .74 (c)
(a) Obligations associated with the non-renewal of the Chairman &
CEO's employment agreement and related search fees
(b) Includes $239,000 extraordinary loss on retirement of debt
(c) Includes $765,000 ($.01 per share) extraordinary loss on
retirement of debt
Pep Boys has 629 stores and more than 6,500 service bays in 36 states and Puerto Rico. Along with its vehicle repair and maintenance capabilities, the Company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States. Customers can find the nearest location by calling 800/PEP-BOYS or by visiting pepboys.com.
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 vibrancy 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 13, 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.