Pep Boys Invests In New State-of-the-Art Distribution Center at AllianceCalifornia in San Bernardino

PHILADELPHIA--May 7, 2004--

The 600,240 Square-Foot Warehouse Will Improve Throughput and Storage Capacity; Serve More Stores

The Pep Boys - Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, announced that it has reached an agreement with Hillwood to lease a 600,240-square-foot build-to-suit distribution center in San Bernardino at the site of the former Norton Air Force Base, now called AllianceCalifornia(TM).

Planned to open in May 20, 200405, the new distribution center will replace Pep Boys' existing three-building distribution center complex in Los Angeles.

"We made a strategic decision to relocate and build a new, larger and fully-equipped distribution center in San Bernardino," said Stuart Rosenfeld, vice president of distribution for Pep Boys. "The spaciousness and design of the new facility will enable us to streamline our operations, increase our throughput and storage capacity, serve additional Pep Boys stores, and expand if necessary. This investment will improve the overall efficiency and growth of our company, enhance day-to-day operations, and ultimately benefit our customers."

The new distribution center, which is being developed and constructed by Texas-based Hillwood, will be significantly larger than the current Los Angeles facility. The additional space will create several advantages for Pep Boys:

-- The new distribution center will comprise - in one facility - nearly 175,000 more square feet than all three L.A. warehouses combined and will provide additional height (30 feet vs. 24 feet), which equate to a 63% increase in cubic capacity. Also, 25 additional loading docks (65 vs. 40) will allow for a substantial increase in throughput capacity. The existing L.A. facilities process 300 million feet of merchandise, equaling 600,000 units weekly.

-- Because of the increased throughput capacity, the new facility will serve 165 stores -151 stores in its existing service area, as well as another 14 stores in the Phoenix market.

-- The design of the new facility will allow for an additional 200,000-square-foot expansion, if necessary.

Currently, Pep Boys' Los Angeles distribution center complex employs 240 full-time and part-time associates. Pep Boys expects many managers and associates to relocate 60 miles east to San Bernardino when the new facility opens. The Los Angeles operations will transition in systematic stages in early 2005 before closing. Associates who are not interested in relocating to the San Bernardino facility will be offered separation packages. Pep Boys expects to hire more than 100 associates for the new facility, employing about 265 in total.

In addition to southern California, Pep Boys operates distribution centers near Atlanta, GA; Dallas, TX; Indianapolis, IN; and Chester, NY.

About Pep Boys

Pep Boys has 595 stores and over 6,000 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 1-800-PEP-BOYS or by visiting pepboys.com.

About Hillwood

Hillwood, a Perot company, is ranked as one of the top commercial real estate developers in the country . The company is best known for its development of the 15,000-acre AllianceTexas project in Fort Worth, Texas and the $420-million American Airlines Center and Victory district near downtown Dallas. In addition to its AllianceCalifornia project, Hillwood's newest developments are Lakeside Trade Center in Flower Mound, Texas; DeSoto Trade Center in Southaven, Miss., part of the greater Memphis, Tenn. market; and Tradepoint Business Park in Coppell, Texas.

Editor's note: Pep Boys' San Bernardino distribution center will be located at the northwest corner of Tippecanoe Avenue and Mill Street.