Pep Boys Reports Sales Increase
PHILADELPHIA--March 2, 2005--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 January 29, 2005.Operating Results
Fourth Quarter
Sales
Sales for the thirteen weeks ended January 29, 2005, were $554,139,000, 4.6% higher than the $529,639,000 recorded last year. Comparable merchandise sales increased 6.0% and comparable service revenue decreased 1.2%.
Earnings
Net Loss from Continuing Operations before cumulative effect of change in accounting principle increased from a Net Loss of $5,015,000 ($.09 per share - basic and diluted) to a Net Loss of $9,667,000 ($.17 per share - basic and diluted).
Recategorizing sales to more accurately reflect the two areas of the automotive aftermarket in which the Company competes, comparable retail sales increased 8.2%, but the gross profit percentage from comparable retail sales decreased from 28.2% to 25.3%. Comparable service center revenue decreased by 0.3%, and the gross profit percentage from comparable service center revenue decreased from 28.2% to 27.3%. In addition, SG&A expenses were flat at $148,556,000, while overall inventories decreased by 1.5% from the third quarter to $602,760,000, an increase of 8.9% from last year.
Commentary
Chairman & CEO Larry Stevenson commented, "Strong comparable sales is a key element of the retail renewal program that we started in the fourth quarter last year, but we have work to do to improve our resulting operating margins. This quarter, for the first time, we faced the very high comparable merchandise sales that we achieved over the last four quarters, and I am pleased that we were able to show significant additional comparable merchandise sales growth. I am confident that the continued development of our merchandising program will allow more of those sales to drop to the bottom line in future quarters."
Stevenson added, "While our comparable service center revenue accelerated from the previous few quarters, and we believe that our personnel and tire initiatives are progressing, the bulk of the improvement in our service business results was due to an improved economic environment and promotional activities, rather than from core operating improvements.
"Again, we caution investors that our operating turnaround is expected to produce uneven interim results as we reposition the chain to thrive over the longer run."
Fiscal Year
Sales
Sales for the fiscal year ended January 29, 2005 were $2,272,896,000, 6.5% higher than the $2,134,270,000 recorded last year. Comparable merchandise sales increased 7.9% and comparable service revenue increased 1.1%.
Earnings
Net Earnings from Continuing Operations before cumulative effect of change in accounting principle increased to $25,666,000 ($.46 per share - basic, $.45 per share diluted) from a Net Loss of $15,145,000 ($.29 per share - basic and diluted).
Initiatives
As previously announced on January 7, 2005, the Company recently restructured its field operations into separate retail and service teams. "As I have said in the past, the foundation of our performance turnaround will come from our people," Mr. Stevenson remarked. He continued, "The restructuring has allowed us to hire talented leaders with industry specific experience - retail or service. We have filled all, but one of our Operations Vice President positions and, today, I am pleased to announce that Mark Bacon has joined our senior management team as Senior Vice President - Retail Operations. Mark brings us a great deal of energy, a wealth of experience and a track record of success, most recently from Staples."
CFO Harry Yanowitz said, "We made good progress in reshaping our balance sheet this quarter, most notably in refinancing and expanding our revolving credit facility, and extending the maturity of our debt by issuing 10 year subordinated notes. As part of our continuing efforts to improve the returns generated by our asset base, we are carefully evaluating our 329 owned properties and have arranged for their appraisal. While we are pleased that this asset base appears to have significant value that supports the underlying business, we note that realizable value may vary widely from an appraisal and that the use of these assets is essential to our store operations regardless of the underlying financing structure. Therefore, changes, if any, to our balance sheet structure are likely to evolve over the course of years rather than quarters."
Pep Boys Financial Highlights
January 29, January 31,
Thirteen Weeks Ended: 2005 2004
--------------------- -------------- --------------
Total Revenues $ 554,139,000 $ 529,639,000
Loss From Continuing Operations $ (9,667,000) $ (5,015,000)
Net Loss $ (10,135,000) $ (2,355,000)
Average Shares - Diluted 55,017,000 52,736,000
Basic Loss Per Share From Continuing
Operations $ (0.17) $ (0.09)
Diluted Loss Share From Continuing
Operations $ (0.17) $ (0.09)
Basic Loss Per Share $ (0.18) $ (0.04)
Diluted Loss Per Share $ (0.18) $ (0.04)
January 29, January 31,
Fifty-Two Weeks Ended: 2005 2004
---------------------- -------------- --------------
Total Revenues $2,272,896,000 $2,134,270,000
Net Earnings (Loss) From Continuing
Operations Before Cumulative Effect
of Change in Accounting Principle $ 25,666,000 $ (15,145,000)
Net Earnings (Loss) $ 23,579,000 $ (33,894,000)
Average Shares - Diluted 64,278,000 52,185,000
Basic Earnings (Loss) Per Share From
Continuing Operations Before
Cumulative Effect of Change in
Accounting Principle $ 0.46 $ (0.29)
Diluted Earnings (Loss) Per Share
From Continuing Operations Before
Cumulative Effect of Change in
Accounting Principle $ 0.45 $ (0.29)
Basic Earnings (Loss) Per Share $ 0.42 $ (0.65)
Diluted Earnings (Loss) Per Share $ 0.41 $ (0.65)
Pep Boys has 595 stores and more than 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.