Pep Boys Announces Cost Reduction Initiatives
PHILADELPHIA--The Pep Boys – Manny, Moe & Jack , the nation’s leading automotive aftermarket retail and service chain, announced that it will implement approximately $20.1 million in pre-tax cost reduction initiatives to improve the Company’s 2009 financial performance.
These initiatives include a Company-wide freeze on merit increases; the elimination of approximately 50 positions, representing 11% of the store support workforce; and numerous other spending reductions. In addition, 401(k) matching contributions and certain other retirement contributions have been conditioned on the Company achieving profitability targets in 2009. A pre-tax charge of approximately $0.6 million has been recorded in the fourth quarter of the 2008 fiscal year for costs associated with the workforce reductions.
“We have taken these steps to accelerate the Company’s return to profitability, which we project will occur in the upcoming year,” said CEO Mike Odell. “Our store base remains strong and no closures are planned, nor are any of our stores impacted by the staff reduction.”
“We expect positive cash flow for fiscal 2009 which, together with our strong balance sheet, provides us with the ability to fund the expansion initiatives of our long-term strategic plan by adding additional service-only locations,” said CFO Ray Arthur.
The Company previously announced closing a new $300 million senior secured revolving credit facility with a syndicate led by Bank of America, Wells Fargo and Regions Bank.
Pep Boys has over 560 retail stores and approximately 6,000 service bays in 35 states and Puerto Rico. Along with its full-service vehicle maintenance and repair 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 www.pepboys.com.
Certain statements contained herein constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The word "guidance," "expect," "anticipate," "estimates," "forecasts" and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include management's expectations regarding implementation of its long-term strategic plan, future financial performance, automotive aftermarket trends, levels of competition, business development activities, future capital expenditures, financing sources and availability and the effects of regulation and litigation. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. 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, retail and commercial consumers' ability to spend, the health of the various sectors of the automotive aftermarket, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, the location and number of competitors' stores, product and labor costs and the additional factors described in the Company's filings with the SEC. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.