Pep Boys To Sell 100 Express Stores

6 October 1998

Pep Boys To Sell 100 Express Stores; Provides Current Quarter Sales Status

    PHILADELPHIA--Oct. 5, 1998-- Express Stores
    The Pep Boys - Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, announced that it has entered into a definitive real estate agreement to sell 100 of its non-service/non-tire format Express stores to AutoZone Inc. for $108 million in cash.
    The company anticipates utilizing the proceeds from this sale to repay existing debt obligations. This transaction, which excludes inventory and certain other assets, is expected to close on or about Oct. 21, 1998.
    In addition, Pep Boys will close nine underperforming Express stores but has no plans to close the remaining 12 Express stores, one of which will be converted to a Supercenter and four of which are in Puerto Rico.
    In order to reflect the estimated costs associated with the sale and closure of the 109 Express stores, Pep Boys will record a pre-tax charge to earnings of approximately $34 million.
    Excluding the 109 Express stores that will be sold or closed, Pep Boys currently operates 624 stores and 6,444 service bays in 37 states, the District of Columbia and Puerto Rico.

Third Quarter Sales
    Sales for the nine weeks ended Oct. 3, 1998, rose to $436,193,000, 19.1% greater than the $366,113,000 recorded during the comparable period of 1997. For the same period, comparable store sales increased 9.5% while comparable service labor revenue and comparable tire sales increased 11.8% and 19.1%, respectively.
    Earnings for the thirteen weeks ended Oct. 31, 1998, will be released on Nov. 12, 1998.

Commentary
    Pep Boys' CEO, Mitchell G. Leibovitz, made the following comments:
    "In addition to strengthening our balance sheet and reducing interest expense, the steps that we have taken will improve our operating results and further enhance our strategic position in the rapidly changing automotive aftermarket.
    "The sale and/or closure of 109 Express stores will enable us to maximize our competitive advantages by focusing our attention and capital on our unique Supercenter format, which features our highly successful service and tire offerings as well as our rapidly growing commercial delivery program."

    Note: Certain statements made herein are forward-looking and as a result involve risks and uncertainties.
    Actual results could differ materially from expected results due to factors beyond the control of the Company, including the strength of the national and regional economies and consumers' ability to spend, the health of various segments of the market that the Company serves-particularly the do-it-yourself segment, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, location and number of competitors' stores, product costs, the ability to attract and retain qualified personnel and to acquire real estate, facilities and equipment, the ability to reduce inventory levels during 1998, and continued successful ramp-up of the commercial delivery program.
    Further risk factors are discussed in the Company's filings with the Securities and Exchange Commission, including its most recent Form 10-K, a copy of which may be obtained from the Company without charge.