Pep Boys Announces Fourth Quarter Results
19 March 1999
Pep Boys Announces Fourth Quarter Results; Current Quarter Update
PHILADELPHIA--March 18, 1999-- The Pep Boys - Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, announced its results for the fourth quarter and fiscal year ended January 30, 1999 and disclosed that comparable store sales for the first six weeks of the first quarter had increased 8.6%.Operating Results
Fourth Quarter
Sales
Sales for the quarter ended January 30, 1999 rose to a record $563,216,000, 12.1% greater than the $502,380,000 recorded last year. Service labor revenue, exclusive of installed product, climbed to a record $99,368,000, 16.6% greater than the $85,228,000 recorded last year.
Comparable store sales increased 13.0% during the quarter while comparable service labor revenue and tire sales increased 9.8% and 17.0%, respectively. Service labor revenue and tires accounted for 17.6% and 14.8%, respectively, of total sales.
Earnings
Shifts in the sales mix, high inventory shrinkage and the sale and closure of the Express stores all had a negative impact on fourth quarter earnings. As a result, the Company sustained a loss of $18,867,000 ($.31 per share-basic and diluted) as compared to the loss of $27,743,000 ($.45 per share-basic and diluted) recorded last year.
Fiscal Year
Sales
Sales for the fiscal year ended January 30, 1999 rose to a record $2,398,708,000, 16.6% greater than the $2,056,520,000 recorded last year. Service labor revenue, exclusive of installed product, climbed to a record $407,368,000, 21.3% greater than the $335,850,000 recorded last year.
Comparable store sales increased 9.0% during the fiscal year while comparable service labor revenue and comparable tire sales increased 11.5% and 15.4%, respectively. Service labor revenue and tires accounted for 17.0% and 14.2%, respectively, of total sales.
Earnings
Shifts in the sales mix, high inventory shrinkage, a reduction in volume rebates, the sale and closure of the Express stores and the rollout of the commercial delivery program all had a negative impact on earnings.
As a result, earnings for the fiscal year ended January 30, 1999 were $4,974,000 ($.08 per share-basic and diluted) as compared to the $49,611,000 ($.81 per share basic; $.80 per share diluted) earned last year.
Current Quarter Update
Sales
Comparable store sales for the six weeks ended March 13, 1999 rose 8.6% while comparable service labor revenue and comparable tire sales increased 6.4% and 10.4%, respectively. By comparison, comparable store sales for the thirteen weeks ended May 2, 1998 increased 7.0% while comparable service labor revenue and comparable tire sales increased 15.2% and 11.9%, respectively.
Store Expansion Program
Pep Boys anticipates opening approximately twenty-five Supercenters during the fiscal year ending January 29, 2000. As of January 30, 1999, Pep Boys operated 638 stores and 6,608 service bays in 37 states and Puerto Rico.
Commentary
Pep Boys' CEO, Mitchell G. Leibovitz, made the following comments:
"Despite the bottom line, the fourth quarter was pivotal for us.
"Our year-long inventory reduction program is behind us. With merchandise levels $128 million lower, we have returned to a normalized replenishment program which is already improving our merchandise margins.
"The unusually high level of inventory shrinkage is behind us. The sale or closure of 115 stores and the Phoenix distribution center coupled with the return of large quantities of merchandise were all contributing factors that will not recur in 1999.
"The rollout of our commercial delivery program is behind us. So far this quarter, the average weekly sales volume of our 576 parts delivery stores has increased to $8,677. This program is budgeted to account for approximately 11% of sales as well as generate higher operating margins in 1999.
"The sale of our non-service, non-tire Express stores is behind us and we have utilized the $108 million proceeds from that sale to help fund the repurchase of 11,276,698 shares or 17.7% of our outstanding common stock at $16.00 per share. This aggressive repurchase underscores our belief that Pep Boys' future prospects are bright.
Although 1998 was an extremely challenging year, we enter fiscal 1999 with optimism and enthusiasm."
Pep Boys Revenue Highlights
Thirteen Thirteen
Weeks Ended Weeks Ended
January 30, 1999 January 31, 1998
---------------- ----------------
Total Revenues $563,216,000 $502,380,000
Net Earnings (Loss) $(18,867,000)(a) $(27,743,000)(b)
Basic Earnings (Loss) Per Share $ (.31) $ (.45)
Diluted Earnings (Loss) Per Share $ (.31) $ (.45)
Fifty-Two Fifty-Two
Weeks Ended Weeks Ended
January 30, 1999 January 31, 1998
---------------- ----------------
Total Revenues $2,398,708,000 $2,056,520,000
Net Earnings $ 4,974,000(a) $ 49,611,000 (b)
Basic Earnings Per Share $ .08 $ .81
Diluted Earnings Per Share $ .08 $ .80
(a) Includes after tax charges of $3,949,000, $.06 per
share-basic and diluted for the thirteen weeks ended January 30, 1999
and $20,109,000, $.33 per share-basic and diluted for the fifty-two
weeks ended January 30, 1999 to reflect the costs associated with the
sale and closure of 109 Express stores.
(b) Includes after tax charges of $18,418,000, $.30 per
share-basic and diluted, to reflect the costs associated with the
closure of nine stores, reducing the store expansion program, certain
equipment write-offs, severance and other non-recurring expenses.
Note: Certain statements made herein are forward-looking which 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 consumers' ability to spend, the health of various segments 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, product costs, and the ability to grow and improve the commercial delivery program.
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.