U.S. News: Pep Boys Plods to Slight Decline on Year

The Pep Boys chain in the U.S. has reported a very soft fourth quarter, but fiscal year results that were down only slightly.
Sales for the thirteen weeks ended February 1, 2003, were $482,786,000, 5% less than the $508,408,000 recorded last year. Comparable store sales, which were negatively impacted by a 12.5% decline in comparable tire sales, declined 5.2%. All figures in U.S. dollars.
Improved merchandise and service center margins and effective expense control did not offset the decline in sales, says the company. As a result, the it reported comparable net earnings of $1,470,000 ($.03 per share basic and diluted) as compared to $5,615,000 ($.11 per share basic and diluted).
The company’s comparable results for the thirteen weeks ended February 1, 2003, do not include non-recurring charges and “Profit Enhancement Plan” reserve changes.
On a GAAP basis, which includes non-recurring charges and “Profit Enhancement Plan” reserve changes, net earnings declined from $3,686,000 ($.07 per share diluted) to a net loss of $1,834,000 ($.04 per share diluted).
Sales for the fiscal year ended February 1, 2003 were $2,172,488,000, 0.6% less than the $2,184,560,000 recorded last year. Comparable store sales declined 0.7%.
An improvement in merchandise and service centre margins as well as effective expense control more than offset the 0.7% decline in comparable store sales.
As a result, comparable net earnings were $48,740,000 ($.95 per share basic and $.90 per share diluted), 26% greater than the $38,660,000 ($.75 per share basic and $.74 per share diluted) that was earned last year.
On a GAAP basis, which includes non-recurring charges and “Profit Enhancement Plan” reserve changes, net earnings increased from $35,335,000 ($.68 per share diluted) to $43,800,000 ($.82 per share diluted).
“After eight consecutive quarters in which earnings increased at least 30%, we are disappointed with our fourth quarter results. Unfortunately, higher merchandise and service margins and effective expense control were offset by the sales impact of extremely low consumer confidence and a very depressed replacement tire market," says Pep Boys CEO, Mitchell G. Leibovitz. "Despite a very challenging retail environment, we were pleased to achieve a 26% increase in comparable net earnings for the full year.
Going forward, our main focus is to improve sales in all four areas of our core business. Given the progress that we have made in merchandise and service margins, expense control and the ongoing improvement of our balance sheet, we are positioned for growth when the economy and replacement tire market normalize.”