Pep Boys Reports Q4 Results
March 26 2008 - 7:30AM
Business Wire
The Pep Boys � Manny, Moe & Jack (NYSE: "PBY"), the nation's
leading automotive aftermarket retail and service chain, announced
the following results for the thirteen weeks (fourth quarter) and
fifty-two weeks (fiscal year) ended February 2, 2008. Operating
Highlights Q4 2007 EPS of ($0.36) includes ($0.27) of restructuring
costs Positive Comparable Service Center Revenue of 0.9% To-date,
Q1 2008 retail gross profit margins have rebounded to Q1 2007
levels as non-core inventory clearance winds down Closed on another
$63.6 million sale-leaseback transaction consistent with previous
valuation of owned real estate Operating Results Fourth Quarter
Sales Sales for the thirteen weeks ended February 2, 2008 were
$517,639,000, as compared to the $578,951,000 recorded for the
fourteen weeks ended February 3, 2007. Excluding the fourteenth
week of Q4 2006, comparable merchandise sales decreased 4.4% and
comparable service revenue decreased 1.0%. In accordance with GAAP,
merchandise sales includes merchandise sold through both our retail
and service center lines of business and service revenue is limited
to labor sales. Excluding the fourteenth week of Q4 2006,
re-categorizing Sales into the respective lines of business from
which they are generated, comparable Retail Sales (DIY and
Commercial) decreased 7.0% and comparable Service Center Revenue
(labor plus installed merchandise and tires) increased 0.9%.
Earnings Net Earnings (Loss) from Continuing Operations Before
Cumulative Effect of Change in Accounting Principle decreased from
Net Earnings of $7,936,000, ($0.15 per share - basic and diluted)
to a Net Loss of $18,505,000 (($0.36) per share - basic and
diluted). This Net Loss included (i) $8.5 million of margin
reductions related to the exiting of non-core merchandise, (ii)
$6.2 million in store closure costs and (iii) $6.0 million in debt
pre-payment costs. Fiscal Year Sales Sales for the fiscal year
ended February 2, 2008 were $2,138,075,000, as compared to the
$2,243,855,000 recorded last year. Excluding the fifty-third week
of 2006, comparable merchandise sales decreased 4.2% and comparable
service revenue increased 1.8%. Excluding the fifty-third week of
2006 and recategorizing Sales (see above), comparable Retail Sales
decreased 7.2% and comparable Service Center Revenue increased
2.8%. Earnings Net Loss from Continuing Operations Before
Cumulative Effect of Change in Accounting Principle increased from
$7,071,000 (($0.13) per share - basic and diluted) to $37,438,000
(($0.72) per share � basic and diluted). Commentary President &
CEO Jeff Rachor commented, �On our third quarter conference call,
we announced our merchandising transformation strategy to edit and
exit our substantial non-core inventory and improve hard parts
coverage and core automotive category management. As noted on that
call, in addition to the third quarter inventory write-down, we
planned to sell through remaining non-core product at its book
value, contributing little or no margin as it was sold. While the
difficult economic backdrop created sales challenges during the
fourth quarter, we are pleased to confirm that our progress to date
leaves us well positioned to complete this first important step in
our strategic plan by the beginning of the second quarter of this
year. �Service center operations continued an eighth consecutive
quarter of positive momentum, posting improvement in both sales and
adjusted gross profit margins during the fourth quarter despite the
difficult macro-economic environment. �It is important to note that
despite the Q4 challenges, the current quarter to date results
indicate that retail gross profit margins have rebounded to Q1 2007
rates and that service center operations remain strong.� CFO Harry
Yanowitz commented, �Certain costs associated with the initial
steps in our long-term strategic plan negatively impacted the
fourth quarter by $0.27 per share. Adjusting for these items, the
Net Loss was $0.09 per share. �Our efforts to reduce indebtedness
and strengthen the balance sheet are continuing. In the fourth
quarter, we closed the first of a series of sale leaseback
transactions on 34 stores for gross proceeds of $166.2 million.
Proceeds were used to partially pay down our outstanding real
estate-backed term loan and related interest rate swap. Yesterday,
we closed a second sale leaseback transaction on 18 stores for
gross proceeds of $63.6 million, which we will also use to pay down
debt.� Pep Boys Financial Highlights � � Thirteen weeksended
Fourteen weeksended February 2, 2008 February 3, 2007 � Total
Revenues $ 517,639,000 $ 578,951,000 � Net (Loss) Earnings From
Continuing Operations Before Cumulative Effect of Change in
Accounting Principle $ (18,505,000 ) $ 7,936,000 � Basic (Loss)
Earnings Per Share: Average Shares 51,903,000 54,274,000 � Net
(Loss) Earnings From Continuing Operations Before Cumulative Effect
of Change in Accounting Principle $ (0.36 ) $ 0.15 � Diluted (Loss)
Earnings Per Share: Average Shares 51,903,000 54,595,000 � Net
(Loss) Earnings From Continuing Operations Before Cumulative Effect
of Change in Accounting Principle $ (0.36 ) $ 0.15 � � Fifty-two
weeksended Fifty-three weeksended February 2, 2008 February 3, 2007
� Total Revenues $ 2,138,075,000 $ 2,243,855,000 � Net Loss From
Continuing Operations Before $ Cumulative Effect of Change in
Accounting Principle $ (37,438,000 ) (7,071,000 ) � Basic and
Diluted Loss Per Share: Average Shares 52,130,000 54,318,000 � Net
Loss From Continuing Operations Before Cumulative Effect of Change
in Accounting Principle $ (0.72 ) $ (0.13 ) Pep Boys has over 560
stores and approximately 6,000 service bays in 35 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 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 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. Investors have an opportunity to listen to the Company�s
quarterly conference calls discussing its results and related
matters. The call for the fourth quarter will be broadcast live on
Wednesday, March 26 at 8:30 a.m. ET over the Internet at Broadcast
Networks' Vcall Website, located at
http://www.investorcalendar.com. To listen to the call live, please
go to the website at least 15 minutes early to register, download
and install any necessary audio software. For those who cannot
listen to the live broadcast, a replay will be available shortly
after the call. Supplemental financial information will be
available the morning of March 26 on Pep Boys' Website at
www.pepboys.com.
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