Pep Boys Reduces Dividend
March 12 2009 - 5:19PM
Business Wire
The Pep Boys � Manny, Moe & Jack (NYSE:PBY), the nation's
leading automotive aftermarket service and retail chain, today
announced that its Board of Directors has reduced the Company's
quarterly dividend from $0.0675 to $0.03 per share. The next
quarterly dividend is payable on April 27, 2009 to shareholders of
record on April 13, 2009. The Company also provided preliminary
fourth quarter and fiscal 2008 results. Full and final fourth
quarter and fiscal 2008 results will be reported on April 8,
2009.
�Given today's tight credit markets and the reduction in stock
valuations, the Board of Directors determined that a reduction in
our dividend is both prudent and appropriate at this time,�
commented Chairman of the Board James Mitarotonda. �We will
continue to review the dividend level quarterly and will make
adjustments as warranted to account for improved market conditions
and Company performance.�
Pep Boys expects to report fourth quarter sales of $466 million,
a decrease of 10.1% from the $518 million reported for the prior
year period. Fiscal 2008 sales are expected to be approximately
$1,928 million, a decrease of 9.8% from the $2,138 million reported
for the prior year period. The expected loss per share will be
between $0.59 and $0.69 per share for the fourth quarter compared
to a loss per share of $0.39 for the fourth quarter of last year.
The expected annual loss will be between $0.53 and $0.63 per share
as compared to an annual loss of $0.79 per share for the prior
year.
The general pullback in consumer spending during the fourth
quarter of 2008 resulted in a weak holiday season and the deferral
of tire purchases. In addition, fourth quarter 2008 results were
adversely affected by increased legal and inventory-related
accruals of approximately $8.0 million; asset impairments of
approximately $4.0 million; the accelerated amortization of
approximately $1.0 million of expenses related to the Company's
recently replaced credit facility; $0.6 million in costs associated
with previously announced cost-cutting initiatives; and a reduction
of the Company's tax provision benefit by approximately $7.0
million due to changes in the Company's effective tax rate.
�We spent much of 2008 repositioning Pep Boys for future
success,� said CEO Mike Odell. �We cleared non-core inventory,
updated our hard parts assortments, re-merchandised our stores,
installed a new service selling system, tested new marketing
programs, implemented new incentive compensation programs designed
to improve customer service and sales and also reduced our overhead
costs.�
Mike Odell continued, �We are encouraged that operational
improvements designed to drive a better customer experience are
beginning to take hold as customer service scores continue to rise
and customer complaints decline dramatically.�We fully expect these
efforts to pay off with improved results and for Pep Boys to be
profitable in 2009.�
Company-wide sales trends have greatly improved from the 10.1%
decline we experienced in the fourth quarter of fiscal 2008 to flat
sales in the first five weeks of fiscal 2009 versus the same period
last year. The Company is experiencing positive sales comparisons
year on year in both its service and commercial businesses,
particularly in the Northeast. Sales trends in the retail business
have also improved, but are still running single-digit declines due
to reduced customer demand in our discretionary categories. During
the third and fourth weeks of February, Pep Boys launched new TV
and radio ads focused on tires and oil changes, and experienced
significant sales increases in its service business during the
promotion.
�Our new marketing program is driving customers in, and our
store associates are embracing our �customer first� culture by
delivering fast, expert service, every time, to keep them coming
back,� remarked Mike Odell.
Furthering this focus on service, Pep Boys expects to open its
first three service �spokes� by the end of the second quarter.
These service-only facilities will be located in Ventura, CA; East
Puente Hills, CA; and Bridgeport, PA.
In addition, the Company has previously announced the completion
of a new $300 million senior secured revolving credit facility to
support Pep Boys' operations and growth.
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.
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