The Pep Boys – Manny, Moe & Jack (NYSE:PBY), the nation's
leading automotive aftermarket service and retail chain, today
announced results for the thirteen (second quarter) and twenty-six
(first half) weeks ended August 1, 2009.
Operating Results
Second Quarter
Sales
Sales for the thirteen weeks ended August 1, 2009 were $488.9
million, as compared to $500.0 million for the thirteen weeks ended
August 2, 2008. Comparable sales decreased 2.3%, consisting of a
5.2% comparable service revenue increase and a 4.0% comparable
merchandise sales decrease. In accordance with GAAP, service
revenue is limited to labor sales and merchandise sales includes
merchandise sold through both our service center and retail lines
of business. Re-categorizing Sales into the respective lines of
business from which they are generated, comparable Service Center
Revenue (labor plus installed merchandise and tires) increased
2.3%, while comparable Retail Sales (DIY and Commercial) decreased
6.0%.
Earnings
Earnings From Continuing Operations Before Income Taxes
increased to $12.8 million for the second quarter of fiscal 2009
from the $6.6 million recorded in the same period last year. Net
Earnings increased to $7.7 million ($0.15 per share) for the second
quarter of fiscal 2009 from the $5.4 million ($0.10 per share)
recorded in the same period last year. The second quarter 2009
results reflect Service Center revenue growth, improved gross
margin rates and tight spending control. The second quarter 2008
results included a $4.1 million gain from the disposition of assets
and a one-time $2.2 million tax benefit resulting from the
recording of a deferred tax asset.
First Half
Sales
Sales for the twenty-six weeks ended August 1, 2009 were $985.4
million, as compared to $998.1 million for the twenty-six weeks
ended August 2, 2008. Comparable sales decreased 1.3%, consisting
of a 4.5% comparable service revenue increase and a 2.6% comparable
merchandise sales decrease. Re-categorizing Sales (see above),
comparable Service Center Revenue increased 2.8%, while comparable
Retail Sales decreased 4.6%.
Earnings
Earnings From Continuing Operations Before Income Taxes
increased to $32.8 million for the first half of 2009 from the
$16.0 million recorded in the same period last year. Net Earnings
increased to $18.6 million ($0.36 per share) for the first half of
fiscal 2009 from the $10.1 million ($0.19 per share) recorded in
the same period last year. The first-half 2009 results reflect
Service Center revenue growth, improved gross margin rates, tight
spending control and reduced interest expense. The first-half 2009
results also include a $6.2 million gain resulting from bond
repurchases. The first-half 2008 results included a $3.5 million
gain resulting from bond repurchases, a $9.6 million net gain from
dispositions of assets (primarily from sale leaseback transactions)
and a one-time $2.2 million tax benefit resulting from the
recording of a deferred tax asset.
Commentary
“We are pleased with our performance for the quarter and
year-to-date and remain on-track with our turnaround,” said CEO
Mike Odell. “Our service center and commercial businesses show
strong revenue growth and our core DIY retail business is stable.
The current environment for sales of more discretionary items
remains challenging for now.” The second quarter of 2009 is the
last quarter where comparable sales are impacted by a prior
period’s sell down of non-core merchandise ($2.4 million in Q2
2008).
Mike continued, “On the store growth front, we have started to
prove out our ‘hub and spoke’ strategy by opening five new service
and tire centers since our first quarter earnings release, bringing
our year-to-date openings to six.”
“During the quarter, we continued to improve store execution and
maintain our customers first focus, while simultaneously
maintaining tight spending control,” commented CFO Ray Arthur. “Our
first half SG&A expense was over $24 million less in 2009 than
2008, helping us end the first half of 2009 with $45 million less
net debt than we had at the beginning of the year.”
Pep Boys has approximately 6,000 service bays within over 560
retail stores located 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.
Investors have an opportunity to listen to the Company’s
quarterly conference calls discussing its results and related
matters. The call for the second quarter will be broadcast live on
Wednesday, September 9 at 8:30 a.m. ET over the Internet at the
Vcall Web site, located at http://www.investorcalendar.com. To
listen to the call live, please go to the Web site 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 September 9
on Pep Boys' Web site at www.pepboys.com.
Pep Boys Financial Highlights
Thirteen Weeks Ended
August 1, 2009
August 2, 2008
Total Revenues $ 488,911,000 $ 500,043,000 Net
Earnings $ 7,735,000 $ 5,448,000 Basic Earnings Per Share:
Average Shares 52,384,000 52,153,000 Net Earnings $ 0.15 $
0.10 Diluted Earnings Per Share: Average Shares 52,699,000
52,236,000 Net Earnings $ 0.15 $ 0.10
Twenty Six weeks ended
August 1, 2009
August 2, 2008
Total Revenues $ 985,399,000 $ 998,086,000 Net
Earnings $ 18,644,000 $ 10,120,000 Basic Earnings Per Share:
Average Shares 52,359,000 52,109,000 Net Earnings $ 0.36 $
0.19 Diluted Earnings Per Share: Average Shares 52,538,000
52,204,000 Net Earnings $ 0.36 $ 0.19
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