The Pep Boys – Manny, Moe & Jack – announced financial results for the 13 weeks (fourth quarter) and 52 weeks (fiscal year) ended February 1, 2014.
Fourth quarter sales
Sales for the 13 weeks ended February 1, 2014 decreased by $35.1 million, or 6.6%, to $495.7 million from $530.8 million for the 14 weeks ended February 2, 2013. Excluding the 14th week of Q4 2012, sales increased by $1.0 million, or 0.2%, while comparable sales decreased 2.4%, consisting of a 1.4% comparable service revenue increase and a 3.4% comparable merchandise sales decrease. In accordance with GAAP, service revenue is limited to labor sales, while merchandise sales include merchandise sold through both the company’s service center and retail lines of business. Excluding the 14th week of Q4 2012 and re-categorizing sales into the respective lines of business from which they are generated, comparable service center revenue decreased 0.3%, while comparable retail sales decreased 4.6%.
Fourth quarter earnings
Net loss for the fourth quarter of fiscal 2013 was $3.3 million ($0.06 per share) as compared to a net loss of $14.5 million ($0.27 per share) for the fourth quarter of fiscal 2012. On a pre-tax basis, the 2013 results included a $2.8 million asset impairment charge and $0.4 million of debt refinancing expense, while the 2012 results included a $17.8 million pension settlement charge and a $1.8 million asset impairment charge, partially offset by a $1.6 million gain from the disposition of assets.
Fiscal year sales
Sales for fiscal year 2013 decreased by $24.1 million, or 1.2%, to $2,066.6 million from $2,090.7 million for fiscal year 2012. Excluding the 53rd week of 2012, sales increased by $11.9 million, or 0.6%, while comparable sales decreased 1.3%, consisting of a 1.6% comparable service revenue increase and a 2.1% comparable merchandise sales decrease. Excluding the 53rd week of 2012 and re-categorizing sales (see above), comparable service center revenue increased 0.2%, while comparable retail sales decreased 3.1%.
Fiscal year earnings
Net earnings for fiscal year 2013 were $6.9 million ($0.13 per share) as compared to $12.8 million ($0.24 per share) for fiscal year 2012. On a pre-tax basis, the 2013 results included, a net charge of $8.7 million comprised of a $7.7 million asset impairment charge, a $0.6 million severance charge and $0.4 million of debt refinancing expense. The fiscal year 2012 results included, on a pre-tax basis, a net benefit of $3.9 million comprised of $42.8 million of merger termination fees, net of related expenses, and a $1.3 million gain from the disposition of assets, mostly offset by a $17.8 million pension settlement charge, a $10.6 million asset impairment charge, $11.2 million of debt refinancing expense and $0.7 million of severance expense.
Commentary
“Our service business continues to grow,” said President & CEO, Mike Odell. “On a comparable store basis, customer count, maintenance and repair sales and tire units all grew quarter over quarter. While retail tire pricing has recently stabilized, prices are still below last year’s level, which has and is expected to continue to negatively impact top line sales results through the second quarter of 2014. We are also growing our service footprint, adding 30 Service & Tire Centers during fiscal 2014. These new Service & Tire Centers showcase the welcoming exterior curb appeal and comfortable customer lounge of our new ‘Road Ahead’ format.
“In addition to allowing us to realize our vision to be the best alternative to the dealer, our Road Ahead strategy also allows us to use our retail business to drive our service business. Our first completed Road Ahead market in Tampa continues to produce returns in line with our 15% hurdle rate. Based on those results, we are moving forward to complete an additional 20 stores in three markets – San Francisco, Boston and Charlotte – during the first half of 2014 and initiating plans for an additional three markets to be completed in late 2014/early 2015.
“Our new Road Ahead strategy includes strong growth from our digital omni-channel initiatives,” Odell added. “Overall, sales from service appointments made online, tires purchased online and installed in our service bays, and products purchased online for store pick up or home delivery grew 152% in the fourth quarter.”
Pep Boys has more than 7,500 service bays in 800 locations in 35 states and Puerto Rico. Pep Boys offers name-brand tires; automotive maintenance and repair; parts and expert advice for the do-it-yourselfer; commercial auto parts delivery; and fleet maintenance and repair. For more information visit www.pepboys.com.
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