Pep Boys Reports Growth In Service

The Pep Boys announced its fiscal year 2013 results, which ended Feb. 1, with Pep Boy President Mike Odell reporting a growth in service.

“Our service business continues to grow,” said Mike Odell, Pep Boys president and CEO. “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.”

A financial statement released to shareholders reported that sales for fiscal year 2013 decreased by $24.1 million, or 1.2%, to $2.066 billion from $2.090 billion 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, comparable service center revenue increased 0.2%, while comparable retail sales decreased 3.1%.

“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,” noted Odell in the financial statement.

Net earnings for the 2013 fiscal year 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.

Odell announced that Pep Boys intends to grow its 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,” said Odell.

The Pep Boys “Road Ahead” format was first introduced in the Tampa, Fla., market. Odell reported in the financial release that the Road Ahead format in Tampa produces returns “in line with Pep Boy’s 15% hurdle rate.”

“Our Road Ahead strategy also allows us to use our retail business to drive our service business,” said Odell. “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.”