The Pep Boys – Manny, Moe & Jack announced the following results for the 13 weeks (fourth quarter) and 52 (fiscal year) weeks ended January 31, 2015.
Fourth quarter sales
Sales for the 13 weeks ended January 31, 2015 increased by $6.7 million, or 1.3%, to $502.4 million from $495.7 million for the 13 weeks ended February 1, 2014. Comparable sales increased 1.3%, consisting of a 5.1% comparable service revenue increase and a 0.2% comparable merchandise sales increase. In accordance with GAAP, service revenue is limited to labor sales, while merchandise sales include merchandise sold through both the 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 increased 3.2%, while comparable retail sales decreased 1.0%.
Fourth quarter earnings
Net loss for the fourth quarter of fiscal 2014 was $26.7 million ($0.50 per share) as compared to a net loss of $3.3 million ($0.06 per share) for the fourth quarter of fiscal 2013. On a pre-tax basis, the 2014 results included, a net charge of $12.4 million comprised of a $23.9 million goodwill impairment charge, a $2.3 million asset impairment charge and $0.5 million in severance, partially offset by a $14.3 million gain from the disposition of certain properties. The 2013 results included a $2.8 million asset impairment charge and $0.4 million of debt refinancing expense.
Fiscal year sales
Sales for fiscal year 2014 increased by $18.0 million, or 0.9%, to $2,084.6 million from $2,066.6 million for fiscal year 2013. Comparable sales remained relatively flat, consisting of a 4.9% comparable service revenue increase and a 1.6% comparable merchandise sales decrease. Re-categorizing sales (see above), comparable service center revenue increased 1.4%, while comparable retail sales decreased 1.9%.
Fiscal year earnings
Net loss for fiscal year 2014 was $27.3 million ($0.51 per share) as compared to earnings of $6.9 million ($0.13 per share) for fiscal year 2013. On a pre-tax basis, the 2014 results included, a net charge of $24.6 million comprised of a $23.9 million goodwill impairment charge, a $7.5 million asset impairment charge, $4.0 million in litigation expense and $2.9 million in severance, partially offset by a $13.8 million gain from the disposition of certain properties. The fiscal year 2013 results included, on a pre-tax basis, a net charge of $8.7 million comprised of a $7.7 million asset impairment charge, $0.6 million in severance and $0.4 million of debt refinancing expense.
“The fourth quarter was a time of transition for the company,” said interim CEO John Sweetwood. “We continued to increase our sales in the growing service segment. Our investments in the high-growth areas of our business – commercial, tires, fleet and digital – increased revenue, but temporarily depressed margins. To date in the first quarter, we have generated higher sales and experienced recovering margins.”
Sweetwood continued, “With only three weeks to go in the first quarter of 2015, we are seeing a turn around in the business. At this point comparable store sales are up with double-digit growth in commercial, fleet and digital. With margins recovering, combined with improved expense and inventory management, to date we are seeing an improvement in operating profit and cash flow.”
Pep Boys has more than 7,500 service bays in 806 locations in 35 states and Puerto Rico.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
