Net earnings for the first half of 2012 increased to $34.1 million ($0.63 per share) from the $26.3 million ($0.49 per share) recorded in the same period last year. The 2012 results include, on a pre-tax basis, merger termination fees, net of related expenses, of $43.0 million and a $0.7 million charge for severance costs from a reduction in force at our Store Support Center. The 2011 results include, on a pre-tax basis, a $0.4 million asset impairment charge, $1.3 million of acquisition related expenses and a $3.4 million benefit from the release of state tax valuation allowances.
“We continue to be rewarded by our strategy to lead with our service business, which grew 3.8% on a comparable store sales basis and experienced an impressive 7.8% customer count increase,” said President and Chief Executive Officer Mike Odell. “A strong July, particularly in our service business, allowed us to record flat comparable sales during the quarter. While industry fundamentals remain solid over the long term, with consistent demand for maintenance and repair services, short-term headwinds, including the recent spike in gas prices, continue to challenge consumer spending relative to discretionary and deferrable purchases. To combat these headwinds, we continue to make it easy for customers to choose us to do it for them and to expand our online efforts to make Pep Boys the most convenient place to shop for all of their automotive needs.”
Mike continued, “In the coming weeks, we expect to begin marketing a debt refinancing. Our intention is to reduce our overall long-term debt by approximately $100 million, settle our interest rate swap, extend our maturities and reduce our overall interest expense, while maintaining flexibility for accelerated growth and/or returning capital to our shareholders.”
Today, Pep Boys also announced the appointment of David Stern as Chief Financial Officer and the departure of William E. Shull III, former Executive Vice President - Stores. Mr. Stern joins Thomas J. Carey, recently-appointed Chief Customer Officer, as the newest member of Pep Boys executive leadership team. Store operations have been reorganized into East and West territories under the leadership of Terence A. Winslow and Sean M. Chidsey. Messrs. Winslow and Chidsey will report directly to Mr. Odell, while a search is conducted for a Senior Vice President - Store Operations with a proven track record in delivering world-class customer service.