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TheStreet Open House

Pep Boys Reports Second Quarter 2013 Results

Stocks in this article: PBY

Six Months Sales

Sales for the twenty-six weeks ended August 3, 2013 increased by $13.5 million, or 1.3%, to $1,063.8 million from $1,050.3 million for the twenty-six weeks ended July 28, 2012. Comparable sales decreased 0.2%, consisting of a 2.2% comparable service revenue increase and a 0.8% comparable merchandise sales decrease. Re-categorizing sales (see above), comparable service center revenue increased 1.9%, while comparable retail sales decreased 2.4%.

Earnings

Adjusted operating profit for the first six months of 2013 was $24.1 million as compared to $25.0 million for the first six months of fiscal 2012. On a GAAP basis including $2.8 million in asset impairment charges in fiscal 2013 and a $0.7 severance charge in fiscal 2012, operating profit for the first six months of fiscal 2013 was $21.3 million as compared to $24.3 million for the first six months of fiscal 2012.

Net earnings for the first six months of 2013 were $9.2 million ($0.17 per share) as compared to $34.1 million ($0.63 per share) for the first six months of fiscal 2012. In addition to the above-referenced items, the 2012 net earnings included, on a pre-tax basis, $43.0 million of merger termination fees, net of related expenses.

Commentary

“Improved product gross margins drove our 25% improvement in adjusted operating income during the quarter,” said President and CEO, Mike Odell. “Our strategically important maintenance and repair services remain steady and grew in customer count, sales and margin rate. Tire sales were down in dollars and units, but grew in gross margin dollars. While not yet realized, we continue to be cautiously optimistic that we will see improving demand for tires this year.”

Mike also commented, “The expansion of our Service & Tire Centers continues with the acquisition of 17 locations in Southern California in September, bringing our total to 211 including one Service & Tire Center opened subsequent to the second quarter. Each of these new locations will be converted to our new 'Road Ahead' format designed with a more welcoming curb appeal and a comfortable and appealing customer lounge.”

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