PHILADELPHIA (March 14, 2003) — Auto parts and services retailer Pep Boys—Manny, Moe & Jack suffered a 5.2-percent decline in sales for the fourth quarter as tire sales at comparable stores slipped 12.5 percent from a year earlier.
Excluding non-recurring and other charges, the company posted net earnings of $1.47 million for the quarter, compared with $5.62 million the previous year. With the charges – more than $3.35 million in obligations associated with the non-renewal of the chairman and CEO's employment agreement and related search fees — Pep Boys reported a net loss of $1.83 million, down from a gain of $3.69 million the year before, the Philadelphia-based company said.
Sales for the fiscal year were $2.17 billion, down 0.6 percent from $2.18 billion the previous year. Excluding the charges, earnings increased to $48.7 million in fiscal 2002 from $38.7 million in fiscal 2001. With the charges, the retailer posted net earnings of $43.8 million, up from $35.3 million.
“After eight consecutive quarters in which earnings increased at least 30 percent, we are disappointed with our fourth-quarter results,” said Pep Boys CEO Mitchell G. Leibovitz in a statement. “Unfortunately, higher merchandise and service margins and effective expense control were offset by the sales impact of extremely low consumer confidence and a very depressed replacement tire market.”
Mr. Leibovitz said he expects the company's earnings to improve when the economy and replacement tire market normalize.
Pep Boys stock, traded on the New York Stock Exchange, closed March 13 at $6.42, down $1.08 from $7.50 March 12. The March 13 close is 67 percent below the 52-week high of $19.39.
Pep Boys operates 629 stores with more than 6,500 service bays in 36 states and Puerto Rico.