PHILADELPHIA (Aug. 1, 2003)—Pep Boys—Manny, Moe & Jack plans to close 33 stores in 13 states as part of a restructuring plan aimed at driving profitability, the Philadelphia-based company said.
The move is expected to save about $11 million in pre-tax annual operating expenses, the automotive service chain said.
With the closings—which account for roughly 5 percent of its existing stores—Pep Boys will operate 596 stores in 36 states and Puerto Rico. About 700 employees, or 3 percent of total employees, will be cut. Management structure in the company also will be reduced by about 160 corporate employees, Pep Boys said.
“While Pep Boys continues to enjoy competitive advantages, we recognize that in order to drive profitability and realize our true growth potential, we need to streamline our operations and continue the restructuring we began nearly three years ago,” said CEO Lawrence Stevenson in a statement. Mr. Stevenson was named to the post in May.
Pep Boys expects a pre-tax charge to earnings of about $85 million for the second quarter.
The affected states include Arizona, California, Florida, Georgia, Illinois, Massachusetts, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas and Virginia. Most states are losing only one or two stores, while California loses 11, Florida four and Texas five.
Pep Boys said the latest move builds on the company's reorganization plan begun in October 2000. At the time, Pep Boys closed 38 stores and eliminated about 1,200 jobs, leaving the chain with 627 stores then. Another 300 employees in field and distribution center supervisory positions were cut.
On July 31, Pep Boys' stock, traded on the New York Stock Exchange, was up almost 7 percent by mid-afternoon on the news.
On May 14, Pep Boys reported first quarter comparable net earnings of $9.1 million, down 33 percent from the year before. Sales for the period also were down 5.3 percent to $529.2 million from $559.0 million last year. Comparable store sales fell 5 percent, primarily from lower tire sales, Pep Boys said.