PHILADELPHIA (Jan. 7, 2005) — Retail tire and automotive service chain Pep Boys—Manny, Moe & Jack has restructured its field management team into separate retail and service organizations.
The Philadelphia-based company said the restructuring is expected to be transparent to customers. About 30 Pep Boys employees are affected by the changes—none in its stores.
Up until now the firm's service managers have reported to a store manager and then up through one field organization supporting both the service and retail businesses. Pep Boys said the new structure provides for a store retail manager and store service manager who will report up through a distinct organization of area directors, divisional vice presidents (DVPs), and senior vice presidents (SVPs) specializing in operating its respective business. Each field group will continue to receive common support functions including purchasing, marketing, information systems and finance.
Leading the service operations field group—which includes Pep Boys' tire business—will be Mark Page, currently SVP-store operations, who becomes SVP-service operations, The company said it is currently recruiting a SVP-retail operations. Both SVPs will report directly to Chairman and CEO Larry Stevenson.
The company said it believes the operations restructuring will result in a pre-tax annual operating cost increase of approximately $1 million to $2 million per year.
Mr. Stevenson said in a prepared statement that Pep Boys continues “to take steps to improve our service and tire business. The restructuring will better position us to deliver the world-class operational execution that each part of our businesses needs to achieve its potential.
“It will also allow us to hire and train to more common industry skill sets—for instance, for our service and tire business, we have today hired three divisional vice presidents, one from a national quick lube organization and two from tire and service companies, to complement one continuing DVP.
“For our retail business we have today hired two divisional vice presidents from other successful big box retailers, complementing two continuing DVPs. In addition, one continuing DVP will manage both sides of our Puerto Rico operations. Given the breadth of responsibilities, across both retail and service that we had previously required, these hires would have been impossible for Pep Boys in the past.”
Pep Boys said that last August Mr. Stevenson and the board asked President George Babich to head the company's efforts toward “building the national leading brand for automotive maintenance and repair.” Having successfully completed this operations restructuring, Mr. Babich is leaving the firm to pursue other opportunities.
Mr. Stevenson called Mr. Babich “an invaluable resource to Pep Boys during his tenure. His contributions as CFO and then president were instrumental during difficult times and helped provide the financial stability for our current initiatives. He leaves Pep Boys with our gratitude for his role in laying the foundation for this operations reorganization, which will improve both our retail and service performance.”
The company said it expects to record a pre-tax charge to this quarter's earnings of approximately $9 million for severance, termination and hiring costs related to the operations restructuring and the departure of certain store support center employees.
Pep Boys has 595 stores and more than 6,000 service bays in 36 states and Puerto Rico, and also operates a commercial auto parts delivery business.