PHILADELPHIA (Aug. 12, 2005) — Lower overall sales plus a 6-percent decline in tire sales led Pep Boys—Manny, Moe & Jack to report slimmer earnings in the second quarter as well as a net loss in the first half.
The Philadelphia-based automotive service chain reported quarterly sales of $577.4 million, down 2.7 percent from $593.4 million last year. Net earnings for the quarter fell to $832,000 from $13.5 million last year. In the quarter, comparable retail sales, including do-it-yourself and commercial items, increased 0.1 percent while comparable service sales, including labor and installed merchandise and tires, fell 6.4 percent.
For the half, Pep Boys' sales declined 1.5 percent to $1.14 billion. The company posted a loss of $1.55 million compared with earnings of $28.6 million last year. Comparable retail sales in the half were up 0.7 percent as comparable service sales fell 4.5 percent.
“We had a challenging quarter in our service center operations, with comparable sales down 6.4 percent,” said Larry Stevenson, CEO and chairman. “Tire sales were down 6 percent as we found significant customer resistance to the tire price increases we have received, in particular with our entry level opening price point touring tires, a historical focus for our private label program.
“However, we are starting to see substantial incremental sales from our investment in branded tires launched a year ago. While the disruption caused by our recent field restructuring is not yet behind us, we remain confident that a more qualified, focused and better-trained field organization will ultimately improve overall profitability.”
Pep Boys operates 593 stores in 36 states and Puerto Rico.