PHILADELPHIA (June 12, 2013) — Pep Boys – Manny, Moe & Jack will invest about $3 million this year to convert six existing "supercenter" locations in the Tampa, Fla., area to the prototype "neighborhood" style store concept the company has been test marketing there for the past several months.
Pep Boys opened the prototype store in north cental Tampa in March. The Philadelphia-based tire, auto service and auto parts retailer describes the new store concept—which features "neighborhoods" within the store—as designed to appeal to a broader swath of customers.
The Tampa project, which should be completed by the fourth quarter, is part of the $65 million Pep Boys budgeted this year to cover opening 31 Service & Tire Centers and seven supercenters.
Last year the company opened 20 tire centers and six supercenters and converted seven supercenters into "super hubs."
Pep Boys is budgeting $525,000 to cover the cost of converting the supercenters in Tampa, Chairman Mike Odell told financial analsysts in the company's first quarter conference call.
In order for the stores to generate the desired 15-percent after-tax internal rate of return, Mr. Odell said, the converted locations have to improve sales 13 percent in the first year of operation.
Mr. Odell said the results to date at the prototype store are "significantly higher than that."
At the same time, though, he said Pep Boys expects "to read this market further before proceeding to any other markets," and that the firm expects the conversion costs will come down further in a bigger rollout.
"When you experience the (new) store," he said, "you will clearly see our vision for Pep Boys to become the best alternative to the dealer and also how we can use our retail business to drive our service business. While all parts of our business have seen a lift in the first store, the strongest lift has been in service, which supports our lead-with-service growth plans."