PHILADELPHIA (Sept.10, 2014) — Pep Boys – Manny, Moe & Jack could close or sell as many as 63 Supercenter stores in the coming years, pending review by management to determine suitability for additional investment under the firm's “Road Ahead” upgrade program.
Company management disclosed the Philadelphia-based auto parts and service chain's strategy Sept. 9 during a second quarter financial results conference call with analysts. Pep Boys fell $300,000 into the red in the quarter ended Aug. 2, prompting management to step up efforts to reduce expenses and consider closing unprofitable stores.
Many of the 63 stores so targeted are leased locations, President and CEO Mike Odell said, so the company is evaluating those leases and the stores' locations to determine if they are suitable for converting to the more customer-centric Road Ahead format.
Some of the locations that Pep Boys is looking at for closure are more valuable as real estate, so they likely would be sold for the better return, he said in response to an analyst's question.
At the same time, Mr. Odell said Pep Boys expects to convert 508 Supercenters to the Road Ahead format in the coming years, at an average cost of about $400,000.
The investment/divestment strategy for the Supercenters is in addition to plans Pep Boys is formulating to cut costs related to the base business by up to $25 million a year and cutting $50 million in costs by fiscal 2015 year-end through “optimizing our inventory mix….”