PHILADELPHIA (Dec. 9, 2014) — Pep Boys – Manny, Moe & Jack suffered a 92.5-percent drop in operating profit and a net loss of $2 million in the quarter ended Nov. 1
Pep Boys did not elaborate on the reasons for the poor earnings performance, but the firm's balance sheet shows the cost of both merchandise sales and service revenue rose more rapidly than sales, which increased 2.1 percent to $517.6 million.
Comparable sales increased 1.2 percent, consisting of an increase of 6.1 percent in comparable service revenue and a decrease of 0.2 percent in comparable merchandise sales.
The net loss also included $1.4 million in asset impairment charges and $1.4 million in severance charges.
Pep Boys said net loss for the first nine months of 2014 was $625,000, versus net earnings of $10.2 million for the first nine months of fiscal 2013. The 2014 results included, on a pre-tax basis, a $5.2 million asset impairment charge, a $4 million litigation charge and $2.4 million in severance charges.
Sales for the thirty-nine weeks ended Nov. 1 increased 0.7 percent, Pep Boys said, to $1.58 billion. Comparable sales decreased 0.7 percent, Pep Boys added, consisting of a 4.9-percent comparable service revenue increase and a 2.3-percent comparable merchandise sales decrease.
“Our recent top-line growth has continued into the fourth quarter,” said interim CEO John Sweetwood. “Particular highlights are tires, commercial and eCommerce sales; however, this balance of business shift has continued to pressure gross margin rate.”
Pep Boys' Road Ahead stores continue to produce positive results, he said.
“Cincinnati and Denver will be completed in the fourth quarter, with grand re-openings scheduled for the first quarter of 2015. Baltimore, which will serve as our first test of a reduced average per-store investment, will be grand re-opened in the second quarter of 2015.”
Additionally, Pep Boys has engaged Spencer Stuart, a Chicago-based executive search consulting firm, to conduct its search for a replacement CEO to succeed Mike Odell, who resigned Sept. 26.
