PHILADELPHIA (June 9, 2015) — Pep Boys – Manny, Moe & Jack reported a near quadrupling of operating earnings in the quarter ended May 2 on marginally higher sales of $542.3 million.
Pep Boys' first quarter operating income jumped to $23.1 million from $6 million, the company reported, but the gain included a $10 million pre-tax gain on the sale of a leasehold interest. Net income jumped 10-fold to $11.9 million.
Philadelphia-based Pep Boys reinvested a portion of the $10 million one-time gain into converting stores in the Baltimore area to its “Road Ahead” customer-centric format, according to interim CEO John Sweetwood. Pep Boys will hold a grand reopening in July for those revamped stores.
The retailer's sales gain came from higher service center revenue, which offset a slight drop in retail revenue, the company said.
“We are pleased to report the third consecutive quarter of positive comparable stores sales,” Mr. Sweetwood said. “Once again, tires, commercial, fleet and digital led the way.”
Even discounting the gain from the leasehold sale, the company's operating earnings grew by 24 percent, he said, “by maintaining our gross profit margins and reducing SG&A expense.”
Pep Boys plans to discuss its results in more detail this morning in a conference call with analysts.