PHILADELPHIA — Icahn Automotive Group has agreed to lease space at its 34 Pep Boys retail locations in Puerto Rico dedicated to auto parts to AutoZone Inc., which will convert the space to AutoZone signage.
The conversion of the retail space in Puerto Rico "is the final step in Pep Boys' transition to a business model that primarily focuses on automotive services," Pep Boys CEO Scott Collette said. "This further reinforces our position as a leading auto repair and maintenance provider for car owners and fast-growing fleets across our service territories.
"The conversion provides us with an opportunity to enhance our Automotive Service Center locations on the island, reinvest in the emerging needs of customers in this market and provide our Pep Boys retail team members with potential employment opportunities at AutoZone."
The companies did not disclose financial details of the deal, which Pep Boys said will allow each organization to strengthen its presence in Puerto Rico and provide a more robust customer-focused, comprehensive and convenient automotive solution to customers there.
Bill Rhodes, AutoZone chair, president and CEO, said AutoZone is "excited to further expand our presence across Puerto Rico and continue delivering on our commitment to always put our customers first."
AutoZone has 48 retail auto parts stores in Puerto Rico. It's not known how many, if any, of the Pep Boys locations might overlap with the existing AutoZone stores.
Icahn Automotive struck a similar deal two years in California, where it leased the retail space of 109 Pep Boys stores there to Advance Auto Parts Inc., which converted the retail auto parts portion of those stores to Advance Auto signage.
Pep Boys opened its 34th store in Puerto Rico in 2021 at Fort Buchanan, a U.S. military installation on Puerto Rico near San Juan that's home to roughly 130,000 soldiers and support personnel.
Overall, Pep Boys operates 891 locations throughout the U.S. and Puerto Rico, a total that's down 31 stores from a year earlier. The company has not commented publicly on its reasons for closing the stores nor disclosed which stores closed.
For the quarter ended Sept. 30, Icahn Automotive generated pre-tax operating income of $32 million despite a 29% drop in revenue. For the January-September period, the business reported a seven-fold increase in operating income to $85 million on 26.7% lower revenue of $1.33 billion.
The bulk of the revenue decline was attributed to a drop of $178 million in aftermarket parts sales, primarily driven by the deconsolidation its AutoPlus auto parts business on Jan. 31.
