The Pep Boys – Manny, Moe & Jack announced the following results for the 13 (second quarter) and 26 (six months) weeks ended August 1, 2015.
Second quarter sales
Sales for the 13 weeks ended August 1, 2015 increased by $0.8 million, or 0.1%, to $526.5 million from $525.8 million for the 13 weeks ended August 2, 2014. Comparable sales increased 0.3%, consisting of an increase of 0.5% in comparable merchandise sales and a decrease of 0.4% in comparable service revenue. In accordance with GAAP, service revenue is limited to labor sales, while merchandise sales include merchandise sold through both our service center and retail lines of business. Re-categorizing sales into the respective lines of business from which they are generated, comparable service center revenue increased 0.6%, while comparable retail sales remained flat.
Second quarter earnings
Net earnings for the second quarter of fiscal 2015 were $4.8 million ($0.09 per share) as compared to net loss of $0.3 million ($0.00 per share) recorded in the second quarter of fiscal 2014. The 2015 results included, on a pre-tax basis, a $1.7 million asset impairment charge, $1.1 million in expenses related to the company's annual meeting and strategic alternatives review and a $0.3 million severance charge. The 2014 results included, on a pre-tax basis, a $2.7 million asset impairment charge and a $0.8 million severance charge. In addition, the 2014 results included a $0.9 million tax charge related to state valuation allowances.
Six months sales
Sales for the 26 weeks ended August 1, 2015 increased by $4.2 million, or 0.4%, to $1,068.8 million from $1,064.6 million for the 26 weeks ended August 2, 2014. Comparable sales increased 0.6%, consisting of a 0.5% comparable service revenue increase and a 0.6% comparable merchandise sales increase. Re-categorizing sales (see above), comparable service center revenue increased 1.2%, while comparable retail sales decreased 0.2%.
Six months earnings
Net earnings for the first six months of 2015 were $16.7 million ($0.31 per share) as compared to $1.3 million ($0.03 per share) for the first six months of fiscal 2014. The 2015 results included on a pre-tax basis, a $10.0 million sale of a leasehold interest offset by a $2.5 million asset impairment charge, $2.5 million in expenses related to our annual meeting and strategic alternatives review and a $0.8 million severance charge. The 2014 results included, on a pre-tax basis, a $4.0 million charge for litigation, a $3.8 million asset impairment charge and a $1.1 million severance charge. In addition, the 2014 results included a $0.9 million tax expense related to valuation allowances.
Commentary
“We continue to improve our operating profit by increasing gross profit margins and controlling costs,” said CEO Scott Sider. “And while we are pleased to report the fourth consecutive quarter of positive comparable store sales, I believe our biggest opportunity is to grow top-line revenue.”
Scott continued, “We are laying the groundwork to create a sales and service culture focused on maximizing the value of each transaction and building customer loyalty. We expect service including tires, commercial and digital sales to lead the way.”
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