Pep Boys Misses on Earnings & Revenues

Zacks

Pep Boys - Manny, Moe & Jack’s (PBY) adjusted earnings per share decreased 58.3% to 5 cents per share in the third quarter of fiscal 2013 (ended Nov 2, 2013), compared with 12 cents per share in the prior-year quarter. Earnings missed the Zacks Consensus Estimate of 13 cents a share.

On a reported basis, Pep Boys posted a profit of $1 million or 2 cents per share compared to a loss of $6.8 million or 13 cents per share in the year-ago quarter. Results include an asset impairment charge of $2 million and a severance charge of $0.6 million in 2013, while the 2012 earnings incorporate $11.2 million for debt refinancing expense, $8.8 million in asset impairment charge and $0.9 million for compensation expense.

Revenues for the 13 weeks ended Nov 2, 2013 decreased 0.5% to $507.0 million from $509.6 million in the 13 weeks ended Oct 27, 2012. Revenues lagged the Zacks Consensus Estimate of $521 million.
 
Revenues from merchandise sales went down 1.7% to $394.3 million, while revenues from service went up 3.9% to $112.7 million. Comparable store sales declined 2.8% in the quarter due to a 3.6% decline in comparable merchandise sales, partially offset by 0.5% rise in comparable service revenues.

Financial Position

Pep Boys had cash and cash equivalents of $55.8 million as of Nov 2, 2013, compared with $78.7 million as of Oct 27, 2013. Long-term debt stood at $198.5 million as of Nov 2, 2013 compared with $200 million as of Oct 27, 2013.

In the first nine months of fiscal 2013, Pep Boys’ cash flow from operations was $62.9 million, significantly down from $116.2 million in the prior year owing to a fall in profits. Capital expenditure increased to $38.3 million from $36.8 million in the first nine months of fiscal 2012.

Zacks Rank

Based in Philadelphia, Pa., Pep Boys supplies tires, batteries, new and remanufactured parts for vehicles, chemicals and maintenance items, fashion, electronic, and performance accessories. It also provides non-automotive merchandises such as generators, power tools and personal transportation products. Currently, the company retains a Zacks Rank #2 (Buy).

Pep Boys is a prominent player in the automotive replacement parts and accessories industry along with Advance Auto Parts Inc. (AAP), O’Reilly Automotive Inc. (ORLY) and CarMax Inc. (KMX).
 

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