Exhibit 99.1 Press Release issued by the Company dated August 11, 2004
Pep Boys Reports 6.9% Comparable Sales Increase
- - Retail Up 16.7%; Service Down 5.3% -
PHILADELPHIA - August 11, 2004 - The Pep Boys - Manny, Moe & Jack
(NYSE: "PBY"), the nation's leading full-service automotive aftermarket chain,
announced its financial results for the thirteen weeks ended July 31, 2004, as
well as a number of organizational changes that are effective immediately.
Financial Results
Second Quarter
Sales
Sales for the quarter ended July 31, 2004 were $593,426,000, 6.7% higher than
the $556,030,000 recorded last year. Comparable Sales increased 6.9%,
including an increase in comparable Merchandise Sales of 8.4% and flat
comparable Service Revenues. Recategorizing Sales to more accurately reflect
the two areas of automotive aftermarket in which the Company competes,
comparable Retail Sales (DIY and Commercial) increased 16.7% and comparable
Service Sales (labor plus installed merchandise and tires) decreased 5.3%.
Earnings
On a GAAP basis, Net Earnings (Loss) from Continuing Operations Before
Cumulative Effect of Change in Accounting Principle improved from a Net Loss of
$13,579,000 ($.26 per share - basic and diluted), which includes after tax
expenses of $30,103,000 related to the July 2003 corporate restructuring and
other non-operations activities, to Net Earnings of $14,649,000 ($.25 per share
basic and $.23 per share diluted), which reflects an increase in shrinkage
reserves and a shortfall in Service Revenues and includes after tax expenses of
$3,290,000 unrelated to the current quarter's operations.
Adjusted Earnings
The Company believes that reporting Adjusted Net Earnings from Continuing
Operations is more representative of its operating results. Accordingly,
Adjusted Net Earnings from Continuing Operations of $17,939,000 (excluding
after tax expenses of $3,290,000 unrelated to the current quarter's operations)
increased 8.6% from the $16,524,000 last year (excluding after tax expenses of
$30,103,000 related to the July 2003 corporate restructuring and other
non-operations activities). Adjusted fully diluted Earnings Per Share were
$.29 this year (which includes an additional 6.9 million shares issued in the
March 2004 equity offering and upon option exercises) versus $.30 last year.
Gross Profit
On a GAAP basis, Merchandise Gross Profit margins increased by 560 basis points
to 29.2% this year from 23.6% last year, while Service Revenue margins
increased by 60 basis points to 23.4% this year from 22.8% last year. After
making the aforementioned adjustments, Merchandise Gross Profit margins
decreased by 80 basis points to 29.3% this year from 30.1% last year, while
Service Revenue margins decreased by 120 basis points to 24.5% this year from
25.7% last year.
(Continued)
Page 2
Recategorizing Gross Profit to more accurately reflect the two areas of
automotive aftermarket in which the Company competes and after making the
aforementioned adjustments, Retail Gross Profit margins increased by 20 basis
points to 28.2% this year from 28.0% last year, while Service Gross Profit
margins decreased by 210 basis points to 28.9% this year from 31.0% last year.
SG&A
On a GAAP basis, Selling, General and Administrative Expenses decreased by 270
basis points to 23.0% of Sales from 25.7% last year. After making the
aforementioned adjustments, Selling, General and Administrative Expenses
decreased by 60 basis points to 22.4% of Sales from 23.0% last year.
Six Months
Sales
Sales for the six months ended July 31, 2004 were $1,159,559,000, 8.7% higher
than the $1,066,940,000 recorded last year. Comparable Sales increased 8.8%,
including an increase in comparable Merchandise Sales of 10.3% and an
increase of 2.8% in comparable Service Revenue. Reallocating Sales to more
accurately reflect the two areas of automotive aftermarket in which the
Company competes, comparable Retail Sales increased 17.4% and comparable
Service Sales decreased 2.0%.
Earnings
Net Earnings (Loss) from Continuing Operations Before Cumulative Effect of
Change in Accounting Principle improved from a Net Loss of $20,906,000 ($.40
per share - basic and diluted) to Net Earnings of $30,840,000 ($.55 per share
basic and $.50 per share diluted).
Organizational Changes
President George Babich will assume direct responsibility for the operations
side of the business. Harry Yanowitz, who previously served as SVP - Strategy
& Business Development, will assume the CFO title and responsibilities. Mr.
Yanowitz has previously served as a CFO of a public company and brings years of
capital markets experience to his new role. Messrs. Babich, Yanowitz and Hal
Smith, EVP - Merchandising & Marketing, will constitute the newly created
Office of the Chief Executive reporting directly to CEO Lawrence Stevenson.
Brian Zuckerman, VP - General Counsel & Secretary, will also report directly to
Mr. Stevenson.
Commentary
Mr. Stevenson, commented, "I am pleased with the progress that we have made
over the past four quarters on the retail side of our business. Much of the
credit for this turnaround goes to Hal and his Merchandising and Marketing
team. On the other hand, we still need to do a lot with the service side of
our business. Our new structure allows me to have George focus his tremendous
knowledge and energy on building the national leading brand for automotive
maintenance and repair. With all of Operations, including the critical HR
function, reporting up through George, we can in a coordinated fashion grow
this business profitably over the next 12 - 24 months. George has done a
tremendous job as CFO and I know that he will be equally successful on the
operations side of our business."
(Continued)
Page 3
Pep Boys Financial Highlights
Thirteen Thirteen
Weeks Ended Weeks Ended
July 31, 2004 August 2, 2003
-------------- ---------------
Total Revenues $ 593,426,000 $ 556,030,000
Net Earnings (Loss) $ 13,797,000 $ (36,381,000)
Net Earnings (Loss)
From Continuing Operations $ 14,649,000 $ (13,579,000)
Add (Net of Tax):
Restructuring Charge $ 393,000 $ 20,919,000
Other Charges $ 2,897,000 (a) $ 9,184,000 (b)
-------------- ---------------
Adjusted Earnings (Loss)
From Continuing Operations $ 17,939,000 $ 16,524,000
============== ===============
Average Shares - Diluted 66,321,000 51,816,000
Average Shares - Diluted (Adjusted Earnings) 66,321,000 59,452,000
Basic Earnings (Loss) Per Share $ 0.24 $ (0.70)
Diluted Earnings (Loss) Per Share $ 0.22 $ (0.70)
Basic Earnings (Loss) Per Share
From Continuing Operations $ 0.25 $ (0.26)
Diluted Earnings (Loss) Per Share
From Continuing Operations $ 0.23 $ (0.26)
Adjusted Basic Earnings Per Share
From Continuing Operations $ 0.31 $ 0.32
Adjusted Diluted Earnings Per Share
From Continuing Operations $ 0.29 $ 0.30
(a) Includes
(b) Expenses related to the other charges for legal and self insurance reserves, asset
impairments, unamortized financing fees and other expenses.
-more-
Page 4
Pep Boys Financial Highlights
Twenty-six Twenty-six
Weeks Ended Weeks Ended
July 31, 2004 August 2, 2003
--------------- ---------------
Total Revenues $ 1,159,559,000 $ 1,066,940,000
Net Earnings (Loss)
From Continuing Operations $ 30,840,000 $ (20,906,000)
Net Earnings (Loss) $ 29,457,000 $ (45,598,000)
Average Shares - Diluted 64,954,000 51,733,000
Basic Earnings (Loss) Per Share
From Continuing Operations $ 0.55 $ (0.40)
Diluted Earnings (Loss) Per Share
From Continuing Operations $ 0.50 $ (0.40)
Basic Earnings (Loss) Per Share $ 0.52 $ (0.88)
Diluted Earnings (Loss) Per Share $ 0.48 $ (0.88)
Pep Boys has 595 stores and more than 6,000 service bays in 36 states and
Puerto Rico. Along with its vehicle repair and maintenance capabilities, the
Company also serves the commercial auto parts delivery market and is one of the
leading sellers of replacement tires in the United States. Customers can find
the nearest location by calling 1-800 - PEP-BOYS or by visiting pepboys.com.
###
Certain statements contained herein constitute "forward-looking statements"
within the meaning of The Private Securities Litigation Reform Act of 1995.
The word "guidance," "expect," "anticipate," "estimates," "forecasts" and
similar expressions are intended to identify such forward-looking statements.
Forward-looking statements include management's expectations regarding future
financial performance, automotive aftermarket trends, levels of competition,
business development activities, future capital expenditures, financing sources
and availability and the effects of regulation and litigation. Although the
Company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be achieved. The Company's actual results may differ
materially from the results discussed in the forward-looking statements due to
factors beyond the control of the Company, including the strength of the
national and regional economies, retail and commercial consumers' ability to
spend, the health of the various sectors of the automotive aftermarket, the
weather in geographical regions with a high concentration of the Company's
stores, competitive pricing, the location and number of competitors' stores,
product and labor costs and the additional factors described in the Company's
filings with the SEC. The Company assumes no obligation to update or
supplement forward-looking statements that become untrue because of subsequent
events.
Investor Contact: George Babich, President & CFO (215) 430-9720
Media Contact: Bill Furtkevic (215) 430-9676
Pep Boys
3111 West Allegheny Avenue
Philadelphia, PA 19132
Internet:http://www.pepboys.com