Exhibit 99.1 Press Release issued by the Company dated March 2, 2005.
Pep Boys Reports 4.6% Q4 Comp Sales Increase
-Full Year Net Earnings from Continuing Operations
Improves to $.45 Per Share from Previous Year's Loss of $.29 Per Share
PHILADELPHIA - March 2, 2005 - The Pep Boys - Manny, Moe & Jack (NYSE: "PBY"),
the nation's leading automotive aftermarket retail and service chain, announced
the following results for the fourth quarter and fiscal year ended January 29,
2005.
Operating Results
Fourth Quarter
Sales
Sales for the thirteen weeks ended January 29, 2005, were $554,139,000, 4.6%
higher than the $529,639,000 recorded last year. Comparable merchandise sales
increased 6.0% and comparable service revenue decreased 1.2%.
Earnings
Net Loss from Continuing Operations before cumulative effect of change in
accounting principle increased from a Net Loss of $5,015,000 ($.09 per share -
basic and diluted) to a Net Loss of $9,667,000 ($.17 per share - basic and
diluted).
Recategorizing sales to more accurately reflect the two areas of the automotive
aftermarket in which the Company competes, comparable retail sales increased
8.2%, but the gross profit percentage from comparable retail sales decreased
from 28.2% to 25.3%. Comparable service center revenue decreased by 0.3%, and
the gross profit percentage from comparable service center revenue decreased
from 28.2% to 27.3%. In addition, SG&A expenses were flat at $148,556,000,
while overall inventories decreased by 1.5% from the third quarter to
$602,760,000, an increase of 8.9% from last year.
Commentary
Chairman & CEO Larry Stevenson commented, "Strong comparable sales is a key
element of the retail renewal program that we started in the fourth quarter
last year, but we have work to do to improve our resulting operating margins.
This quarter, for the first time, we faced the very high comparable
merchandise sales that we achieved over the last four quarters, and I am
pleased that we were able to show significant additional comparable
merchandise sales growth. I am confident that the continued development of
our merchandising program will allow more of those sales to drop to the
bottom line in future quarters."
(Continued)
Page 2
Stevenson added, "While our comparable service center revenue accelerated from
the previous few quarters, and we believe that our personnel and tire
initiatives are progressing, the bulk of the improvement in our service
business results was due to an improved economic environment and promotional
activities, rather than from core operating improvements.
"Again, we caution investors that our operating turnaround is expected to
produce uneven interim results as we reposition the chain to thrive over the
longer run."
Fiscal Year
Sales
Sales for the fiscal year ended January 29, 2005 were $2,272,896,000, 6.5%
higher than the $2,134,270,000 recorded last year. Comparable merchandise
sales increased 7.9% and comparable service revenue increased 1.1%.
Earnings
Net Earnings from Continuing Operations before cumulative effect of change in
accounting principle increased to $25,666,000 ($.46 per share - basic, $.45 per
share diluted) from a Net Loss of $15,145,000 ($.29 per share - basic and
diluted).
Initiatives
As previously announced on January 7, 2005, the Company recently restructured
its field operations into separate retail and service teams. "As I have said
in the past, the foundation of our performance turnaround will come from our
people," Mr. Stevenson remarked. He continued, "The restructuring has allowed
us to hire talented leaders with industry specific experience - retail or
service. We have filled all, but one of our Operations Vice President
positions and, today, I am pleased to announce that Mark Bacon has joined our
senior management team as Senior Vice President - Retail Operations. Mark
brings us a great deal of energy, a wealth of experience and a track record of
success, most recently from Staples."
CFO Harry Yanowitz said, "We made good progress in reshaping our balance sheet
this quarter, most notably in refinancing and expanding our revolving credit
facility, and extending the maturity of our debt by issuing 10 year
subordinated notes. As part of our continuing efforts to improve the returns
generated by our asset base, we are carefully evaluating our 329 owned
properties and have arranged for their appraisal. While we are pleased that
this asset base appears to have significant value that supports the underlying
business, we note that realizable value may vary widely from an appraisal and
that the use of these assets is essential to our store operations regardless of
the underlying financing structure. Therefore, changes, if any, to our balance
sheet structure are likely to evolve over the course of years rather than
quarters."
Page 3
Pep Boys Financial Highlights
Thirteen Weeks Ended: January 29, 2005 January 31, 2004
- --------------------- ---------------- ------------------
Total Revenues $ 554,139,000 $ 529,639,000
Net Loss From Continuing Operations $ (9,667,000) $ (5,015,000)
Net Loss $ (10,135,000) $ (2,355,000)
Average Shares - Diluted 55,017,000 52,736,000
Basic Loss Per Share From Continuing
Operations $ (0.17) $ (0.09)
Diluted Loss Per Share From Continuing
Operations $ (0.17) $ (0.09)
Basic Loss Per Share $ (0.18) $ (0.04)
Diluted Loss Per Share $ (0.18) $ (0.04)
Fifty-two Weeks Ended: January 29, 2005 January 31, 2004
- ------------------------ ------------------ ------------------
Total Revenues $ 2,272,896,000 $ 2,134,270,000
Net Earnings (Loss) From Continuing
Operations Before Cumulative Effect of
Change in Accounting Principle $ 25,666,000 $ (15,145,000)
Net Earnings (Loss) $ 23,579,000 $ (33,894,000)
Average Shares - Diluted 64,278,000 52,185,000
Basic Earnings (Loss) Per Share From
Continuing Operations Before Cumulative
Effect of Change in Accounting Principle $ 0.46 $ (0.29)
Diluted Earnings (Loss) Per Share From
Continuing Operations Before Cumulative
Effect of Change in Accounting Principle $ 0.45 $ (0.29)
Basic Earnings (Loss) Per Share $ 0.42 $ (0.65)
Diluted Earnings (Loss) Per Share $ 0.41 $ (0.65)
Page 4
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.
Investors have an opportunity to listen to the Company's quarterly conference
calls discussing its results and related matters. The call for the fourth
quarter will be broadcast live on Thursday, March 3, 2005 at 8:30 am EST over
the Internet at Broadcast Networks' Vcall website, located at
http://www.vcall.com. To listen to the call live, please go to the website at
least 15 minutes early to register, download and install any necessary audio
software. For those who cannot listen to the live broadcast, a replay will be
available shortly after the call. Supplemental financial information will be
available the morning of March 3 on Pep Boys' website at www.pepboys.com.
###
Investor Contact: Harry F. Yanowitz, 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