PHILADELPHIA -- Pep Boys has announced results for the thirteen (second quarter) and twenty-six weeks ended Aug. 4. Sales were $558,889,000 as compared to the $578,565,000 for the thirteen weeks ended July 29, 2006.

Comparable sales decreased 3.6 percent, including a 5.1 percent comparable merchandise sales decrease and a 3.8 percent comparable service revenue increase. In accordance with GAAP, merchandise sales includes merchandise sold through both retail and service center lines of business and service revenue is limited to labor sales. Recategorizing sales into the respective lines of business from which they are generated, comparable retail sales (DIY and commercial) decreased 9 percent and comparable service center revenue (labor plus installed merchandise and tires) increased 4.9 percent.

Net earnings from continuing operations before Cumulative Effect of Change in Accounting Principle increased from $1,470,000 (3 cents per share -- basic and diluted) to $4,196,000 (8 cents per share -- basic and diluted).

Sales for the twenty-six weeks ended Aug. 4, were $1,104,902,000, 2.7 percent less than the $1,135,166,000 recorded last year. Comparable sales decreased 3 percent, including a 4.1 percent comparable merchandise sales decrease and a 2.6 percent comparable service revenue increase. Recategorizing sales, comparable retail sales decreased 6.9 percent and comparable service center revenue increased 2.9 percent.

Net earnings from continuing operations before Cumulative Effect of Change in Accounting Principle improved from $603,000 (1 cent per share -- basic and diluted) to $7,416,000 (14 cents per share -- basic and diluted).

President and CEO Jeffrey Rachor said, “Since I joined Pep Boys, we have accelerated the company’s execution of previously initiated programs to improve its operational efficiency and move towards monetizing certain real estate assets. In addition, we are already seeing early traction in our service renewal program as service operations gained momentum in comparable sales, despite a difficult economic environment.

“Our efforts to expand margins and manage down our cost structure have yielded improved operating performance in the first half of the year. Both retail and service center operations improved gross margin rates. Cost reduction efforts continued to make significant progress again this quarter, showing a year over year reduction of almost 5 percent in total SG&A expenses,” Rachor said.