PHILADELPHIA -- Pep Boys has announced its fourth quarter results.
Sales for the 14 weeks ended Feb. 3, were $586,146,000, as compared to the $550,481,000 recorded for the 13 weeks ended Jan. 28, 2006. Excluding the 14th week of Q4 2006, comparable merchandise sales decreased 1.5 percent and comparable service revenue increased 2 percent. In accordance with GAAP, merchandise sales includes merchandise sold through both our retail and service center lines of business and service revenue is limited to labor sales. Excluding the 14th week of Q4 2006, recategorizing sales into the respective lines of business from which they are generated, comparable Retail Sales (DIY and commercial) decreased 2.2 percent and comparable service center revenue (labor plus installed merchandise and tires) increased 1 percent.
Net Earnings (Loss) from Continuing Operations Before Cumulative Effect of Change in Accounting Principle increased from a Net Loss of $22,869,000, ((42 cents) per share - basic and diluted) to Net Earnings of $8,110,000 (15 cents per share - basic and diluted).
Sales for the fiscal year ended Feb. 3, 2007 were $2,272,161,000, as compared to the $2,238,029,000 recorded last year. Excluding the 53rd week of 2006, comparable merchandise sales decreased 0.5 percent and comparable service revenue increased 1.3 percent. Excluding the 53rd week of 2006 and recategorizing sales (see above), comparable retail sales decreased 1.9 percent and comparable service center revenue increased 2.4 percent.
Net Loss from Continuing Operations Before Cumulative Effect of Change in Accounting Principle decreased from a Net Loss of $35,799,000 ((65 cents) per share - basic and diluted) to a Net Loss of $2,000,000 ((4 cents) per share – basic and diluted).
William Leonard, interim CEO, said, “During Q4, our team made significant progress in improving our operating margins, through reduced discounting, improved labor sales and reduced operating costs. Following a substantially improved last half of the year, I am very pleased to hand over responsibility to our new President and CEO, Jeff Rachor.
“Pep Boys is well positioned to deliver on its immediate priorities: post positive comparable store sales in our service center operations; make continued progress on our retail margins; and continue to reduce our cost structure to help support overall results. I believe the company’s best days remain in front of it, and look forward to the results of Jeff’s leadership.”
Harry Yanowitz, chief financial officer, said, “We had a strong finish to the year. Efforts to improve performance in our service business, including offering fewer discounts, have started to take hold - yielding improved margins without reducing comparative store sales. As we noted last quarter, our retail margins reflect the substantial efforts our merchants have made to improve mix and reduce acquisition costs. In addition, we believe substantial opportunities to improve efficiencies and reduce our operating costs still remain for fiscal 2007.
“Q4 operating (loss) profit improved by $33.8 million from a loss of $15.7 million to a profit of $18.1 million. Excluding net gains on the sales of assets (realized as part of our program of opportunistically monetizing appreciated real estate) of approximately $1.8 million in Q4 2005 and approximately $9.1 million in Q4 2006 and a $4.2 million charge to SG&A due to the write-off of certain information system assets in Q4 2005, operating (loss) profit improved by $22.3 million from a loss of $13.3 million to a profit of $9 million.
“EBITDA, a non-GAAP indicator of levels of our financial performance that includes the net gains on the sale of assets and impairment charge noted above, improved in Q4 2006 by $41.9 million to $45.3 million, as compared to Q4 2005.
“Improving operating performance continues to support our balance sheet. For the full Fiscal 2006, net cash provided by operating activities improved by $128.4 million and capital expenditures were $37.9 million less than last year. During Q4, we repurchased 494,800 shares of common stock at an average price of $14.77. Subsequent to year-end, we re-priced our $320 million real estate backed term loan from LIBOR+275 to LIBOR + 200, for the remaining term to 2013, the date of our first significant funded debt maturity.
“In addition, please note that Q4 2006 was a 14 week quarter, during our seasonally slow winter period. While it is difficult to precisely carve out a week from an overall reporting period, we estimate that the 14th week did not have a material affect on results, representing approximately $39.2 million of sales and improving operating profit by $0.5 million.”
For more information about Pep Boys, go to: http://www.pepboys.com.
