Pep Boys announced the following results for the 13 weeks (third quarter) and 39 weeks (nine months) ended Oct. 31, 2015. Sales for the 13 weeks decreased by $9.4 million, or 1.8 percent, to $508.1 million from $517.6 million for the 13 weeks ended Nov. 1, 2014. Comparable sales decreased 1.8 percent, consisting of a decrease of 2.5 percent in comparable service revenue and a decrease of 1.6 percent in comparable merchandise sales.
Net earnings for the third quarter of fiscal 2015 were $1.3 million or 2 cents per share as compared to a net loss of $2 million or (3 cents per share) recorded in the third quarter of fiscal 2014. The 2015 results included, on a pre-tax basis, a $6 million gain from the sale of two locations offset by a $0.8 million asset impairment charge, $2.9 million in merger and acquisition expense, $1 million in legal expense and $0.9 million in severance charges. The 2014 results included, on a pre-tax basis, a $1.4 million asset impairment charge and $1.4 million in severance charges.
Sales for the 39 weeks ended Oct. 31, 2015, decreased by $5.2 million, or 0.3 percent, to $1,576.9 million from $1,582.2 million for the 39 weeks ended Nov. 1, 2014.
Net earnings for the first nine months of 2015 were $18 million or 33 cents per share as compared to net a loss of $0.6 million or (1 cent per share) for the first nine months of fiscal 2014. The 2015 results included, on a pre-tax basis, a $10 million sale of a leasehold interest and a gain of $6.5 million from the sale of five locations offset by a $3.3 million asset impairment charge, $3.4 million in expenses related to our annual meeting and strategic alternatives review and a $1.7 million severance charge. The 2014 results included, on a pre-tax basis, a $5.2 million asset impairment charge, a $4 million litigation charge and $2.4 million in severance charges. In addition, the 2014 results included a $0.9 million tax expense related to valuation allowances.
Icahn Makes Bid
Following his disclosure yesterday of an ownership interest in the company, U.S. investor Carl Icahn has made a counter bid for Pep Boys, according to a report in The New York Times. He has offered $15.50 per share, in cash, for the company, outbidding Bridgestone, which announced plans in November to acquire Pep Boys for $15.00 per share.
In a statement released this morning, Pep Boys’ Board of Directors, after consultation with its independent legal and financial advisers, has determined that the proposal from Icahn Enterprises L.P. to acquire Pep Boys for $15.50 per share in cash would reasonably be expected to result in a “Superior Proposal” as defined in the company’s agreement and plan of merger with Bridgestone Retail Operations LLC. This determination by the board allows the company to take certain actions, in accordance with the procedures set forth in the Bridgestone agreement, to further consider the Icahn proposal. In and of itself, however, this determination does not allow the company to terminate the Bridgestone agreement, nor enter into a definitive transaction with Icahn, both of which can also only occur in accordance with the procedures set forth in the Bridgestone agreement.
