Pep Boys remain cautiously optimistic following Q2 results

The Pep Boys are remaining cautiously optimistic that there will be an increase in demand for tires this year, following a comparable store sales decrease of 1.3% for the second quarter ended Aug. 3.

Sales for the quarter increased 0.4% to $527.6 million from $525.7 million for the prior-year quarter. The company’s operating profit for the quarter, adjusted to exclude merger-related costs, was $19.4 million as compared to $15.5 million for the second quarter of fiscal 2012.

Net earnings for the quarter were $5.4 million, or $0.10 per share, as compared to $33 million, or $0.61 per share, for the second quarter of fiscal 2012.

“Improved product gross margins drove our 25% improvement in adjusted operating income during the quarter,” said president and CEO Mike Odell. “Our strategically important maintenance and repair services remain steady and grew in customer count, sales and margin rate. Tire sales were down in dollars and units, but grew in gross margin dollars. While not yet realized, we continue to be cautiously optimistic that we will see improving demand for tires this year.”

The expansion of the company’s Service & Tire Centers continues with the acquisition of 17 locations in Southern California in September, bringing its total to 211. Each of the new locations will be converted to the company’s new Road Ahead format, designed with “a more welcoming curb appeal and a comfortable and appealing customer lounge,” according to Odell.

Pep Boys is a leading automotive aftermarket chain with approximately 7,400 service bays in more than 750 locations in 35 states and Puerto Rico. Pep Boys offers name-brand tires; automotive maintenance and repair; parts and expert advice for the Do-It-Yourselfer; commercial auto parts delivery; and fleet maintenance and repair.