Pep Boys trying to get back on track

Despite lower gas prices and an increase in the average age of U.S. cars on the road, Pep Boys posted a wider loss in the fourth quarter.

The auto parts chain had a loss of $26.7 million, or 50 cents a share, vs. a loss of $3.33 million, or 6 cents a share, a year earlier. The latest results included a net charge of $12.4 million for write-downs and severance expenses.

“The fourth quarter was a time of transition for the company,” said interim CEO John Sweetwood. “We continued to increase our sales in the growing service segment. Our investments in the high-growth areas of our business – commercial, tires, fleet and digital – increased revenue, but temporarily depressed margins.”

Revenue at Pep Boys rose 1.3% to $502.4 million. Same store sales rose 1.3%.

The company did say, however, that its improved business model has led to increased sales in the current quarter.

“With only three weeks to go in the first quarter of 2015, we are seeing a turn around in the business. At this point comparable store sales are up with double-digit growth in commercial, fleet and digital. With margins recovering, combined with improved expense and inventory management, to date we are seeing an improvement in operating profit and cash flow.”

With over 7,500 service bays in 806 locations in 35 states and Puerto Rico, Pep Boys offers name-brand tires; automotive maintenance and repair; parts and advice; commercial auto parts delivery; and fleet maintenance and repair.