Pep Boys Breaks Even in Q4, Misses Ests - Analyst Blog

Pep Boys - Manny, Moe & Jack PBY had break-even earnings in the fourth quarter of fiscal 2013 (ended Feb 1, 2014), compared with a profit of 6 cents in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of 6 cents a share.

On a reported basis, Pep Boys posted a loss of $3.3 million or 6 cents per share compared to a loss of $14.5 million or 27 cents per share in the year-ago quarter. Results include an asset impairment charge of $2.8 million and a debt refinancing expense of $0.4 million in 2013, while the 2012 earnings incorporate $17.8 million of pension settlement charge and $1.8 million in asset impairment charge partially offset by a $1.6 million gain from asset disposition.

Revenues for the 13 weeks ended Feb 1, 2014 decreased 6.6% to $495.7 million from $530.8 million in the 14 weeks ended Feb 2, 2013. Revenues also lagged the Zacks Consensus Estimate of $531 million.

Excluding the 14th week in the fourth quarter of 2014, revenues increased 0.2% while comparable sales decreased 2.4%. The decrease in comparable sales was led by a 3.4% decrease in comparable merchandise sales partially offset by a 1.4% increase in comparable service revenues. Revenues from merchandise sales plummeted 7.7% to $384.9 million, while revenues from service fell 2.6% to $110.8 million.

Fiscal 2013 Performance

Pep Boys' adjusted earnings increased to 29 cents per share for full-year 2013 from 17 cents in 2012. Revenues for full-year 2013 decreased 1.2% to $2.07 billion from $2.09 billion in 2012.

Financial Position

Pep Boys had cash and cash equivalents of $33.4 million as of Feb 1, 2014, compared with $59.2 million as of Feb 2, 2013. Long-term debt stood at $201.5 million as of Feb 1, 2014 as against $200 million as of Feb 2, 2013.

In fiscal 2013, Pep Boys' cash flow from operations stood at $59.4 million, significantly below $88.5 million in the prior year. Capital expenditure decreased to $54 million from $54.7 million in fiscal 2012.

Based in Philadelphia, PA, Pep Boys supplies tires, batteries, new and remanufactured parts for vehicles, chemicals and maintenance items, fashion, electronic, and performance accessories. It also provides non-automotive merchandises such as generators, power tools and personal transportation products. Currently, the company retains a Zacks Rank #3 (Hold).

Pep Boys is a prominent player in the automotive replacement parts and accessories industry along with Advance Auto Parts Inc. AAP, O'Reilly Automotive Inc. ORLY and CarMax Inc. KMX.