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Pep Boys - Manny, Moe & Jack’s (PBY - Snapshot Report) adjusted earnings declined 60% to 2 cents per share in the first quarter of fiscal 2013 ended May 4, 2013, compared with 5 cents per share in the prior-year quarter. Earnings were also way short of the Zacks Consensus Estimate of 22 cents a share. Net income declined 52.5% to $1.3 million from $2.7 million in the first quarter of fiscal 2012.

On a reported basis, Pep Boys posted a profit of $3.9 million or 7 cents per share compared with $1.1 million or 2 cents per share in the year-ago quarter. These included asset impairment charge of $1.2 million and tax benefit of $3.8 million, while 2012 earnings incorporated $1.6 million of merger related costs.

Revenues for the thirteen weeks ended May 4 climbed 2.2% to $536.2 million from $524.6 million for the thirteen weeks ended Apr 28, 2012. Comparable store sales increased 1% in the quarter due to a 4.2% rise in comparable service revenues and 0.1% hike in comparable merchandise sales. Revenues from merchandise sales went up 1.2% to $417.2 million year ago, while service revenues improved 6% to $119.0 million.

Financial Position

Pep Boys had cash and cash equivalents of $56.1 million as of May 4, 2013 compared with $99.4 million as of Apr 28, 2012. Long-term debt stood at $197.5 million compared with $293.8 million as of Apr 28, 2012. This translated into a long-term debt-to-capitalization ratio of 26.7% as of May 4, 2013, versus 36.7% as of Apr 28, 2012.

In the first three months of fiscal 2013, Pep Boys’ cash flow from operations was $9.4 million, significantly down from $38.0 million in the prior year owing to a fall in profits. However, capital expenditures increased to $12.8 million from $11.9 million in the first three months of fiscal 2012.

Our Take

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 #4 (Sell) on its stock.

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

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