Pep Boys — Manny, Moe & Jack (PBY - Analyst Report) posted a broader loss of $14.5 million or 27 cents per share in the fourth quarter of fiscal 2012 ended Feb 2 compared with $4.4 million or 8 cents in the corresponding quarter of prior year as well as the Zacks Consensus Estimate of 5 cents.
The wider loss was mainly attributable to hefty pension-related expenses in the quarter. The company recorded a $17.8 million pension settlement charge during the quarter, partially offset by a $1.6 million gain from the disposition of assets.
Revenues for the fourteen weeks ended Feb 2 went up 5.1% to $530.8 million from $505.3 million for the thirteen weeks ended Jan 28, 2012. It was higher than the Zacks Consensus Estimate of $499 million. Excluding the fourteenth week of the quarter, comparable store sales (sales for stores open at least once in a year) dipped 2.6% due to weak merchandise sales. Comparable service revenues increased of 3.2% while comparable merchandise decreased 4.1% in the quarter.
For fiscal 2012, Pep Boys reported a profit of $12.8 million or 24 cents per share that was narrower than $28.9 million or 54 cents in fiscal 2011. Revenues in the year inched up 1.3% to $2.09 billion. Excluding the fifty-third week of 2012, comparable store sales declined 2.0% due to poor merchandise sales. Comparable service revenues increased 1.3% while comparable merchandise revenues fell 2.9% in the year.
Pep boys had cash and cash equivalents of $59.2 million as of Feb 2, 2013 compared with $58.2 million as of Jan 28, 2012. Long-term debt stood at $200.0 million compared with $295.1 million as of Jan 28, 2012. This translated into a long-term debt-to-capitalization ratio of 27.1% as of Feb 2, 2013, down from 36.9% as of Jan 28, 2012.
In fiscal 2012, Pep Boys’ cash flow from operations enhanced to $89.0 million from $73.9 million in the prior year despite a fall in profits. The improvement was mainly attributable to a fall in merchandise inventories and increase in accrued expenses. However, capital expenditures decreased to $54.7 million from $74.7 million in fiscal 2011.
Pep Boys, based in Philadelphia, Pennsylvania, supplies tires, batteries, new and remanufactured parts for vehicles, chemicals and maintenance items, fashion, electronic, and performance accessories. It also provides non-automotive merchandise such as generators, power tools and personal transportation products.
Pep Boys expects to grow its market share in the service business through continued investment, given the fact that it has completed refinancing and settled pension liabilities in 2012. It currently retains a Zacks Rank #3 (Hold). Shares of the company dipped 3.7% to $11.25 on Apr 15, after the disappointing earnings results.
While we remain on the sidelines about Pep Boys, other stocks that are worth considering in the automotive parts retailer industry include O’Reilly Automotive Inc. (ORLY - Analyst Report) and CarMax Inc. (KMX - Analyst Report). Both of them carry a Zacks Rank #2 (Buy).
Recently, another retailer and distributor of automotive replacement parts, AutoZone Inc. (AZO - Analyst Report) reported a 15.2% rise in earnings per share to $4.78 in fiscal 2013-second quarter (ended Feb 9, 2013) from $4.15 in the year-ago quarter. The results surpassed the Zacks Consensus Estimate by 4 cents.
AutoZone’s revenues increased 2.8% to $1.86 billion in the quarter, marginally missing the Zacks Consensus Estimate of $1.88 billion. Domestic same-store sales (sales for stores open at least one year) decreased 1.8% in the quarter.