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Pep Boys Beats Earnings, Lags Rev

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Pep Boys - Manny, Moe & Jack’s adjusted earnings increased to $19.4 million or 36 cents per share in the second quarter of fiscal 2013 ended Aug 3, 2013, compared with $15.5 million or 29 cents per share in the prior-year quarter. Earnings were way ahead of the Zacks Consensus Estimate of 19 cents a share.

On a reported basis, Pep Boys posted a profit of $5.4 million or 10 cents per share compared with $33 million or 61 cents per share in the year-ago quarter. These included an asset impairment charge of $1.7 million and a tax burden of $2.5 million in 2013, while the 2012 earnings incorporated $1.5 million for reclassification of merger related costs, $0.7 million in severance charges and $43 million of merger termination fees.

Revenues for the 13 weeks ended Aug 3, 2013 climbed 0.4% to $527.6 million from $525.7 million for the 13 weeks ended Jul 28, 2012. Revenues lagged the Zacks Consensus Estimate of $539 million.

Comparable store sales declined 1.3% in the quarter due to a 1.7% decline in comparable merchandise sales and a 0.2% rise in comparable service revenues. Revenues from service centers inched down 0.1%, while comparable retail sales deteriorated 2.6%. Revenues from merchandise sales went down 0.26% to $412.3 million, while service revenues improved 2.68% to $115.3 million.

Financial Position

Pep Boys had cash and cash equivalents of $64.9 million as of Aug 3, 2013 compared with $150.8 million as of Jul 28, 2012. Long-term debt stood at $197 million compared with $293.5 million as of Jul 28, 2012. This translated into a debt-to-capitalization ratio of 26.6% as of Aug 3, 2013 versus 35.2% as of Jul 28, 2012.

In the first six months of fiscal 2013, Pep Boys’ cash flow from operations was $31.2 million, significantly down from $87.5 million in the prior year owing to a fall in profits. Moreover, capital expenditure declined to $11.7 million from $14.4 million in the second quarter of fiscal 2012.

Zacks Rank

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 merchandise 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 - Free Report) , O’Reilly Automotive Inc. (ORLY - Free Report) and CarMax Inc. (KMX - Free Report) .

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