The global automotive industry is mounting as the economic conditions in the emerging markets such as China, Japan, and Germany are becoming healthier. Therefore, the demand for auto parts is also increasing as these countries are major consumers. Pep Boys-Manny Moe & Jack (PBY, Financial) is one of those players in this retail/wholesale-auto parts industry offering good investment opportunity to investors.
Pep Boys sells brand name and private label auto parts, and provides select services through 803 stores in 35 states and Puerto Rico. The company's stores are organized into a hub and spoke network, including supercenters and service and tire centers. Pep Boys stocks about 25,000 car parts and accessories, including tires, and operates more than 7,500 service bays for vehicle repairs, inspections, and parts installations. Further, the company also provides credit and parts delivery to different customers.
Impressive figures posted
On June 8, the Philadelphia, PA-based company reported financial results for its first quarter 2015, ended on May 2, 2015. For the first quarter of fiscal 2015, the company reported net earnings of $11.9 million ($0.22 per share) compared to net earnings of $1.6 million ($0.03 per share) in the year ago quarter. The 2015 results included, on a pre-tax basis, a $10.0 million sale of a leasehold interest offset by a $0.8 million asset impairment charge, while the prior-year quarter figure incorporates an asset impairment charge of $1.2 million and litigation accruals of $4 million. Pep Boys’ operating profit for the first quarter of fiscal 2015 increased to $23.1 million from $6.0 million recorded in the first quarter of fiscal 2014.
Revenues for the 13 weeks ended May 2, 2015 increased by $3.4 million, or 0.6%, to $542.3 million from $538.8 million in the same period last year. In the reported quarter, comparable sales increased 0.8%, consisting of an increase of 1.3% in comparable service revenue and an increase of 0.6% in comparable merchandise sales. Revenues from merchandise sales went up 0.3% to $413.1 million, while revenues from service grew 1.7% to $129.1 million. Pep Boys’ operating profit for the first quarter of fiscal 2015 increased significantly to $23.1 million from $6.0 million recorded in the first quarter of fiscal 2014. As of May 2, 2015, the company had cash and cash equivalents of $42.16 million, compared with $37.81 million as of May 3, 2014. Further, as of May 2, 2015, long-term debt, less current maturities decreased to $193.5 million compared to $202.5 million as of May 3, 2014. Pep Boys’ capital expenditure also decreased to $12.3 million from $14.6 million in the first quarter of fiscal 2014.
Projections
The company’s main motto is to make Pep Boys the best place to shop and care for one’s car. To achieve this motto, Pep Boys has introduced several strategies which are as follows:
- To attract, develop and retain the best people.
- To deliver customer experiences that are beyond expectations.
- To own the best product assortment and shopping experience.
- To grow where its target customers live, work and shop.
- To expand its locations from 235 to 249 by the end of 2015.
- A strong CRM program to understand and target its key customers.
Further, Pep Boys expects sales over $1 million, EBITDA over $100K, investment under $400K, and an IRR of 15% or greater per store. The company has the industry leading on-line appointment system which allows quick and easy scheduling for the wide array of services.
On a concluding note
Overall, Pep Boys is a rock solid company with solid stock price performance, increase in net income, and revenue growth. The company prides itself on providing the best customer service and the highest-quality service work available anywhere. In addition, Pep Boys is committed to honesty and integrity in all of its business dealings – with employees, vendors and customers alike.Â
(Source: Company’s Website)
