I've read a lot of earnings reports in my day and the one that Pep Boys (NYSE: PBY) issued last night was one of the scantiest I've seen. The press release that the auto-parts company put out last week about a new distribution center was longer and more in-depth.
The little bit that was said was cautiously optimistic. First-quarter sales increased 10.8% to $566.1 million from a year earlier. Comparable same-store sales rose 11.0%, comparable merchandise sales increased 12.3%, and comparable service revenue was up 5.6%. Net earnings turned to a profit of $16.2 million, or $0.29 per share, compared to a loss of $7.3 million, or $0.14 per share, a year earlier.
But the CEO cautioned that the company was still in the early stages of remodeling its stores and comparisons would be tougher the rest of the year. The retail renewal is part of a strategic plan announced last July, which has also included the introduction of brand-name tires, implementing new customer relationship software, and offering new promotional items.
When I was in Pep Boys a few weeks ago, they were, surprisingly, now selling a wide variety of powered scooter and low-end dirt bikes, four-wheelers, and go-carts. I wasn't sold, but my four-year-old son was, and had he been like eight or so, I might have been, too. It's an interesting strategy.
Investors didn't care too much for the cautionary guidance, and I suspect that most would like to see a faster turnaround time on its remodeling. From a retail sales and marketing standpoint, there's no doubt that Pep Boys is giving AutoZone (NYSE: AZO) and Advance Auto Parts (NYSE: AAP) some serious competition, but it's a long ways off from putting up the kind of earnings growth the other two are.
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Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.
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