I've been pretty hard on Pep Boys (NYSE: PBY ) in recent months, but my skepticism regarding this troubled auto-parts (and services) retailer has thus far been rewarded. The stock has continued to slide, now sitting at its lowest price since 2003. Given the following news, I find that intriguing.
Earlier this week, the company announced that CEO Larry Stevenson had resigned, effective immediately. In his place, the board tapped Chairman Bill Leonard to serve as interim CEO. Remember when I mentioned 2003? That's when Stevenson was originally hired, and although the first part of '03 was rocky, the stock ultimately saw a sharp rebound.
Until, that is, the wheels started falling off once more. Since that lofty peak in early 2004, performance has eroded, and the stock has seen a pretty steady fall, punctuated by two rounded-off rallies about a year apart. Though company press releases often talked about improving the business, the failure to actually do anything with service operations continued to weigh on overall performance.
The CEO's departure does not solve Pep Boys' problems. Though it has hired Goldman Sachs (NYSE: GS ) to explore the fabled "strategic alternatives," hedge funds like Pirate Capital and Barington have been vocal in criticizing both the company's sluggish self-improvement and its failure to set a date for its shareholders meeting.
In addition, investors have recently grown more worried about performance at rivals Advance Auto Parts (NYSE: AAP ) , AutoZone (NYSE: AZO ) , and O'Reilly Automotive (Nasdaq: ORLY ) . If better-run companies in the industry are having trouble, that doesn't bode well for a quick turnaround at Pep Boys.
I've said before that I'd consider these shares if they were at a discount to tangible book value. They're not there yet, but they keep getting closer. I'm also cautiously optimistic that we're now seeing the last of things getting worse before the company's improvement begins. I may have little faith in Pep Boys' current board when it comes to fixing this business (or hiring a good CEO candidate to do so), but if it can't do it, I figure that somebody who can will eventually step up and buy the company.
For more peppy Foolishness:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).