Please ensure Javascript is enabled for purposes of website accessibility

Pep Boys Is Still Trying to Find Itself

By Todd Wenning – Updated Apr 5, 2017 at 3:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Time to bet on the boys?

The tough times continue at automotive supply retailer The Pep Boys - Manny, Moe & Jack (NYSE: PBY) following a less-than-stellar fourth quarter and full-year earnings report released after yesterday's close. In morning trading, shares were down as much as 8%, leaving them 42% off their 52-week high. 

Here are a few of the call's low-lights:

  • Revenue for the year, expected to be $2.18 billion, came up 2% short at $2.138 billion.
  • Net loss from continuing operations for the year was $37.4 million, or $0.72 per share.
  • Restructuring costs continue to hamstring the trio, contributing a $0.27-per-share loss to the fourth quarter.
  • This was the last earnings call for CFO Harry Yanowitz, who announced his departure from the company in January.

Bootstraps up!
While competitors AutoZone (NYSE: AZO), Advance Auto Parts (NYSE: AAP), and O'Reilly Automotive (Nasdaq: ORLY) aren't exactly burning up the charts either, Pep Boys has suffered the worst fate of all over the past year.

With increased competition from these auto parts stores and car dealers, Pep Boys was right to refocus its business plan. Pep Boys is in the early stages of what the company calls a five-year strategic plan to "refocus on core automotive merchandise, optimize our square footage productivity, and add incremental service bay density through a 'hub and spoke' growth model."

In noncorporate speak, this means the company is closing underperforming stores, increasing its core business inventories (tires, auto parts, car-customizing accessories), tapping the value of its real estate assets through sale-leasebacks and straight sales, and cutting costs.

Despite today's economic conditions, CEO Jeffrey Rachor, who has led Pep Boys for a year, remains confident and believes the company will complete the first step of its strategic plan by the second quarter of 2008. The process won't be easy without a CFO, so investors looking for a turnaround play should pay close attention to who the company brings in to replace Yanowitz.

For related Foolishness:

Fool contributor Todd Wenning has a new appreciation for the middle lane. He does not own shares of any company mentioned. The Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.