Pep Boys -- Manny, Moe & Jack
) saw more than six-fold jump in profits to $76.7 million or $1.43
per share (excluding merger termination fees and severance costs)
in the second quarter of the year ended July 28, 2012 from $11.9
million or 22 cents (excluding asset impairment charge, acquisition
related expenses and benefit from the release of state tax
valuation allowances) in the comparable quarter of prior year.
With this, the automotive parts supplier's profits drove past
the Zacks Consensus Estimate by a significant margin of $1.28 per
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Revenues in the quarter grew marginally by 0.6% to $525.7 million
from $522.6 million a year ago. It was in line with the Zacks
Consensus Estimate. The revenue growth was mainly driven by the
improvement in the company's service business.
Comparable sales were flat with a 3.1% rise in comparable service
revenues and a 0.9% decline in comparable merchandise revenues.
The company believes strong industry fundamentals driven by
consistent demand for maintenance and repair services will drive
its earnings. However, rising gas prices is expected to mar
Further, the company intends to improve its debt structure. It aims
to reduce long-term debt by approximately $100 million, settle its
interest rate swap, extend its maturities and reduce its overall
Pep Boys, based in Philadelphia, 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.
The company, which competes with
O'Reilly Automotive Inc.
), currently retains a Zacks #3 Rank, which translates to a
short-term rating of Hold.