Earnings put on the brakes at Pep Boys in Q4
PHILADELPHIA — Pep Boys sales were up in the fourth quarter, but were earnings were down on merger costs and other expenses. The company reported that sales for the thirteen weeks ended Jan. 28 increased by $27.9 million, or 5.9%, to $505.3 million from $477.4 million for the thirteen weeks ended Jan. 29, 2011. Comparable sales increased slightly (0.8%) and consisted of a decrease of 0.1% in comparable service revenue and an increase of 1% in comparable merchandise sales.
Pep Boys reported a net loss for the fourth quarter of fiscal 2011 was $4.4 million (8 cents loss per share) compared with net earnings of $8.4 million (16 cents per share) recorded in the same period last year. The loss for the quarter includes, on a pre-tax basis, a net charge of $0.9 million comprised of a $1.2 million asset impairment charge and $0.8 million of merger and other transaction related costs, mostly offset by a $1.1 million reduction in its reserve for excess inventory, the company said. The fourth quarter fiscal 2010 results include, on a pre-tax basis, a $4.6 million reduction in the reserve for excess inventory. The fourth quarter fiscal 2010 results also included a $1 million tax benefit.
For the fiscal year, sales increased by $75 million, or 3.8%, to $2.06 billion from $2 billion for fiscal 2010. Comparable sales decreased 0.6%, consisting of a 0.6% comparable service revenue increase offset by a 0.9% comparable-merchandise sales decrease. In accordance with GAAP, service revenue is limited to labor sales, while merchandise sales include merchandise sold through both our service center and retail lines of business.
Net earnings for fiscal year 2011 were $28.9 million (54 cents per share), a $7.7 million decrease from the $36.6 million (69 cents per share) recorded in fiscal 2010. The fiscal 2011 results included a $3.5 million tax benefit, while the 2010 results included a $2.1 million tax benefit. The fiscal 2011 results also include, on a pre-tax basis, a net charge of $2.8 million comprised of a $1.6 million asset impairment charge, $1.5 million of acquisition and transition expenses related to the company's purchase of Big 10 Tires, and $0.8 million of merger and other transaction related costs, partially offset by a $1.1 million reduction in its reserve for excess inventory. The fiscal 2010 results include a net benefit of $8.4 million comprised of a $5.9 million reduction in the reserve for excess inventory, a $2.5 million gain from the disposition of assets and a $1 million reversal of an inventory related accrual, partially offset by a $1 million asset impairment charge.