Pep Boys' Sales Rise 0.8%

Pep Boys-Manny Moe & Jack said sales at established stores rose 0.8% in the quarter ended in May, led by growth in service revenue.

At stores open at least 13 months, service revenue—which is limited to labor sales—increased 1.3%, while merchandise sales grew 0.6%. Interim CEO John Sweetwood said the latest period marked the third consecutive quarter of sales growth at established stores.

For the period ended May 2, the auto-parts and services company's overall revenue increased 0.6% to $542.3 million from $538.8 million a year earlier.

Pep Boys, which has been struggling in recent quarters amid weakness in its tire business, has been spending to try to ignite sales growth, including investments for new stores and for store renovations.

Overall, Pep Boys reported a profit of $11.9 million, or 22 cents a share, up from $1.6 million, or three cents a share, a year earlier. The latest period included $10 million from the sale of a leasehold interest.

The Philadelphia-based company, which competes with larger rivals AutoZone Inc. and Advance Auto Parts Inc., is being wooed by potential buyers including private-equity firm Golden Gate Capital, The Wall Street Journal reported last month.

Pep Boys has been searching for a new chief executive to succeed Mike Odell, who resigned in September after six years at the helm. Board member John Sweetwood has been filling the CEO post on an interim basis.

Longtime shareholder Gamco Investors Inc., the firm founded and headed by investor Mario Gabelli, has indicated it intends to nominate six directors to the Pep Boys' nine-member board at its annual meeting.

Write to Tess Stynes at [e-mail]

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