Wednesday, November 28, 2007

Local Pep Boys closes up shop


The Pep Boys Automotive Supercenter on State Street is one of 31 stores that closed its doors Wednesday in the wake of what company leaders are terming a long-term strategic plan.
“Today is the first of several difficult, but essential steps that we will take toward revitalizing the Pep Boys brand and returning to dominance in the automotive aftermarket,” President and CEO Jeff Rachor said in a press release issued Wednesday. “…We are confident that these decisions will serve as the foundation for Pep Boys’ long-term growth and increased shareholder value.”

Santa Maria’s South Broadway location also shuttered its doors, along with locations across the nation. According to the press release, part of the strategic plan involves a sale-and-leaseback process for 34 stores, a reshuffling of inventory, and the closure of “low-return” stores “located in ancillary markets and locales with changed shopping patterns.”
The 31 locations that closed represent about 5 percent of the total store count and 550 lost jobs, about 3 percent of the Pep Boys workforce. Information on how many positions will be lost at local stores was not provided.
Retail sales reported for the third quarter show an 8.1 percent drop compared to last year, according to the release, while service center revenue jumped 4.5 percent. Overall, sales are down 2.9 percent.
“As we work through our inventory transition, we expect continued pressure on our retail business,” CFO Harry Yanowitz said in the press statement, “resulting in reduced sales and gross profit margins as we sell down our non-core merchandise.
“We expect to take an additional pre-tax charge of approximately $17 million related to the store closures completed today,” he continued, adding, “Over the next 12 months, we expect that the inventory rebalancing and store portfolio reduction will generate working capital proceeds of approximately $65 million.”

1 comment:

Why come to SB if it looks like Huntington Beach? said...

Maybe they could install another Old Navy store there instead?

That would so special.