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Pep Boys - Manny, Moe & Jack Message Board

  • bluebloodedtrader bluebloodedtrader Dec 16, 2007 9:39 AM Flag

    Why PBY is special

    Out of the five major Auto part retailers, there are two reasons why PBY stands out of the pack. (1) PBY is the only firm that owns the real estate on which their stores are situated (they own the land and buildings on 60% of their locations (2) PBY is the only company that provides service on its premises allowing consumers to have the parts they purchased installed..that's a huge advantage...this way they can also sell tires, and provide brake jobs...recurring needs for consumers. The service sector is huge, And PBY has recently begun to show nice margin improvement in this category.

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    • If you look back at the last several recessions, you will always find grocery stores (people quit eating out) and auto parts (people can't afford to buy new cars, must take care of the ones they got)as two of the best recession proof plays. The time is coming again soon. I'm glad to see PBY monetizing their real estate. Commercial real estate values have increased 100% in past seven year. If their real estate is now worth $1.3 billion then they have essentially made $650 million profit on real estate in past seven years. That's almost $93 million a year or almost $2 a share per year PBY has made on their real estate for seven years annually. That blows me away that their past incompetent management allowed this windfall by default. The stock hasn't gone up because the market refuses to believe it. The directors have it figured out. Many ivestors think real estate is real estate. Quite contrary. There are hot and cold markets as well as commercial and residential. Most residential markets are projected to decrease 5% to 15% over the next few years. Commercial real estate is holding strong, albeit not increasing 14% a year but expected to be flat to possibly down 1% in 2008.
      The other thing insiders are not mentioning in their press releases that as they withdrew from commercial sales which they included in retail sales for reporting purposes they were giving away product just to get sales. I used to compete with PBY the last few years and they would sell a 30 pound freon for $999 when we were selling it for couple hundred more and replacement cost was way over $999. They were giving away chemicals and oil for about 10% margin which didn't even cover the payroll because they were under pressure from the Harvard Canandian MBA to get sales at all costs. The decline in retail sales this year are the sales they made no profit on last year. The smart ones (directors) know this and can't wait to come against the easy numbers next year.
      If you want to talk incompetency, how could PBY end up having to take a hit on tens of millions in retail product. There is no way Autozone, Advance or O'Reilly would ever have had to take a hit like that because they would have had vendor support. They would have sent it back to the vendor for credit or different merch. The current management could have done likewise and switched to another vendor that would have given them credit. Previous companies I have worked for would have done that in a minute. There are dozens of companies that would have swapped this merch to get a toe hold on a $2 billion sales company. DaninFW

    • Hey Blue!

      I couldn't have said it better