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Pep Boys - Manny, Moe & Jack Message Board

  • Pull_Collective Pull_Collective Dec 10, 2008 11:00 AM Flag

    Poor Customer Service = Bad Value = BK

    Pepboys has and deserves a bad rap for its customer service.

    It's service work is not outstanding and its labor rate and crazy work rules leave customers fuming. They just don't come back.

    Pepboys parts business is so-so. The prices are not oriented to the customer (who keeps the company going) and Walmart and AZO beats them in price everyday.

    Pepboys would seem to have a slight edge in its storename specialty parts possessing a "Pepboys lifetime guarantee".

    These parts are not really any better - just when they fail you can exert the effort once more to take off the defective part and return it for a free replacement part. This is the way a Pepboys water pump works.

    Pepboys calculates that cars are resold and the Pepboys warranty does not transfer with the vehicle; hence Pepboys sees its liability vanish with each sale of a used car containing any lifetime warranted parts.

    Pepboys just does not have a business model that excites customers to drop in and do business.

    How many more quarters can Pepboys continue to lose money and still pay a dividend?

    Not much more ---> then BK.

    And there appears to be no buyout interest on the horizon unless you count the often discussed Exxon buyout, but they are silent and probably smarter than to do this.

    Look at the EZ Lube experience. When the consuming public doesn't trust you, you will be going out of business.

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    • The record shows continue operating sales/profit loss -- no matter what you like to think they have not made it work in a long time-- you can continue to play the buy/sell game and maybe make a little money --but at the end of the day the current team and business model does not work in todays enviorment-- good luck

    • Sounds like headlines for a customer rather than a proxy for an investor. Read the balance sheet and listen to the Conference Call.

      TTM debt has decreased 233 Million. Material and Labor costs as % of revenue have decreased 9% and 6% repectively. SG&A decreased 10%. The reporting structure has been reorganized to address CS issues.

      Dividends are paid out of cash flow not EPS. Currently cash flow is positive fully supporting the current and future divis. This company is not going BK. There is absolutely nothing in the financials that indicate anything near BK.

      By the end of FY Q1 PBY will be double of today's $3.42 price. A 100% gain in pps would still put this 25% below liquidation value. Mark this post.

      • 2 Replies to briskit44
      • 10-Dec-08 Called for double share price of $3.42
        At todays $6.90+ we are now there.

        Though cash flow would support divi they did cut. Believe this was more an industry move as 'everyone' else was doing it and they could get away with it.

        Divi is not that important as most of us are in this for the capital gain.

        Next stop...$8-$9 by May.

      • The problem that you and your friends fail to discuss is that any income earned comes from elimination of assets or operating cost. Year after year the operating sales and profits continue go lower and lower( if there or any). If PBY did not have these assets and if it did not have the strong brand reconition, this company would have been gone a long time ago.
        This Business Model could have been saved a couple years ago, but today the industry trends have changed and the customers needs are different, plus product distribution channels have been lost to other aggressive retailers.