Their service business helps them sell parts and their parts are right next door ! Think of it as a warehouse of parts and the service people are there to help sell their stuff. That makes it a fully functional business that helps compliment their overall sales and this in turns adds value to their total business model. Their not broken like Cramer said. Their models works. This is a good company. All it needs is a few managers there with better people skills and more positive thinking and ideas. I say long term it is a good buy. Their uniqueness make them special.
I know this might sound dumb, but look at a company called Food Lion. For years and years they did well and so did their stock. Then all of a sudden bad PR came out on a tv show (i think 20/20 or something) that they were bleaching fish in their seafood department. That was the grocery food business but still it was dealing with customers in a retail outlet nevertheless. No one wanted to shop at their stores afterward after this bad PR spread around all over and hence they had to shut down their stores due to weak sales and they filed bankruptcy. So I beg to differ with you on this one. Once your image is shot down, it is almost impossible to get it back. Honesty and integrity is something that is hard to earn and rightfully so. Talk is cheap. You have to earn it.
This is a broken company with a failing business model.
It's model was [started in the depression] and still is: buy your parts here at a cheap price and do the repair yourself or we'll do it here in our shop and charge you much less than elsewhere.
Now - the parts are not always in stock and they are no bargain -- go to Walmart for that oil filter for a better deal.
Pepboys labor rates are no bargain, and the quality of labor is not much to write home about. More importantly, the tricks and fear tactics used by the service managers do no leave a customer satisfied nor convinced they did not get screwed over by Pepboys.
And Pepboys can't seem to make much money implementing this business model.
This is a broken company with a very low price stock that is not respected.
I hear you. You need to understand that the auto repair and the auto parts business in general is fiercely competitive. So given the type of environment that they are in, it's pretty much a tough gig. The key here is image. Once you lose it, it is pretty hard to get it back. You are basically saying they are not trustworthy. I suppose I understand where you are coming from. If this company fails, it is simply because of two reasons:
A. they have ruined their image for being honest B. the industry they are in is really cut throat