Pep Boys shares drop on 3Q loss

Pep Boys shares tumble on weak sales and surprise 3Q loss

Associated Press

PHILADELPHIA (AP) -- The Pep Boys -Manny, Moe & Jack on Monday posted a loss for its fiscal third quarter on weak sales at its auto stores and rising costs.

Shares of the company plunged in after-hours trading.

The loss was $6.8 million, or 13 cents per share, for the quarter that ended Oct. 27. That compared with net income of $7 million, or 13 cents per share, in the same quarter last year. The recent quarter included an $11.2 million expense for debt refinancing and $8.8 million impairment charge.

Total revenue fell 2.4 percent to $509.6 million.

Pep Boys said that sales in stores open at least a year, considered a critical indicator of a retailer's financial performance, decreased 2.7 percent as a slight increase in service revenue was offset by a decline in merchandise sales.

The quarter missed market expectations. Analysts polled by FactSet forecast profit of 15 cents per share on revenue of $527.8 million.

The company refinanced its debt, which reduced the principal it owes by $95 million, and extended the maturity to 2018. That cut its annual interest expense by about $11 million. The company also launched a new online service to expand shopper's options.

Pep Boys, based in Philadelphia, has about 740 stores in 35 states and Puerto Rico.

Shares fell 85 cents, or 8 percent, to $9.83 in after-hours trading. The stock rose 11 cents to close at $10.68 in the regular session.

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