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The Pep Boys-Manny, Moe & Jack (NYSE:PBY)

Q1 2014 Results Earnings Conference Call

June 10, 2014, 8:30 AM ET

Executives

Sanjay Sood - Chief Accounting Officer & IR

Mike Odell - President & CEO

David Stern - EVP & CFO

Analysts

James Albertine - Stifel

Bret Jordan - BB&T Capital Markets

Brian Sponheimer - Gabelli & Company

Ronald Bookbinder - Benchmark Company

Operator

Greetings and welcome to the Pep Boys First Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now turn the conference over to your host, Mr. Sanjay Sood, Chief Accounting Officer and Investor Relations. Thank you, Mr. Sood. You may begin.

Sanjay Sood

Thank you. Good morning and thank you for participating in the Pep Boys first quarter fiscal 2014 earnings conference call. On the call with me today are Mike Odell, President and Chief Executive Officer; and David Stern, Executive Vice President and Chief Financial Officer.

The format of the call is similar to our previous calls. First, Mike will provide opening comments regarding our results and our strategic priorities, and then David will review the financial performance, balance sheet and cash flows. We will then turn the call over to the operator to moderate a question-and-answer session. The call will end by 9:30 a.m.

Before we begin I'd like to remind everyone that this conference call is governed by the language at the bottom of our press release concerning forward-looking statements, as well as SEC Regulation FD. In compliance with these regulations, we are webcasting the conference call on investorcalendar.com. For anyone on the webcast who does not have the financial statements, you can access them on our website, pepboys.com.

I’ll now turn the call over to Mike Odell, our President and Chief Executive Officer. Mike?

Michael Odell

Thanks, Sanjay. Good morning and thank you for joining us today. I want to start our call today by first thanking our 19,000 associates for their commitment to making Pep Boys the best place to shop and care for our customers’ cars. As we say in our mission, we are just people taking care of people and their cars.

Two weekends ago in the San Francisco Bay Area, we grand reopened all of our Supercenter stores in the market in our exciting new Road Ahead strategy. This is our second full-market brand re-launch with our first being in Tampa, which grand reopened six months ago. It is so exciting and rewarding to witness this transformation of our 93-year old brand. The excitement among our associates was amazing, and most importantly to our future growth. The positive customer reaction to this new experience in both customer associate engagement and in sales was overwhelming.

I will start today’s business discussion with an update on our key customer strategies then Dave Stern will review our quarterly results. Our first quarter operating profit, as you’ve seen, improved significantly over the prior year, driven primarily by higher gross margin and a total sales increase.

As I previously stated, there are three primary components to our business strategy. Number one is to continue to lead with and grow our service business, which represents the largest and faster growing segment of the automotive aftermarket. Number two is the transformation of our Supercenter stores and customer experience to differentiate our brand with our target customers. And three is the enhancement of our digital business to drive omni-channel growth in both our service and retail businesses.

Our strategy leads with service as we favor the fundamentals for DIFM over the long haul. The demand for maintenance and repair remains consistent, which continues to drive the growth of our service customer base.

We provide a great value and continue to quickly improve our customer experience. There is a huge gap between the dealer experience and its cost and the rest of the automotive aftermarket. And we are confident that we can now match the dealers with our customer experience and expertise while beating them in price and convenience. And we can meet -- at the same time, meet or beat the independents and chains on price and convenience while delivering the best alternative to the dealer for the customer experience and expertise. We call this white space being the best alternative to the dealer per service while delivering a unique customer experience in retail.

With our retail business, we not only use tires and oil changes to acquire new service customers, but also use free and/or fast professional installation of wipers, batteries and bulbs for retail customers to acquire new service customers. Once acquired, the focus is on developing a relationship that allows us to perform all of their maintenance and repair services from scheduled maintenance to brakes, front-end parts and alignments to major repairs.

Our service revenue for the first quarter grew 2.4% in total and declined 1.0% on a comparable store basis. On a comparable store basis, also, customer count declined 0.6 while average ticket declined 0.4. Breaking the business down further on a comparable store basis, maintenance and repairs grew again, 1.7% with growth in every major category except air filters, while our tire business declined 6%. Tire units declined by 2% and our average all-in price per tire declined 4% during the quarter.

We discussed this decline in the average price per tire last quarter and are still of the view that retail pricing for tires has stabilized meaning that tires are not continuing -- that prices are not continuing to decline. But as we have discussed previously, tire prices are still below last year comparisons and will remain so through the second quarter of 2014. Also, the tire mix has shifted more towards promotional offers.

Through the first five weeks of the second quarter, we have seen our service business improve to a positive comp despite the continued pressure in tire pricing. While our stronger performance has been in the North this year, it is important to note that our Southern California stores have recently turned to positive as well.

We now operate 227 Service & Tire Centers with plans to open 28 new stores in 2014, of which, 25 will be Service & Tire Centers and three will be Supercenters in our new Road Ahead format. Two of the Supercenters are relocations and one is new. We continue to be very pleased with our build-to-suit Road Ahead Service & Tire Center model which will comprise most of the new Service & Tire Centers. We also recently converted the 18 Discount Tire stores that we acquired in Southern California to our new Road Ahead format for Service & Tire Centers and have started to see their weekly sales volume grow.

With respect to the Road Ahead, we have spoken about the transformation of our Supercenters for the past year. We started with one store in Tampa in March 2013 and completed the remainder of the stores in this Tampa market during the fourth quarter of 2013. The first store has now been re-launched for just over one year, continues to perform very well.

The rest of the stores in the market made up of five Supercenters, three remodeled Service & Tire Centers and two new Service & Tire Centers have now been re-launched for 25 weeks. While it’s still early and sales momentum is still building, we are experiencing a strong double-digit sales lift that will still produce returns in line with our 15% hurdle rate for internal rates of return.

While monitoring results, we are in the process of converting three additional markets. As I mentioned in my opening comments, we just completed the first of those three, which was our stores in the San Francisco Bay Area and we’ll complete our stores in the Boston, New Hampshire market in June and in the Charlotte market in August.

Our objective is to be the best alternative to the dealer. We already have the service capability in terms of technicians, equipment and range of services. These new changes bring our stores to dealer level in terms of customer experience as well.

This compelling offering of dealer expertise, great customer experience, all at Pep Boys value, is proving to be a real consumer sweet spot. Of the 565 Supercenters and 227 Service & Tire Centers in our chain, 26 of the Supercenters and 42 of the Service & Tire Centers will be in our new Road Ahead format at the end of August. It is such a dramatic change for so many of our tired old stores.

Another important element of the Road Ahead is our merchandising. On the DIY proud side of the store is our Speed Shop of which we now have 117 locations. 31 of the 56 Speed Shops that we will open this year in 2014 will be done in conjunction with the Road Ahead conversions. Speed Shops are for the true DIY enthusiasts and also connect with our everyday DIY maintenance customers. The other side of the store meanwhile caters to our customers who may not pick up a wrench but still care about the appearance of their cars and our service customers who simply want accessories for how they use their cars.

Along with having a dominant assortment of products to improve the interior and exterior look of our customers’ cars and to personalize their vehicles, this new store format has a visual presentation that appeals to a broader audience than the traditional DIY-er. Additionally, work is underway to continue to update our assortments for our customers who love their cars and car lifestyle. As we continue to dig deeper into our customer segmentation research, we are identifying new product opportunities to target these customers, exciting new products like automotive themed apparel has already landed in our stores and is starting to sell.

Turning to digital operations, the third leg of the Road Ahead for Pep Boys is our digital operations. Sales from digital operations include online service appointments, tire sales that are made online and installed in our stores, ship-to-home sales and products that are ordered online and picked up in our stores.

I’m so pleased to see our strong growth in this important strategy so far this year. Sales through digital operations grew a strong 79% during the first quarter. From a mix of business perspective, sales through digital operations accounted for 4% of our sales during the first quarter as compared to 2.3% for the prior year.

We have made and continue to make numerous upgrades to our digital operations systems and processes and expect to continue the significant increase in sales from our digital operations for the remainder of 2014. The automotive aftermarket is accelerating in its move to digital world and we see this area as critical to our successful omni-channel Road Ahead strategy.

In summary, our key customer strategies remain on track and are gaining traction, but still need to get to critical mass to accelerate our performance for this multi-year transformation process. From a sales and profit perspective, we grew and improved some, but know that we must and still execute better.

Our core service business remains stable and we expect tire sales trends to improve in the back half of the year. Our key target customer groups are endorsing our improved customer experience with new and repeat business. The Road Ahead is working and digital is growing quickly. Our customer centric efforts are guiding our strategies to grow our target customer groups, grow our sales and differentiate ourselves in a competitive landscape.

Thank you for your interest in Pep Boys, and I’ll now turn the call over to Dave Stern, our Chief Financial Officer to review our financial results.

David Stern

Thanks, Mike. Good morning, everyone. This morning, I will review our results on both a GAAP and a line of business basis. The last page of our press release includes financial information in the line of business format.

Sales for the first quarter of 2014 were $538.8 million, an increase of $2.6 million or 0.5% from the first quarter of 2013. The increase was primarily driven by sales from non-comparable store locations during the quarter of $10.3 million, partially offset by a decline in comparable store sales of 1.4% or $7.7 million. Comparable store service revenue increased by 3.2%, while comparable store merchandise sales declined by 2.8%.

Gross profit, which includes service payroll, warehousing and occupancy costs, for the first quarter of 2014 was $133.1 million, an increase of $11.3 million or 9.3% from the first quarter of 2013. Gross profit margin was 24.7% of sales, an increase of 200 basis points. Excluding the impairment charges of $1.2 million in each of the first quarters of 2014 and 2013, gross profit margin was 24.9%, an increase of 200 basis points from the prior year. This increase was primarily due to higher product margins partially offset by higher employee costs.

Selling, general, administrative expenses were 23.6% of revenue, an increase of 150 basis points from the first quarter of 2013. In dollars, SG&A expense for the first quarter was $127.1 million, an increase of $8.9 million or 7.5% from the first quarter of 2013. This increase was primarily driven by the increase of $4 million in litigation accruals and higher marketing expense of $3.3 million.

Operating profit for the first quarter was $6 million, an improvement of $2.5 million from the prior year. The current year includes the increase in litigation accruals of $4 million. The current and prior years each include an impairment charge of $1.2 million. Adjusted for these items, operating profit for the first quarter of 2014 was $11.2 million, compared to $4.7 million for the comparable period of the prior year.

Interest expense during the first quarter was $3.8 million, an increase of $100,000 compared to the first quarter of 2013. Income tax expense for the first quarter of 2014 was $1.1 million or an effective rate of 39.5%, compared to a net tax benefit of $3.7 million in the prior year. During the first quarter of 2013, we recorded a $3.8 million tax benefit from state hiring credits.

Net income, which includes the discrete items noted above, for the first quarter of 2014 was $1.6 million or $0.03 per share, compared to net income of $3.9 million or $0.07 per share in the first quarter of 2013.

I’ll now turn to our results by line of business as opposed to a GAAP basis for our service center and retail operations for the first quarter of 2014. Service center business, which includes service labor revenue and installed merchandise, generated revenue of $293.9 million in the first quarter of 2014, an increase of 2.4% or $6.9 million compared to the first quarter of 2013. This increase was partially due to sales of $9.8 million from non-comparable locations, offset by lower comparable store sales of 1% or $2.9 million.

The decrease in comparable store revenue was due to a 6% decline in tire sales driven by a price decline of 4% and a unit decline of 2%. Excluding tires, service center comparable store revenue grew by 1.7%, driven by the continued strength in repair and maintenance service offerings.

Service center gross profit was $63.8 million, an increase of 22.7% or $11.8 million from the first quarter of 2013. Excluding impairment charge of $1 million in each of the first quarters of 2014 and 2013, service center gross profit, as a percentage of revenue, was 22%, an increase of 350 basis points from the same period of the prior year, primarily due to higher product gross margins and lower employee costs, partially offset by higher store occupancy costs.

The retail business generated sales of $244.9 million in the first quarter of 2014, a decrease of 1.7% or $4.3 million from the first quarter of 2013. This decrease was due to lower comparable store sales of 1.9% or $4.8 million, partially offset by $500,000 from sales from non-comparable locations. Retail comparable store sales declined primarily in chemicals, filters, oil and brakes.

The retail business generated gross profit of $69.3 million for the first quarter of 2014, a decrease of 0.7% or $500,000 from the first quarter of 2013. Excluding the asset impairment charge of $200,000 in each of the first quarters of 2014 and 2013, the retail gross margin rate was 28.4%, an increase of 30 basis points from the same period in the prior year. The increase in retail gross margin was primarily due to improved gross product -- improved product margins.

Moving to the balance sheet and cash flow, cash at the end of the first quarter was $37.8 million, an increase of $4.4 million from year-end and a decrease of $18.3 million from the comparable period last year. Inventory at the end of the first quarter was $663.6 million, a decrease of $8.8 million from the prior year and an increase of $15.4 million from the first quarter of last year. Inventory increased from the comparable period of the prior year due to the 37 additional Service & Tire Centers, the 36 additional Speed Shops and the introduction of new product offerings, partially offset by three fewer Supercenters.

Accounts payable, including the trade payable program, at the end of the [third] (ph) quarter was $381.9 million, a decrease of $4 million from the prior year and a decrease of $12.7 million from the comparable period last year. The accounts payable to inventory ratio was 57.6%, compared to 57.4% at year-end and 60.9% for the comparable period last year.

Capital expenditures in the first quarter of 2014 were $14.6 million and primarily consisted of the addition of two Service & Tire Centers, the completed conversion of five stores into the Road Ahead format, construction and progress to remodel stores and required expenditures for information technology enhancements, including our e-commerce initiatives, as well as our regular facility improvements. Capital expenditures in the first quarter of 2013 were $12.8 million.

For 2014, we anticipate capital expenditures of approximately $80 million. We plan to open 25 Service & Tire Centers, relocate two Supercenters, open one new Supercenter, add 25 Speed Shops within existing Supercenters and convert 42 stores to the Road Ahead format.

I’ll now turn the call over to the operator to begin the question-and-answer session.

Question-And-Answer Session

Operator

(Operator Instructions) The first question comes from James Albertine of Stifel. Please go ahead.

James Albertine - Stifel

Now that we’re a year removed from the Tampa initiatives rolling through the system, I wanted to get a better sense from you guys, if you could, as to I guess the updated P&L, right, so how these new stores that are flowing through into the comp base and performing now year out. And then, where you’re really deriving the bulk of that enhanced return, is it on cost savings, is it SG&A, is it P&L related, or is it something more balance sheet related, AP to inventory ratio benefit or better operations with the vendors or inventory management. So help me understand kind of the early stages now what you are seeing in terms of the pro forma from that initiative?

Mike Odell

The primary benefit of the Road Ahead would be the top line and then flowing through at the normal rates, so obviously that does end up having a favorable impact with suppliers both from a cost perspective, as well as a negotiation perspective that could also affect AP to inventory. In terms of where that sales lift to comes from in the retail end of it, the largest categories that are affected is where introduced the Speed Shop, but really literally every category is favorably affected, but the highest from a kind of a dollar and percentage increase would be the Speed Shop categories.

And then, in service, it’s really across the board. It affects -- it starts -- when we do the re-launch, it starts with the oil changes and the maintenance as we introduce new customers but really we’re seeing the sales lift across maintenance repairs as well as tires. And then, again it’s off that double-digit sales increase that we get, it then flows through at the normal margin rates less some incremental payroll.

James Albertine - Stifel

And can you remind us sort of the cost required, the input costs required, and I guess we could look at your CapEx guidance for the year and sort of back into it based on the parameters you’ve set for additional Speed Shops and additional STCs and Road Ahead stores and so forth, but has that come in at all as you’ve sort of progressed into new markets, learnings from Tampa, has it enabled you to do it at a slightly sort of lower cost or sort of where do you stand from that standpoint?

David Stern

Sure, Jamie, this is Dave. The net cost after vendor support is about $475,000, gross cost is about $525,000 to $550,000 that’s for a Supercenter and STC, which is obviously much less square footage and also includes the sections in the Bay which aren’t part of the remodel, the fiscal remodel process, so they are much less expense.

And it’s really a store-by-store, market-by-market analysis, but keeping all else equal, we are getting slight efficiencies. The first one that we did was a little more expensive, we learned more as we rolled it out through the rest of Tampa and brought down the cost. And we’ve got, as Mike mentioned, we re-grand opened San Francisco two weekends ago, moderated the cost a little bit there and are in the process of remodeling Boston and Charlotte.

Operator

The next question is from Bret Jordan of BB&T Capital Markets. Please go ahead.

Bret Jordan - BB&T Capital Markets

Could you talk a little bit about the gross margin expansion, maybe some of the contributors, are we seeing a swing that tire pricing stabilizing and your acquisition costs are still down or maybe some of the major drivers around that?

David Stern

Sure, Bret, this is Dave. If you recall, our last year quarter one we had lower gross margins and the time we talked about it, we outlined the fact that couple of things had occurred during the comparable period last year. One, was that we got more promotional and two, is that we ran more tests during that quarter and it was really to gather learnings that we could apply through the rest of the year.

And so, the biggest contributor was not in tires but other than tires, higher product gross margins almost across the board. And that’s partially offset by higher employee costs as there was a line of business shift toward service but the vast majority of it was higher product margins.

Mike Odell

The only other thing I would add, Bret, is that we did get a benefit of leveraging higher labor revenues for the mix of business that shifted towards higher margin labor revenue that contributed, I think, about 140 basis points to the improvement year-over-year.

Bret Jordan - BB&T Capital Markets

And then, could we talk about the litigation expense a little bit, is that a class action on California?

Mike Odell

That was, Bret. So we routinely go through our litigation reserves and in the first quarter we increased the reserve to reflect that publicized class action certification of the California case involving former employees and that case has been settled in principle.

Bret Jordan - BB&T Capital Markets

And if we talk about customer, just on last question, I guess customer count was down marginally in the quarter and is that as you back out that a little bit, could you compare that to what you’re seeing in customer count trends on the Road Ahead? And then, maybe is the customer count down sort of as an exchange for the margin as you become less promotional, do you think that was the impact?

Mike Odell

I think in terms of the broad, I guess two parts to the question, in terms of the broad business, we, last year, as Dave said, we were more promotional, so did get more sales, more traffic at a lower margin. So that probably accounts for that slight decrease in customer count in service. In terms of the Road Ahead, the sales increases that we’re getting, the double-digit increases that we’re getting, it’s count more than it is ticket.

Operator

The next question is from Brian Sponheimer of Gabelli & Company. Please go ahead.

Brian Sponheimer - Gabelli & Company

You’ve spent some time on digital in your prepared remarks, with announced 4% of sales versus just over 2% a year ago, what’s your sense that that incremental business versus taking from Peter and paying to Paul, taking from your brick-and-mortar and going online?

Mike Odell

Obviously it’s hard to distinguish between the two, but I guess we think about it as very effective marketing expense. We know that -- it’s pretty amazing how in the past when we wanted to do a promotion and we would do it in preprint, right, we would have to plan it for weeks in advance and then read it during that short time period. Now, we can see it really quickly and as recently just this past week as we put promotions on, take them off, we can see very -- just doing it digitally, we can see quick responses in the business. So again it’s hard to say how much is incremental as much as I think it’s one of the effective ways, cost effective ways to market these days.

Brian Sponheimer - Gabelli & Company

And if I’m thinking about your tire sales within the service business, at the retail end costs have stabilized, what’s your sense if we’re thinking about the rest of the year that you begin to really pick up that margin from any acquisition benefits in 2Q, 3Q, 4Q?

Mike Odell

I’m optimistic for the back half of the year as we said in our comments and always as we know with tires, there is a lot of variability, so I hate to get too far ahead of ourselves, but we do feel like prices have stabilized. We know that we’re coming up against that year where we had declining prices. We do still see more shift towards the promotional offers, so that has some pressure on the top line as well, but still feel positive for the back half of the year that we will be able to hold price and that we’ve been getting our improved acquisition costs, so hard to know for sure but feel optimistic for the back half of the year.

Brian Sponheimer - Gabelli & Company

And you talked about going a little bit more upscale with your tire mix, kind of talk about where you are with that and how you are -- whether you are happy with your tire inventory at this point?

Mike Odell

Yes, so if you were to go back and look at us at the end of 2012 and this is on a dollar basis, we were a little bit more branded than non-branded. And that has definitely flipped where we are now more, did I say that right, we were more non-branded than branded. We’ve definitely flipped that where we sell more branded tires than non-branded tires.

We don’t look at it in terms of necessarily that we are trying to drive a particular mix as much as it is that we’re trying to have the right assortment for our target customers and as far as broader base of customers. If you look at the way our systems are now designed whether you are online or in the store, what we call tires made easy, we’ll take -- we may have for a particular vehicle, car, truck, whatever, there could be 10 or 20 possible options for our customer, not all of those are necessarily going to be in stock in every store, but there is a lot of -- through our network of options available.

But we quickly basically use some algorithms to present it for our customers in a good, better, best format where there is the lowest price, there is the best tire and in the middle is a great tire at a great price. So if it’s a price sensitive customer, we would go to the lowest price tire that we have in stock. If it’s a customer, particularly as we try to be the best alternative to the dealer that’s more interested in branded tire, we can present to them the tire that came on that car when they first bought it or whatever the best tire is available to us.

We may not have it in stock in that store right now, but if they are online, we are going to have it within the day or within the next day. And then, in the middle is the sweet spot where we’re perfectly happy to sell where it’s a great tire at a great price, that’s also going to produce a nice margin result.

And so our assortment thinking is about how to make sure that we’ve got that good, better, best so that we can be relevant to the customer regardless of where their mindset might be, which is why it shifted us to have -- it shifted our mix towards branded from non-branded because our assortment wasn’t right, we didn’t have all the brands that we wanted but feel good about the relationships that we started over the last couple of years, actually feel very good about those relationships. But understand that the Chinese imports still going to have a role because there is a fair share of customers that are interested in the lowest price as well as the customers that are out there interested in the best tire.

Operator

(Operator Instructions) And the next question is from Ronald Bookbinder of Benchmark Company. Please go ahead.

Ronald Bookbinder - Benchmark Company

Are there some stores in individual markets that just won’t warrant the expense of the remodel into the new format and what would be the plan for them?

Mike Odell

The answer is yes and the question is figuring out where exactly to draw that line. So if we look at our customer, the target customer segmentation, it drifts in terms of the range, as we say, best alternative to the dealer drifts off in terms of the median incomes if you wanted to use that demographic.

And so then there is the stores that might be, let’s say below -- again I’m just picking a number because we don’t know the exact answer, that’s below $40,000 median income where we say we’re not sure. We know that the customer likes the format, but are they willing to pay for it and is it going to make t work.

So in Tampa we did two stores that -- we picked Tampa originally because it had a range of stores in different of demographics, including two stores that were in that sub-40 median income. One of them did great, the other one’s got out of the box slow, it’s been the weakest performer, it’s been performing better the last month, but it’s been the weakest performer.

And San Francisco, again this is on a week and a half of data, but the two best performing stores on that first week and a half, one was the highest income demographic and one was lowest income demographic. But to answer your question, I do think that there are going to be stores at the lower end of the chain that won’t justify the investment.

And I think we’re going to have three options that we still need to figure out, one is obviously close and monetize, it’s always an option. Two, such as what we’re doing with one of the stores in Charlotte is that we’re going to basically convert it into a Service & Tire Center on the Road Ahead format and sub-lease the retail space. And three, which we’re going to try in the Denver market in two of the stores is a scale-down investment of the Road Ahead that focuses on the exterior signage and the service customer lounge without doing the rest of the work.

So to answer your question, the bulk of the stores will get the full Road Ahead treatment, but there is some stores at the lower end of the scale that will -- one of those three options will probably be the best answer. But we haven’t -- we still need to continue to test more stores to figure out where exactly we draw that line.

Ronald Bookbinder - Benchmark Company

And is the increased marketing, is that primarily in the new format market and should we expect that to ramp up as more markets are converted?

Mike Odell

That increased marketing was not necessarily related to the Road Ahead. There was a mix of media in terms of TV, print and -- TV, print as well as direct mail and digital that accounted for that increase in marketing. There is also, I believe in there, there is also less vendor support, so if vendor support provides specifically for marketing, we had more vendor support of specific market initiatives in last year’s numbers than in this year’s numbers.

Operator

The next question is from Bret Jordan of BB&T Capital Markets. Please go ahead.

Bret Jordan - BB&T Capital Markets

I have just a quick follow-up around the Boston Road Ahead. You said Boston, Massachusetts and New Hampshire, how many stores are you going to completely reset and what’s the re-grand opening day?

Mike Odell

There are three in the Boston market, Everett, Dedham and Salem, and then there are three in New Hampshire just north of the border. The date is June 27, and Bret and I have to apologize right now but we’ve had a licensing -- or not licensing, permitting, zoning issues in Dedham which is going to be delayed so we’ll probably end up on that June 27 date doing five of the six and we’ll have to do Dedham later, so we’ll see on June 27 in either Everett or Salem, Massachusetts.

Bret Jordan - BB&T Capital Markets

You kind of made it easier for me.

Mike Odell

I know but when they told -- I just learned that yesterday that with those issues weren’t going to necessarily -- they may still get resolved in time but unsure and you were the first person I thought of, Bret.

Bret Jordan - BB&T Capital Markets

I appreciate the help.

Operator

Thank you. We have no further questions in queue at this time, I would like to turn the floor back over to management for any closing remarks.

Mike Odell

Thank you for joining us today. Thank you for your interest in Pep Boys. We’re excited about where we are going with service, the Road Ahead and digital. And hope you all have a great day. Thanks.

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

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