scott3.1416

Looking Under the Hood at PepBoys

Interesting.
Hub and Spoke- Not much more than a glorified mini distribution center. Same deal was tried years ago (hub store) where a centralized store had more parts than others from which sister stores pulled as needed via preset intra-store deliveries. Still it is a good idea as parts sold this way are more profitable than those out sourced. Just remember that it is not novel.

Non-core merchandise- Exiting? We’ll see. Exiting requires planning and follow through, not one or two price reductions. Once consumers shop out the best bargains the remainder need to quickly be further reduced until sold. The space wasted would be better utilized for fresh merchandise being sold at a profit.

Shedding of unprofitable locations? Less than ten percent of all stores were closed and yet the company is still not profitable. It is a stretch to say that unprofitable locations have been eliminated, better to view as a step in the right direction and a tactic that may need to revisited in the future.

Reduction of SG&A expenses- layoffs and off shoring of support positions coupled with a freeze on wages and the hope of replacing long term employees with lower cost new employees. Less with less = more?

Optimization of real estate holdings- Sell assets, lease them back and hope the business becomes profitable enough to offset the subsequent net increase in operating costs.

Lean and mean- Lean at store level, lean at the top, still fat around the middle. Mean, yes well if you were in middle management, you would be getting mean about now too.
Eight quarters of positive momentum? What does that mean? 1.8 % increase in revenues?
How much of the 1.8% and the eight quarters could be attributed to price increases?
Decreased debt, well at less this is good news. Money from asset sales spent on debt reduction reduces cost of operating, well except for the increases incurred at those stores being leased back.
Officers and directors purchasing on the open market. A vote of confidence in the long term future, excellent, or could they know something outsiders do not? Well no there are rules against that and they would never break them. Still if a take over were to occur, ownership of 1.9 million shares would certainly prove to be a wise investment.