The Pep Boys - Manny, Moe & Jack, an automotive parts and service chain, posted a wider third-quarter loss Tuesday and said it closed 31 stores, which will result in a work force reduction of about 3 percent, or about 550 employees.
For the 13 weeks ending Nov 3, the company said its loss from continuing operations, before the cumulative effect of a change in accounting principle, increased to $21.65 million, or 42 cents per share, compared with a loss of $10.71 million, or 20 cents per share, in the year-earlier quarter ended Oct 28.
Sales fell to $535.38 million from $550.85 million.
Same-store sales were down 2.9 percent, as a 4.1 percent decline in comparable merchandise sales was partially offset by a 2.6 percent increase in comparable service revenue.
The company said its third-quarter operating loss was $28.5 million. That figure included $38.3 million in pretax charges related to inventory write-down, executive severance, legal settlements and reserves, as well as a $3.8 million benefit from a company-owned life insurance policy on a former executive.
In the fourth quarter Pep Boys expects to take an additional pre-tax charge of about $17.0 million related to closing 31 stores Tuesday. Those stores represent about 5 percent of its stores.
Pep Boys' Chief Financial Officer Harry Yanowitz said the company expects continued pressure on its retail business, which will result in reduced sales and gross profit margins, as it sells down its non-core merchandise through the first half of 2008.
The company plans to rev up its business by refocusing on core automotive merchandise and investing in its service business.
The company recently did a sale-leaseback deal on 34 stores, which brought in gross proceeds of $166.2 million.