Pep Boys Takes Foot Off Gas, Competitors Floor It

Auto parts supplier The Pep Boys - Manny, Moe & Jack (NYSE:PBY), a Philadelphia-based auto parts and service chain with nearly 600 stores in 36 states and Puerto Rico, indicated in a conference call presenting its quarterly financial performance that it does not expect to add any meaningful number of stores this coming year. Instead the firm expects to focus on improving operations and returning the firm to profitability.

As part of the strategy, the firm announced the hiring of Jeffrey Rachor as president and CEO to continue the progress made under Chairman William Leonard, who has been serving as interim CEO since July 2006 when former CEO Lawrence Stevenson resigned. And while company executives said they were pleased with the fourth quarter financial results, Leonard admitted, "Pep Boys has a long way to go."

While Pep Boys heads in for a pit stop its competitors are planning aggressive real estate initiatives. Roanoke, VA-based Advance Auto Parts opened 215 new stores last year, and plans to open at least 200 new stores this year to bring its store count to nearly 3,300 stores in 40 states, Puerto Rico, and the Virgin Islands.

Memphis, TN-based Auto Zone had 185 new U.S. store openings in fiscal 2006 and the company has already added 76 stores in its first and second fiscal 2007 quarters. At the end of fiscal 2007, expect Auto Zone’s store count to hover around 3,925 stores in 48 states, Puerto Rico and Mexico.

Auto Zone’s real estate requirements, which are similar to Pep Boys and Advance Auto, requires space for 6,500-8000 square feet and 25-40 parking spaces in highly-visible, well-trafficked locations.