Philadelphia- March 12, 2009 - The Pep Boys - Manny, Moe & Jack (NYSE: 'PBY'), the nation's leading automotive aftermarket service and retail chain, today announced that its Board of Directors has reduced the Company's quarterly dividend from $0.0675 to $0.03 per share. The next quarterly dividend is payable on April 27, 2009 to shareholders of record on April 13, 2009. The Company also provided preliminary fourth quarter and fiscal 2008 results. Full and final fourth quarter and fiscal 2008 results will be reported on April 8, 2009
'Given today's tight credit markets and the reduction in stock valuations, the Board of Directors determined that a reduction in our dividend is both prudent and appropriate at this time,' commented Chairman of the Board James Mitarotonda. 'We will continue to review the dividend level quarterly and will make adjustments as warranted to account for improved market conditions and Company performance.'
Pep Boys expects to report fourth quarter sales of $466 million, a decrease of 10.1% from the $518 million reported for the prior year period. Fiscal 2008 sales are expected to be approximately $1,928 million, a decrease of 9.8% from the $2,138 million reported for the prior year period. The expected loss per share will be between $0.59 and $0.69 per share for the fourth quarter compared to a loss per share of $0.39 for the fourth quarter of last year. The expected annual loss will be between $0.53 and $0.63 per share as compared to an annual loss of $0.79 per share for the prior year.
The general pullback in consumer spending during the fourth quarter of 2008 resulted in a weak holiday season and the deferral of tire purchases. In addition, fourth quarter 2008 results were adversely affected by increased legal and inventory-related accruals of approximately $8.0 million; asset impairments of approximately $4.0 million; the accelerated amortization of approximately $1.0 million of expenses related to the Company's recently replaced credit facility; $0.6 million in costs associated with previously announced cost-cutting initiatives; and a reduction of the Company's tax provision benefit by approximately $7.0 million due to changes in the Company's effective tax rate.
Company-wide sales trends have greatly improved from the 10.1% decline we experienced in the fourth quarter of fiscal 2008 to flat sales in the first five weeks of fiscal 2009 versus the same period last year. The Company is experiencing positive sales comparisons year on year in both its service and commercial businesses, particularly in the Northeast. Sales trends in the retail business have also improved, but are still running single-digit declines due to reduced customer demand in our discretionary categories. During the third and fourth weeks of February, Pep Boys launched new TV and radio ads focused on tires and oil changes, and experienced significant sales increases in its service business during the promotion.
Certain statements contained herein constitute 'forward-looking statements' within the meaning of The Private Securities Litigation Reform Act of 1995. The word 'guidance,' 'expect,' 'anticipate,' 'estimates,' 'forecasts' and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include management's expectations regarding implementation of its long-term strategic plan, future financial performance, automotive aftermarket trends, levels of competition, business development activities, future capital expenditures, financing sources and availability and the effects of regulation and litigation. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. The Company's actual results may differ materially from the results discussed in the forward-looking statements due to factors beyond the control of the Company, including the strength of the national and regional economies, retail and commercial consumers' ability to spend, the health of the various sectors of the automotive aftermarket, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, the location and number of competitors' stores, product and labor costs and the additional factors described in the Company's filings with the SEC. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Investor Contact Ray Arthur, 215-430-9720 Media Contact Peter A. Robinson, (215) 430-9553
