Wednesday, November 28, 2007

Pep Boys cuts 550 jobs, closes 31 stores

Manny, Moe & Jack said late Tuesday it cut approximately 550 jobs and closed 31 stores as part of a five-year restructuring plan, while its third-quarter loss widened partly on declining merchandise sales.

The job cuts, which represent about 3 percent of the auto parts retailer's total work force, all come from the store closures. Pep Boys said the stores, which comprise approximately 5 percent of its total store count, are located in ancillary markets and areas where shopping patterns have changed.

The company's restructuring plan includes placing more emphasis on its core automotive merchandise and maximizing square footage productivity. Pep Boys said it is aggressively marking down and selling noncore merchandise and slower-selling products as part of its plan.

Pep Boys also plans to add smaller stores to its existing Supercenter base through acquisitions and new centers. The company started a sale leaseback process to help come up with funds needed for the plan and previously completed a sale leaseback on 34 stores for $166.2 million in gross proceeds.

Pep Boys reported its third-quarter loss from continuing operations widened to $21.7 million, or 42 cents per share, compared with a loss of $10.7 million, or 20 cents per share, in the prior year.

Revenue for the period ended Nov. 3 dropped 3 percent to $535.4 million from $550.8 million.

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