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PEP BOYS REPORTS RECORD SECOND QUARTER SALES; HIGHER GROSS MARGINS

    PHILADELPHIA, Aug. 5 /PRNewswire/ -- Pep Boys -- Manny, Moe & Jack (NYSE: PBY), the nation's leading automotive aftermarket retail and service chain, announced that sales for the 13 weeks ended July 31, 1993, were a record $329,146,000, a 6 percent increase over the $309,211,000 that was recorded last year.
    Comparable stores sales, which were negatively impacted by governmental restrictions on the sale of R-12 refrigerant (freon) as well as economically induced weakness in the demand for tires, decreased 1 percent during the second quarter.  Had the sale of freon been eliminated from both years' sales, comparable store sales for the second quarter of fiscal 1993 would have increased 3 percent.
    It is important to note that despite the significant decline in freon sales, the gross profit generated from the sale of that product was higher during the second quarter of 1993 than it was during the comparable period of 1992 so the loss of freon revenue will not have a negative impact on earnings.  As was the case in the first quarter, the ongoing increase in sales mix and related profit contribution of the company's hard parts categories as well as solid expense control have offset a significant portion of the sales shortfall that occurred during the second quarter.  As a result, earnings for the second quarter are expected to be within the range of $.30-$.32 per share.
    Earnings for the quarter are expected to be released on Aug. 24.
    STORE EXPANSION PROGRAM
    One warehouse format automotive supercenter, which is approximately 23,000 square feet and features 10 service bays, was opened during the second quarter.  On June 21, Pep Boys made its entry into the state of Arkansas when it opened an automotive supercenter in Little Rock.
    Pep Boys, which operates 360 stores in 22 states, anticipates opening as many as 34 additional units during the balance of the fiscal year, including its initial entry into Rhode Island, Missouri, Illinois and Indiana.
    COMMENTARY
    Pep Boys' CEO, Mitchell G. Leibovitz, made the following comments:
    "The loss of significant freon revenue and industry-wide weakness in the demand for replacement tires compounded by the 16 percent increase in same store sales that we achieved during the second quarter of 1992, collectively contributed to the modest decline in comparable store sales.  Fortunately, higher gross margins and ongoing expense control helped to compensate for the below-budget sales levels that were recorded during the quarter.
    "Although we continue to be concerned about the lack of consumer confidence, we remain optimistic about the second half of the year.  The introduction of our new tire program on June 6 improved sales and mix during the balance of June and July and we believe that trend will continue.  We also expect the above-budget gross margins that we achieved during the first half of the year to continue in the second half and are hopeful that they will be complemented by an improvement in same store sales.
    "Our store expansion program will 'shift into high gear' during the balance of the year as thirty-four automotive supercenters open throughout the United States.  We continue to be extremely pleased with the unprecedented sales levels being generated by many of our new units and are looking forward to the opening of our new supercenters as well as our entry into a number of new markets with much enthusiasm."
    /delval/
    -0-             08/05/93
    CONTACT:  Michael J. Holden, senior vp-finance and treasurer of Pep Boys, 215-227-9202
    (PBY) CO:  PEP BOYS -- MANNY, MOE & JACK IN:  REA ST:  PA


-- PH004 -- X073 08/05/93
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Publication:PR Newswire
Date:Aug 5, 1993
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