Wednesday, July 30, 2014
Inquirer Daily News

Another good quarter for Pep Boys, while gas prices climb

The Philadelphia retail chain booked higher sales and profits in the latest fiscal year, but is cautious over how high gas prices will affect its future results.

Another good quarter for Pep Boys, while gas prices climb

I managed not to write about the price of gasoline or the price for a barrel of oil at all in 2010. No such luck this year.

Most of us only care about gas prices when they're going up, and that's where they have been heading for weeks now. Gas prices are the highest they've been since 2008 when station owners had to rummage around for their $4 signs.

Spring and summer are the seasons when demand for gasoline rises. However, Bloomberg News said data from the U.S. Energy Department, which tracks gasoline consumption, shows demand at its lowest level for this time of year since 2003.

As bad as those $50-plus fill-ups can be for consumers' wallets, high gas prices make retailers very nervous. Shoppers tend to make fewer trips to the store and change their behavior in other ways.

Even automotive retailers don't like higher gas prices. Philadelphia-based Pep Boys - Manny, Moe & Jack on Wednesday reported higher sales and earnings for its most recent fiscal year and its fourth quarter. It was the eighth quarter in a row of improved profits year-over-year for the 620-store chain.

Pep Boys reported net earnings of $8.37 million, or 16 cents per share, on total revenues of $477.39 million for its fourth quarter. For the same period a year earlier, the company had net earnings of $2.27 million, or 4 cents per share, on revenues of $452.90 million.

The big X-factor that could let the air out of Pep Boys' tires though is the number of miles driven. "If gasoline prices continue to trend higher, we would expect to see a negative impact on miles driven, which would pressure our future sales and results," said the company's chief financial officer, Raymond L. Arthur, on a conference call with analysts.

The U.S. Department of Transportation said that American drove 3 trillion miles in 2010 - the most vehicle miles traveled since 2007. So far, the monthly data when compared to the previous year aren't showing a drop-off.

But if Pep Boys executives are watching service-station signs with unease, you can bet Wal-Mart, Target and Macy's are dusting off their 2008 playbooks too.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
Business Videos:
Also on Philly.com:
Stay Connected