Wall Street Watch Wednesday: Checking Under Pep Boys' Hood
The retailer of auto parts and provider of automotive services posted uninspiring quarterly results on Tuesday night.
Sales at the 735-unit chain clocked in essentially flat at $525.7 million. Comparable-store sales were also flat, fueled by a 3.1% increase in service revenue and a 0.9% dip in merchandise sales at the same-store level.
Pep Boys has been around since 1921, and its business has typically been steady. In lean times, folks come in to service their cars so they last longer. In times of prosperity, customers can drive in for aftermarket upgrades.
Pep Boys was supposed to be acquired in a $1 billion deal by privately held Gores Group, but that deal fell apart in May. Gores agreed to pay a $50 million merger termination fee and cover some deal-related expenses.
Those one-time payments are naturally inflating Pep Boys' bottom line -- so don't read too much into the car-savvy retailer's juicy $0.61-a-share quarterly profit.
Pep Boys is starting to think like an independent company again. There are a few executive moves being made, and the company is tipping off investors about a debt refinancing that's in the works. The goal of the refinancing would be to lower its long-term debt by roughly $100 million.
Driving alone can be enjoyable at times, but for shareholders, the buyout premium you get after someone calls "shotgun" would've probably been better.
Other Things Worth Watching
• Francesca's Holdings (FRAN) posted better-than-expected earnings on Tuesday after the market close, but it also revealed that its CEO would be retiring by the end of the year. Francesca's has already had one head-turning executive move earlier this year: The CFO of the boutique apparel retailer was let go in May after posting on Twitter that a sales meeting with the board went well -- a week before the company made its quarterly financials public. There's never a dull moment at some retailers.
• Insider selling has been a problem at Facebook (FB), but at least its top dog is holding on to his shares. CEO Mark Zuckerberg revealed in an SEC filing on Tuesday afternoon that he plans on holding onto his stake for at least 12 months. Investors may be clicking "Like" on the move, but the stock did hit a fresh low earlier in Tuesday's trading.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook.