Pep Boys 2005 Annual Report Download - page 14

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9
Tire Sales
● national and regional (including franchised) tire retailers; and
● mass merchandisers and wholesale clubs that sell tires.
A number of our competitors have more financial resources, are more geographically diverse or have better name
recognition than we do, which might place us at a competitive disadvantage to those competitors. Because we seek to offer
competitive prices, if our competitors reduce their prices we may also be forced to reduce our prices, which could cause a material
decline in our revenues and earnings and hinder our ability to service our debt.
With respect to the service labor category, the majority of consumers are unfamiliar with their vehicle's mechanical
operation and, as a result, often select a service provider based on trust. Potential occurrences of negative publicity associated with
the Pep Boys brand, the products we sell or installation or repairs performed in our service bays, whether or not factually accurate,
could cause consumers to lose confidence in our products and services in the short or long term, and cause them to choose our
competitors for their automotive service needs.
Vehicle miles driven may decrease, resulting in a decline of our revenues and negatively affecting our results of
operations.
Our industry depends on the number of vehicle miles driven. Factors that may cause the number of vehicle miles and
our revenues and our results of operations to decrease include:
● the weather – as vehicle maintenance may be deferred during periods of inclement weather;
● the economy – as during periods of poor economic conditions, customers may defer vehicle maintenance or
repair, and during periods of good economic conditions, consumers may opt to purchase new vehicles rather
than service the vehicles they currently own and replace worn or damaged parts;
● gas prices – as increases in gas prices may deter consumers from using their vehicles; and
● travel patterns – as changes in travel patterns may cause consumers to rely more heavily on train and airplane
transportation.
ITEM 1B UNRESOLVED STAFF COMMENTS
None.