Pep Boys 2007 Annual Report Download - page 57
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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.
ITEM 2 PROPERTIES
The Company owns its five-story, approximately 300,000 square foot corporate headquarters in
Philadelphia, Pennsylvania. The Company also owns the following administrative regional offices—
approximately 4,000 square feet of space in each of Melrose Park, Illinois and Bayamon, Puerto Rico.
In addition, the Company leases approximately 4,000 square feet of space for administrative divisional
offices in each of Decatur, Georgia and Addison, Texas. The Company owns a three-story,
approximately 60,000 square foot structure in Los Angeles, California in which it occupies 7,200 square
feet and sublets the remaining square footage to tenants.
11
10-K