Pep Boys 2009 Annual Report Download - page 4

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2
Service & Tire Center is full service with approximately six service bays and $1 million in expected sales. Our
Supercenters were built to be destination stores. Our Service & Tire Centers offer customer convenience,
allowing us to be close to our customers’ home or work. They are also lower in cost and more efficient.
Establish a differentiated Retail experience by leveraging our Automotive Superstore. Because of the size
of our stores we are able to provide the highest level of replacement parts coverage and the broadest range of
maintenance, performance and appearance products and accessories. Our combination of service and retail
makes us a leading installer of automotive aftermarket products also. Category management is the process we use
to make sure that we have the right offering for our customers in each store.
We are focused on core automotive and we have three enhanced automotive offerings in different stages of
rollout. Superhubs are stores with enhanced parts coverage to maximize parts availability in the market. Speed
Shops serve automotive enthusiasts - whether muscle car, import performance or sport truck - with niche products
and expert associates. And sales and installation technicians install automotive after-market products like
electronics and accessories.
Leverage our Automotive Superstore to provide the most complete offering for our Commercial
customers. We support other installers also, not just with parts and fluids but also with tires, equipment,
accessories and services. Like our Service & Tire Centers, this leverages our inventory and delivery operations.
OPERATIONAL TURNAROUND
We have started year three of our plan to turnaround The Pep Boys, which has enjoyed such a rich history since
its founding in 1921. 2008 was our “year of disruptive change”, as we made the foundational changes we knew we
needed to make despite their disruption to our operations. 2009 was our “year of positive change”, as our
organization and business underwent a second year of dramatic change, but with a positive impact on our associates,
our customers and our results. And now we enter 2010, our “year of optimization and execution”, which is
characterized by putting together most of the remaining pieces to our business model and improving the consistency
of our execution.
We still have more opportunities to improve our profitability. Over time, we are targeting a mid and then
highsingle digit operating margin by continuing to improve our operational disciplines and through growth in our
Service & Tire Centers. In addition to returning to profitability, our balance sheet is also healthy, as we have
reduced inventory levels while improving parts coverage. We also continue to sell and leaseback operating stores
when advantageous and to sell the remaining surplus properties in our portfolio. As of year-end, we had no
borrowings against our line of credit and $39 million of cash on hand.
In summary, we love what we do, we are very positive about our future, and we are driven to achieve our vision
to become The Automotive Solutions Provider of Choice for the Value Oriented Customer.
Michael R. Odell
Chief Executive Officer
April 30, 2010