Pep Boys 2009 Annual Report Download - page 62

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expand our commercial operations. In addition to offering these customers parts and fluids, we enjoy a
competitive advantage of also being able to offer tires, equipment, accessories and services.
STORE IMPROVEMENTS
In fiscal 2009, the Company’s capital expenditures totaled $43,214,000 which included the addition
of 25 stores and one regional tire and battery distribution center, as well as other store and corporate
improvements. Our fiscal 2010 capital expenditures are expected to be approximately $68,000,000 which
includes the addition of approximately 40 Service & Tire Centers and other store and corporate
improvements. These expenditures are expected to be funded from cash on hand, net cash generated
from operating activities and the Company’s existing line of credit.
SERVICES AND PRODUCTS
The Company operates a total of 6,027 service bays in 578 of its 587 locations. Each service
location performs a full range of automotive repair and maintenance services (except body work) and
installs tires, hard parts and accessories.
Each Pep Boys Supercenter and Pep Express store carries a similar product line, with variations
based on the number and type of cars in the markets where the store is located, while a Pep Boys
Service & Tire Center carries tires and a limited selection of our other products. A full complement of
inventory at a typical Supercenter includes an average of approximately 25,000 items, while Service &
Tire Centers average approximately 4,000 items. The Company’s product lines include: tires (not
stocked at Pep Express stores); batteries; new and remanufactured parts for domestic and import
vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories; and a
limited amount of select non-automotive merchandise that appeals to automotive ‘‘Do-It-Yourself’’
customers, such as generators, power tools, personal transportation products and canopies.
In addition to offering a wide variety of high quality name brand products, the Company sells an
array of high quality products under various private label names. The Company sells tires under the
names DEFINITY, FUTURA↧ and CORNELL↧, and batteries under the name PROSTART↧. The
Company also sells wheel covers under the name FUTURA↧; water pumps and cooling system parts
under the name PROCOOL↧; air filters, anti-freeze, chemicals, cv axles, lubricants, oil, oil filters, oil
treatments, transmission fluids, wheel rims and wiper blades under the name PROLINE↧; alternators,
battery booster packs, alkaline type batteries and starters under the name PROSTART↧; power steering
hoses, chassis parts and power steering pumps under the name PROSTEER↧; brakes under the name
PROSTOP↧ and brakes, starters, and ignitions under the name VALUEGRADE. All products sold by
the Company under various private label names were approximately 31%, 28%, and 27% of the
Company’s merchandise sales in fiscal 2009, 2008, and 2007, respectively.
The Company’s commercial automotive parts delivery program, branded PEP EXPRESS PARTS↧,
is designed to increase the Company’s market share with the professional installer and to leverage
inventory investment. The program satisfies the commercial customer’s automotive inventory needs by
taking advantage of the breadth and quality of the Company’s parts inventory as well as its experience
supplying its own service bays and mechanics. As of January 30, 2010, approximately 80% or 451 of the
Company’s 562 Supercenters and Pep Express stores provided commercial parts delivery as compared
to approximately 76% or 428 stores at the end of fiscal 2008.
In May 2009, the Company began a 20-store pilot program designed to fulfill the Company’s goal
of becoming the automotive solutions provider of choice for mobile electronics and installation services.
The Company re-organized our automotive audio product lines to include radios, speakers, amplifiers,
remote starters and alarm systems from the most popular brands. The key to this program was the
addition of expert sales and installation technicians to service our customers’ needs. In November 2009,
4