Pep Boys 2011 Annual Report Download - page 3

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THE PEP BOYS !MANNY, MOE & JACK
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
________________
LETTER TO OUR SHAREHOLDERS
________________
In 1921, Manny Rosenfeld, Moe Strauss and two of their navy buddies returned from World War One to start a
business in their South Philly neighborhood –Pep Auto Supply. That marked the beginning of the automotive
aftermarket, and today that business is The Pep Boys –Manny, Moe & Jack. Back then, most of our business was
conducted over-the-counter, as customers did the work themselves. Today, over half of our business is conducted in
service bays, as Pep Boys does the work for customers. In fact, Pep Boys has 7,195 service bays in the U.S. and
Puerto Rico, an increase of 1,332 or 23% over the past three years.
Both then and now, Pep Boys has been about helping customers to maintain, repair and improve the appearance and
performance of their vehicles –whether customers choose to have us do it for them or to do it themselves. Our vision
remains to be the automotive solutions provider of choice for the value-oriented customer.Our cornerstone is
earning the TRUST of our customers every day. For each of our 19,000 associates,that means making a commitment
to our customers to: be friendly; do it right; keep our promises; and show compassion.
Our associates are an integral part of the customer experience, which is why we established our objective of being
the preferred employer in the automotive aftermarket. We continually review and improve our hiring, training,
development and two-way communication practices, as well as our performance-based compensation and benefit
plans, to support this objective.Just as important is our focus on the development of the leaders in our stores.
When it comes to helping customers improve the appearance or performance of their vehicles, we are the automotive
superstore with the best selection of products and services. When it comes to helping customers to maintain and
repair their vehicles, the core of our strategy is our service business. We are a national, full-service chain, offering
tires, maintenance and repair. We leverage our retail and commercial businesses to buy parts directly from the
manufacturers, and we pass those savings on to our customers in the form of lower prices. We have ASE-certified
technicians on staff at all times. We invest in the latest equipment. We have a well-developed training program for
all positions in the store. We know that our customers rely on us every day to keep their cars and trucks running
properly and we focus on earning their TRUST each and every time.
Key to our growth strategy is our Service & Tire Centers. They are smaller in size and closer to where our target
customers live and work. They leverage the inventory, delivery operations and marketing of the Supercenters, while
improving our market density. We opened 119 new Service & Tire Centers in 2011, and currently operate 171. To
support our service business, we launched TreadSmart, our online tire “information to installation”solution.
Recently, to support our retail business, we launched the ability to buy online and pick up in store; that will be
followed later this year by shipping direct to customers. Our automotive superstore is coming to you. Technology
continues to change how customers make decisions and interact with us, and we intend to make it easy for customers
to choose us to serve them.
Financially, we took a step back recently. We had improved our profitability for 11 consecutive quarters, until
the fourth quarter of 2011. While our first half results were softer than expected, we remain profitable and fully
intend to be back on the winning track by year end. We are in a solid financial position with expectations to reduce
and refinance our debt later this year, and then be positioned to balance continued investment in store growth and
technology along with returning capital to you, our shareholders.
Our team is passionate about serving customers and energized about our prospects for continued growth. We
thank you for investing alongside of us.
Michael R. Odell
President & Chief Executive Officer
July 27, 2012