Pep Boys 2011 Annual Report Download - page 52

Implementation of the Superhub concept enables local expansion of our auto parts product
assortment in a cost effective manner. We are now able to satisfy customer needs for slow-moving auto
parts by carrying limited amounts of this product at Superhub locations. These Superhubs then deliver
this product to requesting Supercenters to fulfill customer demand. Superhubs are generally replenished
from distribution centers multiple times per week. As of January 28, 2012, the Company operated 38
Superhubs within existing Supercenters, with plans to convert an additional 15 Superhubs in fiscal 2012.
SUPPLIERS
During fiscal 2011, the Company’s ten largest suppliers accounted for approximately 52% of the
merchandise purchased. No single supplier accounted for more than 21% of the Company’s purchases.
The Company has one long-term contract under which it is required to purchase merchandise.
Management believes that the relationships the Company has established with its suppliers are
generally good.
In the past, the Company has not experienced difficulty in obtaining satisfactory sources of supply
and believes that adequate alternative sources of supply exist, at similar cost, for the types of
merchandise sold in its stores.
COMPETITION
The Company operates in a highly competitive environment. The Company encounters competition
from national and regional chains and from local independent service providers and merchants. The
Company’s competitors include general, full range, discount or traditional department stores which
carry automotive parts and accessories and/or have automotive service centers, as well as specialized
automotive retailers. Generally, the specialized automotive retailers focus on either the ‘‘do-it-yourself’’
or ‘‘do-it-for-me’’ areas of the business. The Company believes that its operation in both the
‘‘do-it-for-me’’ and ‘‘do-it-yourself’’ areas of the business positively differentiates it from most of its
competitors. However, certain competitors are larger in terms of sales volume, store size, and/or
number of stores. Therefore, these competitors have access to greater capital and management
resources and have been operating longer or have more stores in particular geographic areas. The
principal methods of competition in our industry include store location, customer service, product
offerings, quality and price.
REGULATION
The Company is subject to various federal, state and local laws and governmental regulations
relating to the operation of its business, including those governing the handling, storage and disposal of
hazardous substances contained in the products it sells and uses in its service bays, the recycling of
batteries, tires and used lubricants, the sale of small engine merchandise and the ownership and
operation of real property.
EMPLOYEES
At January 28, 2012, the Company employed 19,123 persons as follows:
Description Full-time % Part-time % Total %
Retail ................................. 3,964 29.5 3,722 65.6 7,686 40.2
Service center ........................... 8,104 60.3 1,831 32.2 9,935 52.0
Store total .............................. 12,068 89.8 5,553 97.8 17,621 92.2
Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 4.1 118 2.1 667 3.5
Offices ................................ 828 6.1 7 0.1 835 4.3
Total employees .......................... 13,445 100.0 5,678 100.0 19,123 100.0
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