Pep Boys 2013 Annual Report Download - page 2

Download and view the complete annual report

Please find page 2 of the 2013 Pep Boys annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

THE PEP BOYS −−MANNY, MOE & JACK
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
________________
LETTER TO OUR SHAREHOLDERS
________________
Fiscal 2014 was a transitional year in which we made great progress for the future growth of Pep Boys, while
stabilizing our sales and profitability.
• Our customer centric efforts are guiding our strategies to grow our target customer groups, grow our sales and
differentiate ourselves in a competitive landscape.
• We developed a strategy for our service and retail businesses that our key target customers are strongly
endorsing with new and repeat business.
• Our critical service business is growing to take advantage of this larger segment of the automotive after-
market.
• Digital operations are further complementing our service and retail businesses thru stronger Omni-channel
integration.
• We completed the retooling of our senior management team.
Our business strategy, which we call “The Road Ahead,” has three primary components.
#1 is to continue to lead with and grow our service business, which represents the largest and faster growing
segment of the automotive after-market.
#2 is the transformation of our Supercenter stores to differentiate our brand with our target customers.
#3 is the enhancement of our digital business to drive omni-channel growth in both our service and retail
businesses.
Service. Our strategy leads with Service, as we favor the fundamentals for the “do-it-for-me” sector over the long
haul. The demand for maintenance and repair remains consistent, which continues to drive the growth of our service
customer base. We provide a great value, and are quickly improving our customer experience. There is a huge gap
between the dealer experience and its cost, and the rest of the automotive after-market with its lack of consistently
positive customer experiences. We intend to own the position of the “best alternative to the dealer”; to fill that gap
profitably; and to use our retail business to further compliment our re-positioning. As an example, traditionally, we
have acquired new service customers through tire and oil change services - like the rest of the industry. More
recently, we have expanded our funnel for acquiring new customers by offering free, professional installation of
wipers and batteries. Traditionally, we would have viewed these customers as retail customers. But what we have
learned is that while they start as retail customers due to the convenience, they are quick to take us up on our offer.
And we know that any customer that lets us install their wipers or battery for them is really a service customer for
most of the rest of their automotive needs
With respect to our Service & Tire Centers, we just opened our 225th location. Thirty-nine of these Service & Tire
Centers showcase the welcoming exterior curb appeal and comfortable customer lounge of our new “Road Ahead”
format. As we have refined our real estate model over the years we have also developed a build-to-suit model that
allows us to enter more desirable demographic trade areas. The build-to-suit model allows us to serve the attractive
and less competitive neighborhoods that were built since Pep Boys previously discontinued building new stores back
in the 1990's. We are making progress on the sales mix and margin structure of our Service & Tire Centers, and
sales continue to grow on a per store basis as our store portfolio matures.