Pep Boys Reports Q3 Results

PHILADELPHIA December 9, 2008: The Pep Boys – Manny, Moe & Jack , the nation's leading automotive aftermarket retail and service chain, today announced the following results for the thirteen (third quarter) and thirty-nine weeks (nine months) ended November 1, 2008.

Sales

Sales were $464.2 million as compared to $528.8 million in 2007. Comparable sales decreased 10.4%, including a 10.3% comparable merchandise sales decrease and an 11.0% comparable service revenue decrease. In accordance with GAAP, merchandise sales includes merchandise sold through both our retail and service center lines of business, and service revenue is limited to labor sales. Re-categorizing Sales into the respective lines of business from which they are generated, comparable Service Center Revenue (labor plus installed merchandise and tires) decreased 8.2%, while comparable Retail Sales (DIY and Commercial) decreased 12.1%.

Net Loss

Net Loss was $7.3 million or ($0.14) per share (basic and diluted) as compared to a loss of $28.0 million or ($0.54) per share (basic and diluted) in 2007. Net Loss for the third quarter of 2007 included $50.0 million in pre-tax costs for an inventory write down, asset impairment and increased legal reserves.

Nine Months

Sales

Sales were $1,462.3 million as compared to $1,620.4 million in 2007. Comparable sales decreased 7.8%, including an 8.1% comparable merchandise sales decrease and a 6.3% comparable service revenue decrease. In accordance with GAAP, merchandise sales includes merchandise sold through both our retail and service center lines of business, and service revenue is limited to labor sales. Re-categorizing Sales into the respective lines of business from which they are generated, comparable Service Center Revenue (labor plus installed merchandise and tires) decreased 3.2%, while comparable Retail Sales (DIY and Commercial) decreased 11.3%.

Net Earnings

Net Earnings were $2.8 million or $0.05 per share (basic and diluted) as compared to a Net Loss of $20.6 million or ($0.40) per share (basic and diluted) in 2007.

Commentary

“Our sales and operating results have been impacted by the decrease in miles driven and the general reduction in consumer spending. To offset these trends, we continue to focus on implementing our strategic plan, serving our customers well, tightly controlling spending and promoting the fact that “Pep Boys Does Everything. For Less.” said CEO Mike Odell. “Pep Boys is the place to go for great prices on tires, oil changes and automotive maintenance and repairs – whether the customer is a Do It Yourselfer or wants our ASE-certified technicians to do it for them. With many dealerships and smaller shops currently closing, now is the time for the cost-conscious consumer to discover the value at Pep Boys.”

“Our liquidity position remains strong,” commented CFO Ray Arthur. “As of the end of Q3, we had $38.4 million cash on hand, an undrawn revolving credit facility and no significant debt maturities due until 2013. A year in advance of the December 9, 2009 maturity of our current revolving credit facility, we have secured commitments from a syndicate led by Bank of America for a $300 million replacement facility. This facility is expected to close, subject to the satisfaction of customary closing conditions, before our fiscal year ends on January 31, 2009.”

Pep Boys has over 560 retail stores and approximately 6,000 service bays in 35 states and Puerto Rico. Along with its full-service vehicle maintenance and repair capabilities, the Company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States. Customers can find the nearest location by calling 1-800-PEP-BOYS or by visiting PEP BOYS.