PHILADELPHIA New Pep Boys CEO plans rebound for sales and profits

The car-parts retailer is adding products such as DVD players and power tools.
PHILADELPHIA (AP) -- Manny, Moe and Jack are getting a makeover, though not the kind seen on reality TV shows.
Pep Boys -- a Philadelphia-based car-parts retailer with local centers in Boardman and Niles -- is trying to rebound from recent sales and profit declines with the guidance of Larry Stevenson, its new chief executive officer.
Stevenson, 47, has no prior experience in the auto parts business, but he's credited for developing Canada's largest bookstore chain.
He plans to revive the company by getting more customers and a better product mix into Pep Boys retail stores and grabbing a larger share of the automotive service market, with its hefty 25 percent profit margin.
Related to transportation
The new retail products include gas-powered scooters, power tools and portable DVD players -- anything, he said, broadly related to transportation.
"We want it to be that if you come into a Pep Boys again 30 days later, you should see products you haven't seen before," said Stevenson, who recently toured a renovated store in Exton, Chester County, one of the first of about 600 to be modernized by 2006.
Six of the 10 best-selling products nationwide are products the chain did not carry a year ago. Some are sold at promotional prices, which cut into profits but generate traffic.
The new store design has more open space at the entrance to show off special items, like a $399 scooter recently on display, and a wide center aisle featuring items often bought on impulse.
Customers having their cars serviced will now be processed inside the store, to walk them past the retail goods. And the service available will be limited to basic car maintenance and preventive measures instead of complicated jobs like transmission overhauls, to boost volume.
Stevenson believes that strategy can win the company a larger share of the heavily splintered auto-repair market, where the top five chains have only about 10 percent of the market. By comparison, the top five U.S. auto-parts retailers own more than half the market share.
Stevenson also plans to keep the lid on tire prices and to start selling brands other than Pep Boys, to attract more customers.
Closures and layoffs
Since arriving in April, Stevenson -- an economist and former paratrooper with a master's degree in business from Harvard -- has closed 33 unprofitable stores and laid off their 860 employees, including 160 at the company's North Philadelphia headquarters.
He succeeded Mitchell Leibovitz, a veteran employee who had become the first non-family member to take the helm of the 80-year-old company.
Leibovitz's retirement was announced in January, as the company struggled from its overexpansion in the 1990s.
In March, a quarterly earnings report showed sales were down 5 percent while earnings, forecast to be 12 cents per share by some analysts, came in at just 3 cents.
Pep Boys shares traded as low as $6 that day, less than half the price of a year earlier and far below the $70 share price of rival Autozone.
Stores neglected
"Many of the stores were neglected. Older stores were let to just rot," said Cid Wilson, an analyst who covers car-parts retailers at Whitaker Securities.
In November, Pep Boys announced its first quarterly profit in a year, even if the numbers were still down from a year-earlier period. Same-store sales increased for the first time in nearly two years. And shares have risen 245 percent since March, reaching a high for the year at $22.60 on Dec. 19.