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Pep Boys posts Q1 profit, beats Street view
Pep Boys-Manny, Moe & Jack (PBY.N: Quote, Profile, Research), the automotive parts and service chain, posted a first-quarter profit that beat market expectations of a loss on higher service center business revenue and a gain on the disposal of assets, sending its shares up as much as 9 percent.

The company, facing a weak economy, has been selling its non-core merchandise since the third quarter of last year to focus on core automotive merchandise and has been investing in its service business.

"Profit improved in our service business, (but) was weaker in our retail business as we expected due to our merchandise transition," the company said in a conference call on Tuesday.

Pep Boys operates in the automotive aftermarket for the maintenance of older vehicles in the do-it-yourself, do-it-for-me arenas, and buy-for-resale and replacement tires segments.

These various customers typically repair and maintain vehicles themselves, or seek service labor, car part installations and merchandise.

But high gas prices and the credit crunch have put a strain on the automotive aftermarket industry with continued maintenance deferrals by vehicle owners.

"While we still believe that the company's plans are valid and that the company could continue to improve its operations, the environment remains difficult and we believe caution on the stock is still warranted," analyst Scot Ciccarelli of RBC Capital said in a research note.
http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSBNG17642920080610