FINANCE

Pep Boys comps driven down by retail weakness

BY Gail Hoffer

Philadelphia — Comparable sales for the third quarter took a slight dip at The Pep Boys due to continued weakness in the company’s retail segment. The company reported that comparable sales fell 0.4%, consisting of a 0.4% comparable service revenue increase and a 0.6% comparable merchandise sales decrease. Total sales increased 5.2% to $522.2 million, from $496.4 million for the same period last year.

The company reported that net earnings for the third quarter of fiscal 2011 increased to $7 million, or 13 cents per share, from $5.7 million, or 11 cents per share, from the same period last year.

“Our service business started to rebound during the third quarter,” commented president and CEO Mike Odell. “Our ‘surround sound’ marketing effort coupled with lower gas prices and pent-up demand drove strong tire sales in the last month of the quarter, which have continued into the fourth quarter. While our retail business remained soft in a challenging environment for consumers, our service business results and margin enhancement initiatives resulted in our 11th quarter of improved profitability, on a year-over-year basis.”

The company opened six Service & Tire Centers during the quarter bringing its total to 159. According to CFO Ray Arthur, the company is ahead of its targeted openings for 2011 and expects aggressive growth in 2012.

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JCPenney gets piece of Martha magic

BY CSA STAFF

PLANO, Texas and NEW YORK — JCPenney is looking to capture its share of the Martha Stewart brand that has become synonymous with Kmart, by launching a strategic alliance with Martha Stewart Living Omnimedia to create a unique and comprehensive retail experience featuring Martha Stewart products, know-how and advice.

The partnership goes beyond just featuring Martha Stewart brands. Beginning in February 2013 , customers will be able to visit distinct Martha Stewart retail stores inside the majority of JCPenney department stores, the company said. In addition, these stores will staffed by trained associates that can offer customers advice on how to best use the products.

The agreement also includes the launch of an e-commerce site in 2013 that will offer Martha Stewart expertise and enable consumers to purchase a wide range of home and lifestyle products, including those sold in the Martha Stewart stores inside JCPenney, and other merchandise designed or selected by Martha Stewart. MSLO is expected to receive in excess of $200 million from JCPenney over the initial 10-year contract period.

JCPenney now holds a 16.6% stake in MSLO and will have representation on MSLO’s board of directors.

Ron Johnson, CEO of JCPenney, said, "I have long admired Martha Stewart’s extraordinary influence on the way American families live and enjoy their lives. For nearly two decades she has been the primary person we turn to for advice regarding food, entertaining, decorating, and celebrating life’s memorable moments. The opportunity to work with Martha and create an entirely new shopping experience, both in-store and online, is a once in a lifetime opportunity. The Martha Stewart brand embodies quality, beauty, inspiration and possibility and we intend for Martha Stewart stores to be a key centerpiece of our new strategy to transform JCPenney into America’s favorite store."

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Staples names SVP general counsel

BY CSA STAFF

FRAMINGHAM, Mass. — Staples has named Cynthia Pevehouse SVP general counsel, effective Jan. 3, 2012. Pevehouse will have global management responsibility for the company’s legal team and report to Ron Sargent, Staples’ chairman and chief executive officer.

“Cynthia brings a wealth of knowledge and skills to Staples,” said Sargent. “With her extensive legal management experience and proven leadership, Cynthia will play an important part in supporting the company’s growth.”

Pevehouse joins Staples from international law firm Steptoe & Johnson LLP where she served as senior counsel advising senior management and boards of directors. Previously, she served as EVP and general counsel at Allianz of America Corp. Prior to Allianz of America, Pevehouse served in senior legal positions in the technology industry, including general counsel at Polycom, Inc. and Ask Jeeves Inc. and a senior role at Compaq Computer Corp. She holds a J.D. from Williamette University School of Law.

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