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The Pep Boys – Manny, Moe & JackExecution Excellence & Growth

September 2011

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This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements contained herein other than statements of historical fact are “forward-looking statements” for purposes of these provisions. In some cases, forward-looking statements can be identified by the use of terminology such as “may”, “will”, “expects”, “plans”, “anticipates”, “estimates”, “potential” or “continue”, or the negative thereof or other comparable terminology. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure investors that our assumptions and expectations will prove to have been correct. Actual results could differ materially from our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Safe Harbor Statement

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The Pep Boys – Manny, Moe & JackFounders of the Automotive Aftermarket• Trusted since 1921• Philadelphia – based

725 Locations (as of 8/31/2011)• 561 Supercenters (19-20k sf)

– 9 New Prototypes (13-14k sf)

• 156 Service & Tire Centers (5-6k sf)• 8 Retail Stores

35 States and Puerto Rico

$2.1 Billion Revenues (1)

• 50% Service– 59% Maintenance & Repair– 41% Tires & Related Services

• 39% Retail– 60% Do It Yourself– 40% Accessories & Complementary

• 11% Commercial

(1) Adjusted for 99 stores acquired year to date.

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Pep Boys Vision: Automotive Solutions Provider of Choice for the Value Oriented Customer

Pep Boys Strategy: Earn the TRUST of our Customers every day through:� Speed� Expertise� Respect� Value

Lead with our Service business and grow through Service & Tire Centers� Does Everything. For Less.� Market share leader in a fragmented market

Establish a differentiated Retail experience by leveraging our Automotive Superstore � Highest level of replacement parts coverage� Broadest range of maintenance, performance and appearance products

and accessories� Leading installer of automotive after-market products

Leverage our Automotive Superstore to provide the most complete offering for our Commercial customers � One call solution for parts, tires, equipment, and accessories

The Pep BoysVision and Strategy

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0%

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60%

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80%

90%

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

Service Retail

The Pep BoysEarn The Trust Of Our Customers Every Day

Speed. Expertise. Respect. Value.

Net Promoter Scores

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The Pep BoysLead With Service

Provides parts for Service“We install what we sell”

Market leader in appearance and performance products and accessories

Speed Shops for automotive enthusiasts

Competitive pricingSuperhubs serve neighboring stores with

same-day parts availability

Delivers to Service & Tire Centers

“One Call” for parts, tires,equipment and accessories

Leverages parts inventory to support competitive assortment and pricing

RETAIL COMMERCIAL

SERVICE

Full service: tires, maintenance, undercar and underhood

Value leader as a result of our parts pricing advantage:“We buy direct from the manufacturers and

pass the savings onto our customers”

Service & Tire Centers:Convenient for customers

Local “my mechanic”

Support Service

Automotive Superstore

Support Parts

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Service($172 billion) (1)

Industry Characteristics

Source: 2011 Digital Aftermarket Factbook.(1) Includes tire sales.

� Service is 4x larger than DIY

� Service is expected to grow slightly faster than DIY

� Service is highly fragmented (254,000 Service establishments in the US)

� DIY had been declining prior to 2007, but has benefited from the recession

� Consumers continue to shift to Service

• Cars more complex

• Lifestyle changes

• Aging of baby boomers

� Service consolidation has started

• Service is becoming increasingly capital-intensive

• Evolving technologies require specific knowledge and training

� High barrier to entry for new players

Do It Yourself ($43 billion)

2010 Sales = $215 billion

DIY20%

DIFM & Tires80%

Sears

Pep BoysFirestoneJiffy LubeTBCMidasGoodyearAAMCOMonroMeineke

Carquest

AutozoneAdvanceO'Reilly

Pep Boys

NAPA

Independents, Regionals

64%

Dealerships30%

Other59%

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Full service provider

More than 7000 service bays

National scale

Parts sourced directly from manufacturers

Savings passed onto customers

Tires Alignments

Oil changes Brakes

Ride control HVAC

Starting and charging Tune-ups

Engine performance Fuel systems

Maintenance products and services

Engine and transmission R&R

Computer module flashing


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The Pep BoysGrow Through Service & Tire Centers

• Customer friendly: local “my mechanic”

• Higher financial return: leverage existing assets

• Existing facility: 4 to 8 bays

• Full service: tires, maintenance, undercar, underhood

• Stock high velocity assortment

• Retail that targets our service customer, when space permits

• Convenient to where customers live and work– 3 to 5 mile trade area

• Higher median household income

• 5 to 15 minutes from supporting Supercenter

Model

Locations

Markets

• Individual sites in biggest Pep Boys markets

• Small chains in other Pep Boys markets

• Consider chains in new markets opportunistically

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The Pep Boys Grow Through Service & Tire Centers

When� 25 in 2009� 28 in 2010� 119 in 2011� 75 in 2012

Projected Financials� $1 million sales� $150K EBITDA � <$400K investment� IRR of 15% or greater

Maturity Curve� EBITDA neutral run rate at end of year one� EBIT neutral run rate at end of year two� Mature at end of year three� Additional upside after that

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The Pep BoysAcquisition of Big 10 Tires & Automotive

Transaction Overview

•85 Service & Tire Centers�36 Alabama�27 Florida (7-Orlando, 20-Panhandle)�22 Georgia (Atlanta)

•Improves market density in Florida and Georgia•Establishes significant presence in Alabama•Facilities average 5,800 square feet and 8.3 bays

Value Enhancement

•Add full assortment of tire and service offerings•Leverage inventory from existing supercenters•Leverage distribution from Atlanta DC•Leverage existing Pep Boys marketing expense•Reduce costs through direct sourcing of parts •Eliminate redundant overhead and advertising

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Pep Boys Supercenters

Florida Tire Locations

NewService & Tire Centers

Orlando–Daytona Market

Big 10 Locations

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Davco Locations

Seattle–Tacoma Market

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Atlanta Market

Big 10 Locations

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Gulf Coast Markets

Big 10 Locations

16



Los Angeles Market

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Philadelphia Market

New Supercenters

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Chicago Market

New Supercenters

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My Mechanic Service & Tire Centers


Houston Market

New Supercenters

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The Pep BoysService & Tire Center Sales Continue to Build

Demonstrates an increase in sales as Service & Tire Centers mature

19202124

262829

313435

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44

5253

61

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17 19 21 23 25

27 29 31 33 35

37 39 41 43 45 47 49 51 53 55 57 59 61 63 65

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69 71 73 75

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79 81 83 85 87

89 91 93

Full Weeks of Operation

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Automotive Superstore means more than just a parts store

Starts with parts (knowledgeable people, parts availability, competitive pricing)

We are the market leader in appearance products and automotive accessories

Parts, especially late model coverageFluidsTools for DIY customersWash and wax dominanceAutomotive electronicsLight maintenancePerformance / speed shopsExterior accessoriesInterior accessories

The Pep Boys Automotive Superstore

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In 451 Locations

• One stop shop

• Leverages Automotive Superstore assortment and distribution network

• Phased replacement of Commercial point of sale system with robust solutions in late 2011 and 2012

Complete Offering• Parts• Fluids• Tires• Equipment• Accessories

Serving• Repair Shops• Dealers• Fleets

The Pep Boys“One Call” Commercial Offering

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The Pep Boys New Supercenter PrototypeCustomer Perception Benefits� Showcases service center� Dominant parts presentation� Easy to navigate� Customer lounge

Customer Service Benefits� One customer advisor team� Greeted at the entrance� Performance based pay

Financial Benefits� 13-14,000 square feet versus

19-20,000 square feet� Consolidated payroll model� Lower operating cost

New Store Plans� Hubs for Service & Tire Center

growth� Relocation opportunities� Will open 10 in FY 2012

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The Pep BoysNew Supercenter Prototype

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The Pep Boys New Supercenter Prototype

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The Pep Boys“One Team” Supercenter ConversionConvert existing stores to new Supercenter format

Benefits

�Catalyst for store culture change �Improved customer experience�Lower operating cost

Two Tests

Salt Lake Test:�Full store conversion �New prototype look and feel�Higher cost, longer process�Space recapture in rear of store

Phoenix Test:�Front of store conversion�Old prototype look and feel�Lower cost, shorter process�No space recapture

Up to $20 million in annual payroll and benefit savings.

Capital expenditures of$6 to $8 million.

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The Pep BoysSpeed Shop� Remodel existing Supercenters to accommodate Speed Shops

• 10 open in California, New York, Florida, Pennsylvania, Maryland, New Jersey, and Texas

- 3 “light” speed shops also opened

• Opening 5 additional “full” speed shops in second half of 2011

� Attracts Automotive Enthusiasts

• Muscle car; import tuner; sport truck, Jeep, diesel

� Highlights our competitive point of differentiation

• Staffed with dedicated enthusiasts

• Sales and installation of our products

� Creates destination store in key markets

• Expands 3-5 mile trade area

• Draws car shows and other enthusiast activities

• Serves surrounding stores

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The Pep Boys Distribution Network

Indianapolis Distribution

Center

RegionalDistribution

Centers

SuperhubLocations

Supercenter & Retail

Locations

Service & Tire Centers

# Locations

1

4• San Bernardino, CA• McDonough, GA• Mesquite, TX• Chester, NY

• Plainfield, IN

33 Servicing 359 stores

569

156

# SKUs

~75,000

~40,000

~40,000

~23,000

~3,000

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The Pep Boys SuperhubsRemodel existing Supercenters to accommodate Superhub inventory� Currently supporting 359 stores with 33 Superhubs / WDs� Adding 11 more Superhubs in second half of 2011 to support an additional 61 stores

Superhub objectives:� Increase sales in host and satellite stores through improved inventory availability� Increase margins by reducing the need for outside purchases� Allow for consolidation of inventory from satellite stores

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The Pep BoysE-Serve … Coming This Year

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The Pep BoysE-Serve … Coming Next Year

Excellent web experience- Discover

- Research - Purchase

My Home

Pick up in Store

Installed on My Car

Online Service

Selection

Parts and Accessories

Tires and Installation

IndianapolisDC

Shopping Experience

Payment and Shipping Fulfillment

Store

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The Pep Boys14 Million Rewards Members

How it works…� Members get FREE Services

• Tire rotation and air pressure check• Flat repair• Brake evaluation• Check engine light evaluation• Discounted towing to a Pep Boys location

� Members earn a point for every dollar they spend in service and retail

� Rewards are equivalent to 5% of their total purchases ($200 spend = $10 reward)

� Reward vouchers are sent to members once they are earned

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The Pep BoysImproving Financial Performance

Notes: •Results adjusted to exclude certain one time non-recurring charges and gains.•Pre-Tax ROIC = EBIT / (Average Debt + Average Equity)•Earnings Per Share is Diluted EPS•See next slide for unadjusted financial metrics and list of one-time non-recurring charges and gains.

Total Revenue (Billions)$2.21 $2.24 $2.14

$1.93 $1.91 $1.99

FY-2005 FY-2006 FY-2007 FY-2008 FY-2009 FY-2010

Operating Margin

0.9% 0.4%

3.1%3.8%

-0.8%-0.6%

FY-2005 FY-2006 FY-2007 FY-2008 FY-2009 FY-2010 2014Goal

Mid to HighSingle Digit

Earnings Per Share

($0.13)

($0.46)($0.66)

$0.38$0.60

($0.69)

FY-2005 FY-2006 FY-2007 FY-2008 FY-2009 FY-2010

Pre-Tax ROIC

2.9%7.8%

10.1%

-1.8%

1.1%-0.6%


HighTeens

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The Pep BoysUnadjusted Financial Metrics

List of one-time non-recurring charges and gains:2005: Includes a $4.2 million pre-tax asset impairment charge.2006: Includes a pre-tax gain of $8.968 million from disposition of assets.2007: Includes an aggregate pre-tax charge of $10.963 million related to the closure of 31 stores ($7.199 million cost of sales and $3.764 million discontinued operations). Includes a pre-tax inventory impairment charge of $32.803 million (cost of sales) for the discontinuance of certain product offerings. Also includes a pre-tax gain of $15.151 million from disposition of assets.2008: Includes an aggregate pre-tax charge of $5.353 million ($3.427 million cost of sales and $1.926 million discontinued operations) for asset impairment. Includes a pre-tax gain from debt retirement of $3.46 million partially offset by a $1.172 million pre-tax charge for deferred financing costs. Also includes a pre-tax gain of $9.716 million from disposition of assets.2009: Includes a pre-tax charge of $3.11 million ($2.884 million cost of sales and $0.226 million discontinued operations) for asset impairment. Includes a pre-tax gain from debt retirement of $6.248 million. In addition, includes a net pre-tax gain of $1.213 million from disposition of assets.2010: Includes a pretax benefit of $5.9 million due to the reduction in reserve for excess inventory which reduced merchandise cost of sales and an aggregate pretax charge of $1.0 million for asset impairment ($0.8 million was charged to merchandise cost of sales and $0.2 million was charged to service cost of sales). Also includes a pre-tax gain of $2.467 million from disposition of assets.

Total Revenue (Billions)

$2.21 $2.24 $2.14$1.93 $1.91 $1.99

FY-2005 FY-2006 FY-2007 FY-2008 FY-2009 FY-2010

Operating Margin

1.3%

-0.8%

3.0%4.2%

-0.5%-0.6%


Mid to HighSingle Digit

Earnings Per Share

($0.05)

($0.79)($0.58)

$0.44$0.69

($0.69)

FY-2005 FY-2006 FY-2007 FY-2008 FY-2009 FY-2010

Pre-Tax ROIC

3.7%7.5%

11.1%

-0.6%

-1.8% -1.3%


HighTeens

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The Pep Boys Macro-environment

� Primary external drivers for Pep Boys are:

• Miles driven for tires, maintenance and repairs

• GDP for discretionary purchases

� Other factors include:• Gas prices• Age of vehicles• Car sales (new and used)• Shift to smaller / lighter

vehicles• New technologies

� Our plans assume that the macro-environment continues to stabilize

� We do not foresee a rapid recovery

Notes:US Real GDP in billions of chained 2005 dollars (trailing 4 quarters expressed at annual rates).Vehicle Miles Traveled in billions trailing 4 quarters (all roads and streets).Q2 data estimated based on run rate thru May 2011Source: US Bureau of Economic Analysis

US Department of Transportation (Federal Highway Administration)

New Car Sales

Year# Units

(millions)

2010 11.62009 10.62008 13.52007 16.5

2001 - 2006 17.2

Source: Bureau of Transportation Statistics, U.S. Department of Transportation

2,700

2,800

2,900

3,000

3,100

2000

_Q1

2000

_Q2

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320

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001_

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420

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22

002_

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003_

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120

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Ve

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10,000

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GD

P(A

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VMT (Billions) GDP (Billions)

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The Pep BoysImproving Financial Performance� Low single digit comparable store sales growth

� 119 new Service & Tire Centers and 1 new Supercenter in 2011� Includes 99 acquisition, 4 organic Service & Tire Centers, and 1 Supercenter already opened in 2011

� 75 new Service & Tire Centers and 10 new Supercenters in 2012

� Gross margins are improving, but still an opportunity• Gross margin leaks• Cost of goods sold• Pricing and mix

� Sales growth leverages expense base• Safety and claims reductions• Productivity and cost reductions• Outlier management• “One Team” store structure

� Execution • Selling excellence• Store simplification• People and focus

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The Pep BoysSolid Financial Position

� Financial flexibility• $60m cash• $300m debt at favorable rates

• ½ due 2013; ½ due 2014

� Dry powder• 232 owned stores• 162 ground leased stores• 331 leased stores• 4 owned distribution centers• 1 leased distribution center• 2 owned office buildings

� Sales growth leverages asset base• Investing in new parts while improving inventory productivity• Expanding vendor financing programs to improve payables leverage• Maintenance capital expenditures of $40 million per year

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The Pep Boys Investment Story� We have turned

around the company

� We still have opportunity for improvement in our base business

� We have a solid foundation for growth for years to come

the pep boys – manny, moe & jack execution excellence & growth · the pep boys – manny,...

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