Story Stock: Fourth Quarter Sales Drop for 'Pep Boys'

Auto-care company prepares for transition in its stores, sees decline in stock price.
3:47 | 04/15/14

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Transcript for Story Stock: Fourth Quarter Sales Drop for 'Pep Boys'
I'm Michelle New York as the financial markets close on Tuesday April 15 this is story stock today and bad news for Manny Moe and Jack. The Pep Boys auto care company posted a six point 6% decline. In fourth quarter sales -- tell us what the -- and wise for Newman from Yahoo! finance. Here's what CEO Michael -- had -- about the tire trouble prices are still below last year's level which. It has is is expected to continue to negatively impact through the second quarter of 2014. Give us an idea what this all means. Well as you just mentioned tire prices there have been falling which means it's cutting into that. Profits basically of Pep Boys it's good -- for -- -- storage is good news for consumers obviously people buy a lot of tires. This is actually due to a bumper crop in robber I mean believe it or not. We stood at tires are still made out of -- the current grows -- grows out of the ground it's they're not synthetic. And like so many other things are. So that there's a lot of -- in the world the demand has been sought. That's pushing prices down and it's hard for retailers like Pep -- to pass. Pass many up mark -- on to consumers so this could -- this company is suffering. Let's take a look at the two day chart here and can you talk us through this company's today's stock performance. -- this was this was on for seeing -- there was a huge drop today in their stock 15%. -- that's a big drop usually. When you -- one company's mission analysts' targets we see something like 56 or 7% drop. I think part of the story here Michelle is kind of interest in what happens to auto parts stores they tend to do better. When the economy is struggling and the reason for that is when he economies going tough. People buy fewer new cars and so they need more stuff from auto parts stores to keep older cars -- There's basically more maintenance. Otto the auto industry has actually seen strong sales -- getting back close to where. Sales of new cars were before -- recession that began in 2008. So for our part stores eventually that could mean more cars on the road that need parts but at the moment means that people are turning in -- -- up these. And driving around new cars and are -- break down for awhile so. I think. What do you think the road ahead for pep boys and will have to be in order for -- to make up the difference here even -- the economy not I know that is -- I think that's part of the story is there they're not gonna benefit from people who need to fix up their -- so much so what they're trying to do is. They're trying to kind of upgrade a lot of their stores make -- -- attract people with -- more expensive cars they got a little bit of a problem because they have this blue collar image. Many -- Jack. You know at their coveralls. In -- generally appeal to people who like to fix their cars themselves they did they sell less stuff to those people they want to. Market more to people who are gonna pay more for service. And it's a little bit of a tough transition -- They don't quite have the image that goes along with that yet so they have to work that out and that's why I think that's why the stock is down as much as it is today could be a little Iraq for them this year is that image hurting because fewer people -- sort of doing maintenance on their own -- -- just more competition for these boys. I think it's to achieve the market is just a little bit tapped out right now and as I was saying before. You know more people are just buying a new car these days. You know -- interest rates are low people can finally feel like they can afford it so you've got fewer people I think crawling under there -- there cars in the garage at home. And that's price just enough to cut -- sales at Pep Boys -- Newman of Yahoo! finance thanks for joining us thank you. You've been watching story stuck stay with abcnews.com. For your latest headlines I'm Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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