Activist Investor Takes Issue With Dillard's; Signs Indicate Upcoming Proxy Battle

by Mark Friedman  on Monday, Mar. 3, 2008 12:00 am  

For the 26-week period ended July 29, 2006, Pep Boys had $1.14 billion in revenue and a net income of $649,000. For the same period in 2007, Pep Boys had $1.1 billion in revenue and $7.4 million in income.

But in the third quarter of 2007, which ended Nov. 3, Pep Boys took a hit and reported a loss of $28 million on revenue of $535.4 million. For the same quarter in 2006, Pep Boys had a loss of $10.9 million on revenue of $551 million.

The stock price last week was trading around $12.25.

Still, Pep Boys management is happy to have Mitarotonda.

"He's been very helpful here at Pep Boys," CFO Harry Yanowitz said last week.

Yanowitz, who joined Pep Boys in 2003 and has announced that he will leave as soon as the 2007 books are closed, said Mitarotonda helped management when he brought himself and three others to the board. Mitarotonda "was instrumental in building out the full management team here, including the appointment of the new chief executive," Yanowitz said.

Yanowitz also said Mitarotonda has helped Pep Boys focus on the core stores and business.

"He's been a very constructive member of the team here," Yanowitz said.

Mitarotonda himself is something of a mystery. In a brief interview with Arkansas Business, Mitarotonda, while cordial, declined to go on the record about his plans for Dillard's and even refused to give his age. The Pep Boys proxy filing on May 2, 2007, though, revealed Mitarotonda's age as 52.

Dillard's Watch

 

The first public sign that Mita-rotonda was furious with the way Dillard's was being operated came in June, when he wrote the letter asking to talk with Dillard's CEO and chairman, William Dillard II.

But he didn't hear back from Dillard.

 

 

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