Investors liked the news, sending Pep Boys shares surging more than 4% in Friday morning trading, above $10 a share.
CEO Mike Odell said that the auto parts retailer believes it shares to be “undervalued.” Pep Boys will fund the share buyback, which starts immediately, with future cash flow and currently available cash, Modern Tire Dealer notes.
Last month, Pep Boys said it lost $6.8 million during the third quarter, compared to a profit of $7 million in the same period last year. Quarterly sales fell from $522.2 million in 2011, to $509.6 million.
No specific share price targets or repurchase schedule was announced. The program does not have an expiration date.
In May, the company cancelled a planned merger with Gores Group, a Los Angeles-based privaye equity firm, which had agreed to pay $15 a share for the auto parts retailer, valuing the company at nearly $1 billion.