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Tags: OReilly | auto parts | car | retail

O'Reilly Sales Miss Deepens Slump for Reeling Auto-Parts Stores

O'Reilly Sales Miss Deepens Slump for Reeling Auto-Parts Stores
(Dreamstime)

Wednesday, 05 July 2017 04:31 PM

O’Reilly Automotive Inc. provided more fodder for this year’s rout of auto-parts retailers, with disappointing sales slamming a sector that’s seen as Amazon’s next potential victim for disruption.

The aftermarket car-parts chain headed for a record plunge after saying Wednesday that same-store sales missed its forecast for the second quarter. O’Reilly’s peers Advance Auto Parts Inc. and AutoZone Inc. also extended declines following weak early-year demand and reports that Amazon.com Inc. plans to mount an offensive on the industry.

Potential threats to the retailers also are coming from the likes of automakers including Ford Motor Co. and dealership groups such as AutoNation Inc. The companies are making an increasingly crowded bet that aftermarket car parts will be in greater demand from Americans that are holding onto their vehicles longer than ever -- the average vehicle on U.S. roads is approaching a record 12 years.

“This is the market saying, ‘Wait there’s something bigger going on -- the industry is not growing as fast, or it’s more competitive, or both,”’ David Schick, a retail analyst at Consumer Edge Research, said by phone. “We think that’s right.”

O’Reilly’s same-store sales rose 1.7 percent in the second quarter, trailing the company’s projection for growth of 3 percent to 5 percent. Shares of the Springfield, Missouri-based retailer plunged as much as 21 percent in New York.

Advance Auto Parts and AutoZone fell as much as 16 percent and 10 percent, respectively.

Auto-parts retailers blamed results that missed analyst estimates at the start of the year on delayed tax refunds and a mild winter that reduced the need to replace some car parts. O’Reilly’s Chief Executive Officer Greg Henslee said Wednesday that weak consumer demand continued into the second quarter after signs of stronger sales earlier this spring.

“After exiting the first quarter and entering April on an improved sales trend, we faced a more challenging sales environment than we expected for the remainder of the quarter,” Henslee said. “While we are disappointed with our sales results in the first half of the year, we remain confident in the long-term health of our industry.”

Shares of Standard Motor Products Inc. and Dorman Products Inc., which count auto-parts retailers among their top customers, also dropped on Wednesday.

O’Reilly’s sluggish sales rekindled concerns that competition from e-commerce could be eroding demand at brick and mortar stores, Schick wrote in a note to clients Wednesday.

“There’s more and more evidence of a period of increased competition during a slower period of demand,” Schick said by phone. “That’s amplified further by this general retail threatened concern about e-commerce penetration.”

O’Reilly scheduled the release of its second-quarter earnings report for July 26.

© Copyright 2021 Bloomberg News. All rights reserved.


StreetTalk
O'Reilly Automotive Inc. provided more fodder for this year's rout of auto-parts retailers, with disappointing sales slamming a sector that's seen as Amazon's next potential victim for disruption.
OReilly, auto parts, car, retail
442
2017-31-05
Wednesday, 05 July 2017 04:31 PM
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