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By Counterman
Standard Motor Products (SMP) announced that it is the recipient of the 2021 Spirit of NAPA trophy, presented at NAPA Auto Parts’ Vendor Summit and Supplier Awards Banquet on May 25.
At the awards banquet, NAPA recognizes top suppliers for their contributions in categories such as quality, innovation, cataloging and sales leadership. The highlight of the evening is the presentation of the prestigious Spirit of NAPA trophy, NAPA’s top honor.
This year, SMP was honored as the 2021 Spirit of NAPA award winner, as a testament to SMP’s significant impact on NAPA’s success.
“The Spirit of NAPA encompasses market leadership, outstanding products and service, and a firm commitment to winning the right way with integrity,” said Jamie Walton, NAPA’s executive vice president & chief merchandising officer. “Equally as impressive was the fact that despite a sales increase beyond expectations and global supply challenges, this supplier maintained a fill rate well above the Industry.”
“We are delighted and humbled to have been awarded NAPA’s top honor,” SMP CEO and President Eric Sills said. “We believe that the partnership between NAPA and SMP creates a powerful combination, one which has yielded tremendous success in the marketplace. “We recognize that to be successful, we need to do just about everything right, so I thank both NAPA and the thousands of SMP employees who contributed to this win.”
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By Counterman
During AutoZone’s fiscal second-quarter 2022 conference call in March, company executives asserted that its pandemic-driven sales momentum could be sustained, even after consumers blow through their stimulus payments.
AutoZone’s fiscal third-quarter results did nothing to convince them otherwise.
“We believed our competitive positioning was materially improved, as indicated by our significant retail share gains and rapidly accelerated commercial sales growth,” AutoZone CEO Bill Rhodes reflected during the company’s third-quarter conference call on May 24. “We believed customer behavior may have permanently changed. We continue to believe all of this today.”
AutoZone reported fiscal third-quarter net sales of $3.9 billion, a 5.9% year-over-year increase. The company’s fiscal third quarter ended on May 7.
Domestic same-store sales, or sales for stores open at least one year, increased 2.6% for the quarter. AutoZone delivered the 2.6% increase against some extremely tough comparisons: In the fiscal third quarter of 2021, same-store sales jumped nearly 29%.
If AutoZone indeed is able to sustain its momentum from 2020 and 2021, “it’ll be the fourth time in the last 30 years that the economy and society have been through significant shocks leading to material acceleration in our growth in sales and profits, without a corresponding decline back to pre-recessionary or pre-pandemic levels,” Rhodes said.
DIFM sales, which suffered in the first few months of the pandemic in 2020, continued to rebound. AutoZone’s commercial sales rocketed 26% higher to $1.04 billion, a third-quarter record for the company.
Weekly commercial sales per store also set a quarterly record, at $16,600, up from $13,500 in fiscal Q3 2021. The company averaged approximately $87 million in total weekly commercial sales.
During the quarter, AutoZone launched 43 net new commercial programs, finishing with 5,275 total programs.
“As I’ve said since the outset of the year, commercial growth will lead the way in FY 22, and our results in the third quarter and year to date reflect this dynamic,” CFO Jamere Jackson said during the conference call.
Rhodes attributed the DIFM growth to a number of companywide initiatives, including expanded hub and megahub coverage, “the strength of the Duralast brand,” technology investments, a more effective salesforce and improved delivery times.
Domestic DIY sales slipped 4.5% during the quarter – another case of tough comps. Rhodes noted that U.S. consumers received stimulus payments in the third quarter of 2021, which led to record DIY-sales growth.
“We’re very proud of our DIY results,” Rhodes added. “Considering we had such a tough comparison to last year, from the data we have available to us, we continued not only retain the enormous share gains in dollars and units built during the initial stages of the pandemic, but [also] modestly build on those gains.
“Our performance, considering the amount of time from the last stimulus and the ending of the enhanced unemployment benefits, has substantially exceeded our expectations and gives us continued conviction about the sustainability of the massive elevated sales levels we have experienced since the beginning of the pandemic.”
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By Counterman
Genuine Parts Co. (GPC) reported first-quarter sales of $5.3 billion, an 18.6% year-over-year increase.
A 12.3% year-over-year increase in comparable sales and an 8.1% benefit from acquisitions contributed to the strong quarter.
“We are pleased with the continued strength in our results to start the year, and we could not be prouder of the hard work by all our 52,000 teammates,” said Paul Donahue, chairman and CEO. “The first quarter was highlighted by new sales records for GPC and our Automotive and Industrial segments, margin expansion and our seventh consecutive quarter of double-digit earnings growth. The GPC team successfully navigated through ongoing supply chain challenges and inflationary pressures at levels we haven’t seen in 40 years.”
Sales in the Automotive Parts Group, which includes NAPA Auto Parts, were $3.3 billion, up 10.9% from the first quarter of 2021. Automotive sales represented 62% of total company revenues.
“”The continued strength in Automotive reflects solid growth across our operations, with 12% and 13% comparable-sales increases in the U.S. and Canada, respectively, and high-single digit comps in Europe and Australasia,” Donahue said. “Additionally, Industrial posted its fourth consecutive quarter of double-digit sales comps, driven by strengthening sales trends throughout the quarter.”
GPC updated its full-year guidance with a more bullish outlook for the year.
GPC now expects overall 2022 sales to grow between 10% and 12%, up from its previous full-year guidance of 9% to 11%. The company expects Automotive sales to grow between 5% and 7%, up from its previous outlook of 4% to %6.
“The increase in our sales and earnings outlook reflects the confidence in our plans for accelerated growth and profitability as we build on the positive momentum in our Automotive and Industrial businesses,” Donahue said. “While cognizant of the many uncertainties in the global economy, we believe GPC is well-positioned with the financial strength and flexibility to support our growth plans and provide for disciplined, value-creating capital allocation while enhancing shareholder value.”
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By Counterman
O’Reilly Automotive reported first-quarter sales of $3.3 billion, a 7% year-over-year increase.
Comparable-store sales were up 4.8%, on top of the record 24.8% year-over-year increase in first-quarter 2021.
“Historically, our first quarter can be volatile, as we see weather impacts from winter conditions early in the quarter and the timing of the onset of spring at the end,” CEO Greg Johnson said in a news release. “This year was no exception, and we saw choppiness in our business that coincided with inclement weather at the beginning of our quarter and the slow start to spring, along with other macroeconomic pressures. However, we continue to be pleased with the core, underlying strength of our business and our solid first-quarter comparable-store sales results, which, on top of last year’s performance, are clear indicators of our team’s ability to grow our business and take market share.”
The emergence of the coronavirus Omicron variant put some pressure on O’Reilly’s DIFM sales early in the quarter, but “outside of this short period, our professional business in the quarter was consistent and in line with our expectations, with comp strongly positive in each month of the quarter,” Johnson explained during the company’s first-quarter conference call.
“We’re encouraged by the resiliency and consistency of our professional-customer demand, and still anticipate this side of the business to be the larger driver of our growth in 2022 as we grow share and consolidate the market,” Johnson added.
In February, O’Reilly rolled out targeted, companywide price cuts for DIFM customers, which contributed to an expected year-over-year decline in the company’s gross profit margin. Johnson pointed out that the competitive response to O’Reilly’s pricing initiative “has been muted, as expected, and pricing remains rational.”
The DIY side of the business was much more volatile, according to Johnson.
“Early in the quarter, in addition to the headwind from inclement weather and Omicron, we also faced headwinds to DIY traffic from macroeconomic pressures stemming from the spike in gas prices and global instability,” Johnson explained.
Over the last eight weeks of the quarter, which ended on March 31, DIY volumes stabilized, “though still hampered by less-than-ideal spring weather as our business benefits when we see an early start to spring.”
“Our DIY customers often perform their routine jobs outside in their driveways and will take advantage when warmer weather hits to catch up on the repair, maintenance and tuneup items that have been temporarily on hold at the end of winter,” Johnson added. “This year, we have seen cold, wet weather persist through much of spring in many of our markets. However, the corresponding impact to demand matches up to what we have historically seen in similar environments, and we have been encouraged that DIY results have stabilized from volatility earlier in the quarter.”
Along with reporting its first-quarter financial results, O’Reilly announced that Tom McFall will step down as chief financial officer effective May 9, although he will stay with the company in the role of executive vice president. At that time, Jeremy Fletcher, O’Reilly’s senior vice president of finance and controller, will be promoted to CFO.
“After 16 years of dedicated service, Tom has communicated his desire to transition into a different role with the Company,” Johnson said. “Tom has provided exceptional leadership to our company since joining Team O’Reilly in 2006, and we are pleased he will continue to provide valuable guidance and mentorship as he shifts to this new role. Tom will retain his existing responsibilities in the areas of information technology, real estate, legal and risk management, and will continue to provide key strategic and executive leadership. Succession planning has always been an important component of our culture, and Tom has done an extraordinary job preparing Jeremy for his new role.”
Fletcher, 45, has been an O’Reilly team member for 16 years. Upon joining the company in 2005, Mr. Fletcher served as financial reporting and budgeting manager and progressed through the roles of director of finance, vice president of finance and controller and has served in his current role as senior vice president of finance and controller for more than five years.
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