Mild Winter Weather, Late Tax Refunds Crimp O’Reilly’s Q1 Growth

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Counterman has been serving auto parts jobbers, retailers and distributors since 1983.
Financials

Mild Winter Weather, Late Tax Refunds Crimp O’Reilly’s Q1 Growth

O’Reilly Automotive reported a 3 percent increase in first-quarter 2017 revenue and profit, but other metrics fell short of the company’s expectations.

Counterman Staff
By Counterman Staff
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SPRINGFIELD, Mo. – O’Reilly Automotive reported a 3 percent increase in first-quarter 2017 revenue and profit, but other metrics fell short of the company’s expectations.

Growth in comparable store sales – a measurement of the change in sales for stores open at least one year – slowed to 0.8 percent, down from 6.1 percent in first-quarter 2016 and below O’Reilly’s already lowered guidance of 2 percent to 4 percent.

Although diluted earnings per share (EPS) were up 9 percent to $2.83, the increase ended O’Reilly’s streak of 32 consecutive quarters of 15 percent or greater EPS growth.

In the company’s Q1 earnings call, O’Reilly CEO Greg Henslee said mild winter weather in January and February, and delays in tax refunds for early filers, hurt the company’s results.

“We saw business improved markedly toward the end of February as our customers began to receive these income tax refunds,” Henslee added. “However, this positive trend was halted at the beginning of March as a result of cold wet weather, including late winter storms in many of our markets. This type of weather would have been a positive in January or February, but was a significant headwind to our business in much of March as customers awaited spring weather. When we look at our by-category sales, this unusual weather drove softness in weather-sensitive categories like engine cooling, rotating electrical and anti-freeze.”

Despite the challenges, Henslee praised the company’s “expense-control culture” for generating a nearly 19 percent operating profit.

“While we are obviously not pleased with our comparable store sales performance in the first quarter, we remain extremely confident in not only our business model and industry-leading supply chain but also our team of outstanding parts professionals and the Team O’Reilly culture they live every day across our company,” Henslee said. “As we move past the short-term pressures we faced in the first quarter, we believe we are very well-positioned to grow our market share by continuing to leverage our industry-leading distribution model and providing the unsurpassed levels of customer service that has put us in the industry-leading position we’ve maintained the past several years.”

Sales increased from $2.10 billion in Q1 2016 to to $2.16 billion in Q1 2017, while gross profit increased from $1.10 billion to $1.13 billion.

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Customer Service: How It’s Done

Customer service should be your number one priority, and it all starts with the greeting.

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By Eric Garbe
Eric Garbe is a graduate of Columbus State Community College with a degree in Automotive Maintenance Technology. He has extensive independent and dealership field experience as a technician and shop owner and is an ASE Certified Master Technician and former Adjunct Automotive Professor. He has been professionally writing automotive technical articles and documents for many years and in his free time enjoys restoring old cars and creating custom interiors and upholstery.
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This is always an important topic to discuss, because I consider excellent customer service one of the most important tools you can have to earn trust, respect and repeat business from the customers that come through your door. Whether that customer is do-it-yourselfer from across town or the professional repair shop across the street, your business depends on a solid relationship.It’s a subject that I am passionate about, and it’s one that many people are losing touch with. Whether you are communicating to someone in person, on the phone or using some type of social media, good customer service and bad can both exist. You can’t afford the latter, so this is the first in a series of topics which can and should be shared from the front of the shop to the back. No matter which role you hold, you represent the shop and yourself. Customer service should be your number one priority.First on the list is the greeting. From the second a customer walks in the door, they need to know you appreciate them coming in and how important they are to your business. First impressions are everything and here’s the correct way to do it each and every time: look them directly in the eye, smile and say hello!Of course, you can say “Good morning” or “Welcome to Joe’s Autocare,” but it should be a formal greeting and the most important thing is that you have smiled, looked them in the eye and recognized that they have walked through the door.You should always retain a formal greeting until you are on a first-name basis with a customer. Only once you have established that level of relationship is it OK to use the less formal greeting of “Hi,” followed by the person’s name.This greeting does more than just indicate respect and appreciation for someone walking through the door. Most likely there are customers both new and old who are in earshot of your conversation. For newer customers, this continues to build rapport and reinforce their positive view of your shop; they see that you demonstrate respect and treat everyone in the same manner. For repeat customers, even ones that have been coming for years, the greeting is important because the way you treat them is the reason they continue to come.And when a long-time customer comes in and you greet them with “Hi [First Name],” this indicates your appreciation for them and that you’re glad to see them as a person, more than just a customer. New customers that witness this will see that your repeat customers are comfortable enough to be on a first-name basis, another indication of the trust they have in you.

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