NAPA Parent GPC Reports Solid First Quarter, Sees 'Continued Strengthening' of US Automotive Aftermarket

NAPA Parent GPC Reports Solid First Quarter, Sees ‘Continued Strengthening’ of US Automotive Aftermarket

In the United States, sales for the Automotive Parts Group were up 2.5% and comparable store sales were up 3.5%.

Genuine Parts Co. (GPC) reported first-quarter sales of $4.7 billion, up 3.3% from $4.6 billion in first-quarter 2018.

Globally, sales for GPC’s Automotive Parts Group were $2.6 billion, up 2.3% from first-quarter 2018.

In the United States, sales for the Automotive Parts Group were up 2.5% and comparable store sales were up 3.5%.

“This marks our fourth consecutive quarter of improved sales comps, and reflects the continued strengthening of the U.S. automotive aftermarket as well as the effective execution of our ongoing initiatives to drive both DIFM and DIY sales growth,” GPC President and CEO Paul Donahue said during the company’s April 18 conference call. “To sum it up, we believe the aftermarket has benefited from a second consecutive normalized winter and ongoing sound fundamentals. These positive factors led to improved sales growth with both our commercial and retail customers.”

Among the U.S. highlights, sales to NAPA AutoCare customers were up 5% in the first quarter, on the heels of a 3.5% sales increase in 2018. Heading into 2019, the program had grown to more than 18,000 members, according to the company.

“NAPA AutoCare is an industry-leading commercial program for independent repair customers and a key sales driver for us,” Donahue noted.

Sales to GPC’s major accounts – which include government fleets, national tire centers and OE dealers – were up 2.2% in the first quarter, marking the strongest quarterly sales growth for the group in three years, according to Donahue.

“The positive sales trend with these accounts is significant,” Donahue added.

On the retail side, a number of initiatives “continue to make a difference and drive steady growth,” including the NAPA Rewards program – which boasts 10 million members – expanded store hours and the Retail Impact project.

NAPA rolled out the Retail Impact initiative at company-owned stores in 2018, and sales growth at those stores has outpaced stores that aren’t part of the initiative. The company began upgrading independent NAPA stores in 2018, and as the initiative continues over the next few years, “we see opportunities to drive additional retail sales,” Donahue said.

In Mexico, GPC closed on the sale of Grupo Auto Todo. The legacy business generated approximately $100 million in annual revenue, Donahue noted, “and was not a significant contributor to our overall profitability.”

“Going forward, our focus will be on expanding our presence in Mexico under the NAPA banner,” he added.

In Europe, GPC subsidiary Alliance Automotive Group (AAG) faced “a challenging sales environment,” due to a mild winter, Brexit drama in the United Kingdom, social unrest in France “and the overall softening economic environment,” according to Donahue. However, recent AAG acquisitions “more than offset the decrease in comp sales,” he added.

AAG in March announced it is acquiring PartsPoint Group, an Ede, Netherlands-based distributor of automotive aftermarket parts and accessories in the Benelux. Through a network of one national distribution center, six regional warehouses and 147 branches, PartsPoint serves thousands of customers across the Netherlands and Belgium, predominantly independent repair shops and wholesalers. GPC said it expects the business to generate annual revenue of approximately $330 million.

“Despite the current challenges we face in Europe, our team is fully prepared to push through these near-term issues via the continued execution of their growth plans and cost-savings initiatives,” Donahue said. “We remain confident in the growth potential we see for our European operations over the longer term.”

In Canada, GPC subsidiary UAP produced “another quarter of solid results,” buoyed by “mid-single-digit comp sales [growth] and the added benefit of accretive tuck-in acquisitions,” Donahue noted.

“Our Canadian operations are performing well, and we expect to build on this trend in the quarters ahead,” he added.

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