Each month, Northcoast Research publishes the Northcoast Research Mechanic Index, based on the results of a survey of approximately 50 independent repair shops operating in the top 10 states (based on the light vehicle fleet population), plus Advance Auto Parts’, AutoZone’s and O’Reilly’s aggregate store count.
The study is designed to capture the following factors in the DIFM channel:
• Recent business trends and the corresponding drivers
• Major inflection points in sales trends
• Expectations for demand over the next three months
• Major changes in consumer behavior
• Insight into market share trends and the relative rate at which installers are switching wholesale parts suppliers
According to the results of Northcoast Research’s survey, the sluggish sales trends that characterized business conditions in the DIFM channel at the end of 2011 and the beginning of 2012 improved slightly in March. Northcoast’s Current Sales Index climbed to 53.5.
"As expected, the primary driver of demand in March was a higher average ticket, which is consistent with the underlying theme of our research in recent months," the Cleveland-based firm wrote in its report. "What was not expected was that traffic went from being a headwind in the first two months of the year, to a modest tailwind in the final month of the quarter as pent-up demand was released.
"The Three Month Outlook Index tacked on an 8.9 percent gain to close the month at 71.5, which illustrates that the majority of respondents anticipate year-over-year sales gains during the next three months. According to our proprietary weather screen, precipitation was lighter in March in many of the key markets, while temperatures were much less harsh relative to the prior year.
"While we believe that industry-wide DIFM sales trends decelerated slightly from 4Q FY11, our research suggests that an acceleration of trends on the DIY side of the business due to the warmer-than-normal weather provided a natural sales hedge. Consequently, we are maintaining our 1Q CY12 estimates for Advance Auto Parts and O’Reilly Automotive," Northcoast Research stated, adding that it is maintaining its NEUTRAL ratings on Advance Auto Parts, AutoZone, and O’Reilly Automotive.
ABOUT NORTHCOAST RESEARCH
Northcoast Research is an independent, full-service institutional equity research and trading firm headquartered in Cleveland, Ohio. Founded in 2009, the company’s mission is to add value in each phase of the investment process by aligning the company’s goals with those of its clients. Northcoast aims to provide unbiased, proprietary and actionable fundamental research on select industry verticals and companies, underpinned by comprehensive channel checks across a broad array of industry contacts. The company’s core research verticals are Consumer, Health care, Industrial and Business Services.
