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.