No need to jump O'Reilly Automotive's battery. The fast-growing company sells automotive aftermarket parts (both new and remanufactured), maintenance supplies, professional service equipment, tools, and accessories through more than 3,700 stores in some three dozen states and online. Many O'Reilly stores also offer a range of services, including oil and battery recycling, battery testing, paint mixing, and tool rental. The company wheels and deals with automotive professionals as well as do-it-yourself customers. Founded in 1957 by Charles F. O'Reilly and his son "Chub," O'Reilly Automotive is still family run.
Sales and Marketing
O'Reilly Automotive calls attention to itself by way of television and radio ads, direct mail and newspaper distribution, in-store and online promotions, and sports and event sponsorships. The firm spent nearly $74 million on advertising in 2011, vs. $70 million and nearly $73 million in 2010 and 2009, respectively.
Like other retailers in the automotive aftermarket category, O'Reilly fared quite well during the recession, posting higher sales and profits and revving up its retail presence through acquisitions (most notably, CSK Auto on the West Coast). High unemployment rates and weak credit markets prompted more Americans to maintain their vehicles and drive them longer, instead of purchase new cars. As a result, O'Reilly saw its sales and profits accelerate as professional mechanics experienced an uptick in their business, and do-it-yourselfers became more hands-on. Indeed, O'Reilly's sales more than doubled between 2007 and 2011. Most recently, sales rose about 7% in 2011 vs. 2010 to about $5.8 billion, while net income rose 21% over the same period. The uptick was driven by the opening of about 170 new stores and a 4.6% rise in sales at existing stores. Improved efficiency at CSK stores helped drive the increase in same-store sales and profits.
In late 2010 O'Reilly finished integrating the roughly 1,300-store CSK Auto chain. The $500 million purchase, which was completed in 2008, created the third-largest auto parts retailer in the nation, behind rivals AutoZone and Advance Auto Parts. CSK operated stores in 22 states, including a dozen that O'Reilly had not previously operated in, under the Checker Auto Parts, Schuck's Auto Supply, Kragen, and Murray's Discount names. Most the stores were converted to the O'Reilly banner, however, nearly 20 were closed and about 40 CSK locations merged with existing O'Reilly stores. While acquisitions are key to extending O'Reilly's reach to new markets, so too are new store openings, which have primarily bolstered the chain's presence in existing markets in recent years. In 2011 the company added about 170 new stores; including its first in West Virginia.
O'Reilly is looking to capture additional revenues from race fans, who are believed to spend more on automotive parts than the general public. To this end, the retailer partnered with NASCAR in 2008 to be its official auto parts store and has sponsored numerous races since then, including the Checker O'Reilly Auto Parts 500 NASCAR Sprint Cup race. In 2009 it also backed more than 1,500 local and regional motorsports events.
T. Rowe Price owns more than 10% of O'Reilly Automotive's shares. – less