O’Reilly Auto Parts once again lapped the competition with outsized market share gains during its Q3 2023 update, especially in commercial segment (where comparable-store sales increased by a midteens rate). Management noted that recent market share gains have been driven, in part, by an improved inventory position, improved employee retention, and increased staffing and productivity at the company’s distribution centers. Incoming CEO Brad Beckham said, “In line with the trends we have seen this year, our DIY comparable-store sales growth has been driven primarily by increased average ticket values. However, we were pleased to see positive DIY ticket count comps in the third quarter. Our teams continue to execute our dual market strategy, driving market share growth in our DIY business alongside our robust growth in [commercial]. However, our portion of the total DIY market share in the U.S. is still relatively low, and we see continued DIY growth as a tremendous area of opportunity for our company...Our team's ability to out-hustle and out-service our competition for this increased traffic volume is paramount to ensuring these share gains translate into repeat business. It has never been more important to ensure that we have highly trained teams of professional parts people supported by superior product availability in every single one of our 6,000-plus stores."
As the table below shows, O’Reilly’s commercial business is growing at multiples of NAPA’s, as well as AutoZone’s and Advance Auto’s. By comparison, Genuine Parts Company/NAPA, whose business is nearly all commercial, produced only a +0.4% comparable-stores sales gain (on an underlying basis). Management expressed disappointment with their results and GPC CEO Will Stengel said, “We believe the underperformance is a combination of execution and further tightening of market conditions. On the execution side, we have not been crisp enough in the field with service to our customers. In addition, while supply chains have improved significantly post-pandemic, we've experienced some lingering issues with inventory availability in a few product categories. Finally, the impact of tightening market conditions, including higher interest rates and persistent levels of higher cost inflation has created a more cautious trading environment for customers...We're taking action. First, in terms of service in the field, we've taken actions to intensify our operational rigor at stores and DCs as well as further enhance our inventory strategies, powered by investments we've made in data analytics tools. Second, we've experienced fill rates below our acceptable levels in a few product categories...As mentioned, we've underperformed our expectations at U.S. automotive in 2023. But with new leadership in the role for 100 days now, the team has clarity of the priority opportunities has taken action and are quickly moving to get where we need to be.“