EU News Digest Latest News & Updates
Luke Sharrett | Bloomberg | Getty Images
Customers watch as an employee investigates their vehicle outside an O’Reilly Automotive auto parts store in Louisville, Kentucky.
O’Reilly Automotive’s stock sank by 20 percent Wednesday after the auto parts retailer reported weaker-than-expected same-store-sales growth.
Other auto parts retailer stocks also fell sharply.
The company announced comparable-store sales growth of 1.7 percent for the second quarter, below its previous guidance of 3 to 5 percent growth and FactSet’s estimated growth of 3.9 percent. O’Reilly’s stock plunge made it the biggest decliner in the S&P 500 index.
“The comparable store sales shortfall will also have a consequent impact on our operating profitability,” putting in doubt whether the company will hit its other targets, O’Reilly CEO Greg Henslee said in a statement.
O’Reilly shares had already been struggling over the 12 months entering Wednesday’s session, losing more than a third of their value in that time.
News of O’Reilly’s disappointing sales also weighed on shares of Advance Auto Parts and AutoZone, which fell 14 percent and 9.5 percent, respectively.
The three companies have missed their targets for the last several quarters, according to Ali Faghri, a senior research analyst at Susquehanna Financial.
“Sales growth has slowed over the last four-to-six quarters,” he said. “That’s led to most of these companies missing Street expectations or missing guidance.”
One reason Faghri cited was mild weather over the past two years, saying the companies are dependent on harsh winters to drive sales. Car parts companies also depend on sales to people who own older cars and the “number of those vehicles is at a trough” Faghri said.
