U.S. auto parts retailer shares hit by O’Reilly’s weak comp sales
(Reuters) – US auto parts retail shares fell sharply on Wednesday after O’Reilly Automotive Inc. (ORLY.O) said its comparable store sales were well below the company’s estimates for Second quarter due to mild winter and low demand.
O’Reilly shares fell 18.9% to $ 178.77 in the largest daily decline in percentage and also reduced the proportion of its competitors.
The company said sales in stores open for at least 12 months were up 1.7 percent, compared with a forecast of a 3 percent increase to 5 percent.
On average, analysts expected quarterly sales O’Reilly same store increase of about 4 percent, according to Thomson Reuters I / B / E / S.
Weak demand probably reflects a lackluster confidence of low-end consumers, those earning less than $ 50,000 per year, who had less cash, partly because of increased health care, debt and costs Of housing, said Wedbush analyst Seth Basham.
These consumers are part of the main group of customers in the auto parts industry (DIY) auto parts.
The trust of minorities such as Hispanics, a key group for DIY auto salespeople, flows. They avoid leisure travel and have saved money for fear of being held under the immigration policy of the Trump administration said Basham.
Increased competition from e-commerce actors like Amazon.com Inc (AMZN.O) could also have been one of the factors that had an impact on even O’Reilly’s store sales, according to analysts.
O’Reilly, which generates about 58 percent of its 2016 sales to DIY customers, said the lack of comparable store expenses would also have an impact on its operating profitability in the second quarter.
Competitors’ shares Autozone Inc (AZO.N) and Advance Auto Parts Inc (AAP.N) also reached the lowest levels for several years.
Advance Auto closed 11.1% at $ 105.21 and the Auto Zone fell 9.6% to $ 516.83.
Short sellers were preparing to make money in the sector. A short interest for the three retailers peaked at $ 2,017 $ 4.8 billion on June 14, according to S3 Partners data. It fell to 4.2 billion Monday and is expected to fall to 3.7 billion after Wednesday’s share price.
“We have found an additional short in all three stocks while short sellers continue to build their positions in anticipation of further weakness in the sector,” S3 Partners said Tuesday after the market closed.