O'Reilly Auto Parts 2011 Annual Report Download - page 9

We remain dedicated to
generating profitable growth
and attractive returns.
goals, are located in attractive
markets and can be staffed with
experienced and quality Team
Members. Our new store site
selection process involves an
extensive analysis of market
demographics, vehicle registration
information, the competitive environ-
ment and a comprehensive list of
other factors, all of which must be
met before the decision is made to
open a new store. Most importantly,
we conduct an exhaustive training
process to ensure that each new
store’s team of professional parts
people can deliver our high standards
of customer service and expense
control from day one. The ability to
grow over a large distribution
footprint – we have capacity for over
500 additional stores spread out
between 23 regional distribution
centers covering 39 states – is a key
factor in our efforts to develop
exceptional new store teams. As a
result, 2012 will see new O’Reilly
stores from coast to coast, including
expansion markets along the East
Coast, south into Central Florida,
and through the Ohio Valley into
Pennsylvania, with additional growth
across the country in existing markets.
New store growth has historically
proven to be an excellent return on
our shareholders’ investment and
we will continue to prudently, but
aggressively, expand our store base.
Integration of Acquired
Parts Stores
2011 marked the three year anniversary
of the acquisition of CSK and also
marked the completion of the
physical conversion and integration
of these acquired stores. We com-
pleted the final store interior resets
and replaced the remaining legacy
CSK signs during the year. Now that
the physical conversion is complete
and the acquired stores have all of
the tools necessary to execute our
Dual Market Strategy, we’ve focused
on building the strongest store teams
in the industry, which will enable
us to significantly grow our market
share in the Western States.
Although we have made significant
improvements in the top line perfor-
mance of the acquired CSK stores,
we believe we have the opportunity to
greatly improve the average revenue
per store as we continue to penetrate
the professional service provider
market. In addition, we see an
opportunity to regain retail hard part
DIY market share CSK lost in the
years prior to the acquisition. Our
ultimate goal for these stores is to
better leverage our fixed costs by
gaining as much market share as
possible, on both sides of the business,
through the execution of the proven
strategy that has made O’Reilly
successful for over 50 years.
Historically, major acquisitions
such as CSK have been a very
accretive avenue for profitable growth.
The overall automotive aftermarket
remains very fragmented, with the
top 10 chains in the U.S. accounting
for only about 45% of the total
market. The number of auto parts
retail locations nationwide has
remained around 36,000 for the last
10 years, even with the growth of the
top players in the industry. We
constantly monitor the competitive
environment and evaluate opportunities
to consolidate the industry through
acquisitions. We remain one of the
few companies in the aftermarket
willing to supplement greenfield
growth with acquisitions of single
stores or small chains. We also seek
out opportunities for larger, “tuck-in”
type acquisitions which, although no
longer available to the scale of CSK,
would allow us to enter new markets
with a significant number of stores.
For acquisitions of any size, we will
The Right Product Mix
Our stores offer a wide selection of brand-name and private-label
products for domestic and imported automobiles, vans, and trucks
tailored for each store based on the local vehicle population. All of
these parts meet or exceed original equipment requirements and
provide a superior combination of quality and value.
O’Reilly Automotive 2011 Annual Report
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