O'Reilly Auto Parts 2006 Annual Report Download - page 3

o’reilly automotive 2006 annual report
page 1
Letter to Shareholders
Our road to success ... begins and ends
with excellent customer service.
Whether in Noel, Missouri, population
1,480, or metropolitan Atlanta, popula-
tion 5 million; whether in Bismarck,
North Dakota, with an average winter
low temperature of -1 degree, or in
Brownsville, Texas, with an average
winter high temperature of 70 degrees,
our road to success begins and ends with
excellent customer service. In every one
of our 1,640 stores, our ability to provide
excellent customer service sets us apart
from the other options available to
our customers. At O’Reilly, superior
customer service means a friendly
Professional Parts Person, whose singular
goal is to help solve a customer’s problem
with technical advice and superior in-
stock and parts availability at fair prices.
Whether it is a do-it-yourselfer who is
trying to get their vehicle back on the
road, or a professional installer trying to
run an efficient, profitable business, our
Professional Parts People are there to
help our customers achieve their goals.
By consistently providing excellent cus-
tomer service, we gain the customer’s
trust, build a win-win relationship and
earn their repeat business. At O’Reilly,
we sum up our culture in the motto
“Live Green,” and we focus on perpetu-
ating and growing our Live Green
culture every day.
All team members know that understanding customers
personally and professionally is a very important aspect
in building business relationships. They don’t see their
customers as just another sale; they value their friendship
and work hard to exceed their expectations in order
to retain their business.
01 02 03 04 05 06
12%
11%
10%
13%
Our operating margin of 12.4% in 2006 is the
highest level ever for O’Reilly and is the direct result
of Team O’Reilly’s focus on profitable sales growth
and expense control.
2006 was a challenging year for both
Team O’Reilly and our customers. High
energy costs reduced miles driven during
the summer months for the first time in
recent history and put pressure on our
customers’ pocket books. Despite the
temporary reduction in miles driven, one
of our key business drivers, our team dug
in and worked hard to increase sales by
11.6% and achieve a same-store sales
increase of 3.3%. In this tough sales
environment, our 17,494 store team
members were extremely focused on solid,
profitable sales growth achieved through
building new customer relationships and
enhancing existing ones. Our focus on
profitable sales growth and expense
control (a Team O’Reilly Live Green core
value) enabled us to increase operating
margin to 12.4%, the highest level ever
for our Company.
In 2006, we continued our proven,
profitable growth model by adding 170
new stores. The two main components of
our successful growth model are people
and support. The success of an O’Reilly
store, new or existing, is shaped by the
quality of our store team. To ensure our
store is staffed with Professional Parts
People, we hire people who fit our
culture, focus on education through our
e-learning system and perpetuate our
culture with hands-on mentoring made
possible by our low ratio of operations
operating profit as a
percentage of sales