O'Reilly Auto Parts 2007 Annual Report Download - page 4

connection with our do-it-yourself customers.
Do-it-yourself customers require more from
their shopping experience than a cashier
at a register. They seek out our professional
parts people and rely on their professional
expertise. If you spend any time in one
of our stores, you quickly realize that the
majority of our DIY sales are the culmination
of a conversation at the counter where an
O’Reilly team member works with the
customer to get the right part to solve
their problem. We know that our success
in these individual encounters is the key to
capturing our customer’s repeat business
and word-of-mouth business, which leads to
increased share in our markets. We constantly
focus on meeting the highest service standards
to ensure customer satisfaction.
2007 was a year of challenges for O’Reilly
Auto Parts and our customers. After a strong
start to the year, the demand in our markets
softened as our customers encountered
significant financial pressures due to higher
energy costs and the generally difficult
economic conditions. In this challenging
environment, Team O’Reilly remained
dedicated to providing the best service
and value to our customers and achieved
comparable store sales growth of 3.7%, which
led our industry. In 2007, our team extended
O’Reilly Auto Part’s track record of significant
profitable growth through continued focus
on exceptional customer service and expense
control. We also added 190 new stores while
delivering an operating margin of 12.1% and
7.7% earnings per share growth. We are
pleased to have achieved total sales growth
of 10.5% while increasing inventory only
8.5%. We were able to grow sales at a rate
greater than inventory due to continued
leverage of our core competency in inventory
management. Our focus on deploying the
right inventory assortment in our stores has
allowed us to reduce average inventory per
store even as sales volume has grown.
We view the recent challenges in the
macroeconomic environment to be temporary
and continue to be very optimistic about
the long-term prospects for growth and
profitability in our industry. Even during
the difficult economic conditions faced by
consumers in 2007, the total number of miles
driven in the United States remained stable.
The total number of miles driven is one of
the key factors that drives demand in the
2
Our dual market strategy and 50 years of experience in
providing industry-leading customer service resulted in a
10.5% increase in sales to $2.52 billion in 2007.
SALES
(in billions)
1974
With nine stores operating in
southwest Missouri, we broke ground
on a new 48,000 square-foot
distribution center.
1978
Our “Dual Market Strategy” was born
to maximize sales in the professional
installer and DIY businesses.
1980
O’Reilly held first Managers’ Conference
at Kentwood Arms Hotel,
Springfield, Mo.
1979
O’Reilly began enhanced advertising
campaigns with the addition of our
animated little red van, which helped
make O’Reilly a household brand.
‘03 ‘04 ‘05 ‘06 ‘07
1.5
1.7
2.0
2.3
2.5
2.5
2.0
1.5
1.0
.5
0