O'Reilly Auto Parts 2009 Annual Report Download - page 19

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centers in Denver, Colorado, and Salt Lake City, Utah, to help support the acquired CSK stores in the west. As these new distribution
centers open, the acquired CSK stores in those areas will begin to convert to O’Reilly systems and will begin receiving same-day or
overnight access to an average of 118,000 SKUs.
Experienced Management Team. Our management team has demonstrated the consistent ability to successfully execute our business
plan, including the identification and integration of strategic acquisitions. We have experienced seventeen consecutive years of record
revenues and positive comparable store sales results since becoming a public company in April of 1993. We have a strong senior
management team comprised of 133 professionals who average 16 years of service. In addition, our 191 corporate managers average
13 years of service and our 311 district managers average 10 years of service.
Growth Strategy
Aggressively Open New Stores. We intend to continue to open new stores to achieve greater penetration in existing markets and to
expand into new, contiguous markets. We plan to open approximately 150 stores in 2010 – a majority of these sites have been
identified. To date, we have not experienced significant difficulties in locating suitable sites for construction of new stores or
identifying suitable acquisition targets for conversion to O'Reilly stores. We typically open new stores either by (i) constructing a new
store at a site we purchase or lease and stocking the new store with fixtures and inventory, (ii) acquiring an independently owned auto
parts store, typically by the purchase of substantially all of the inventory and other assets (other than realty) of such store, or (iii)
purchasing multi-store chains. Store sites are strategically located in clusters within geographic areas that complement our distribution
network in order to achieve economies of scale in management, advertising and distribution. Other key factors we consider in the site
selection process include population density and growth patterns, age and per capita income, vehicle traffic counts, the number and
type of existing automotive repair facilities, other competing auto parts stores, other competitors within a pre-determined radius, and
the operational strength of such competitors. When entering new, more densely populated markets, we generally seek to initially open
several stores within a short span of time in order to maximize the effect of initial promotional programs and achieve economies of
scale.
We target both small and large markets for expansion of our store network. While we have faced, and expect to continue to face,
aggressive competition in the more densely populated markets, we believe that we have competed effectively, and that we are well
positioned to continue to compete effectively, in such markets and achieve our goal of continued sales and profit growth within these
markets. We also believe that with our dual market strategy, we are better able to operate stores in less densely populated areas within
our geographic footprint, which would not otherwise support a national chain store selling primarily to the retail automotive
aftermarket. Consequently, we also expect to continue to open new stores in less densely populated market areas.
Profitable same store sales growth is also an important part of our growth strategy. To achieve improved sales and profitability at
existing O'Reilly stores, we continually strive to improve the service provided to our customers. We believe that while competitive
pricing is an essential component of successful growth in the automotive aftermarket business, it is customer satisfaction, whether of
the DIY consumer or professional installer, resulting from superior customer service that generates increased sales and profitability.
Selectively Pursue Strategic Acquisitions. Although the automotive aftermarket industry is still highly fragmented, we believe the
ability of national retail chains, such as ourselves, to operate more efficiently than smaller independent operators or mass
merchandisers will result in continued industry consolidation. Thus, our intention is to continue to selectively pursue acquisition
targets that will strengthen our position as a leading automotive products supplier.
Continually Enhance Store Design and Location. Our current prototype store design features enhancements such as optimized square
footage, higher ceilings, more convenient interior store layouts, improved in-store signage, brighter lighting, increased parking
availability and dedicated counters to serve professional installers, each designed to increase sales and operating efficiencies and
enhance customer service. We continually update the location and condition of our store network through systematic renovation and
relocation of our existing stores to enhance store performance. We believe that our ability to consistently achieve growth in same store
sales is due in part to our commitment to maintaining an attractive store network, which is strategically located to best serve our
customers.
Grow Professional Installer Relationships in the Western United States. In order to implement our proven dual market strategy
throughout the CSK store network and grow our share of the professional installer market in those areas, we opened distribution
centers in Seattle, Washington, in November of 2009 and Moreno Valley, California, in January of 2010. We will open two new
distribution centers in Denver, Colorado, and Salt Lake City, Utah, in the first half of 2010. The Seattle, Moreno Valley and Denver
distribution centers were existing facilities we purchased and ranged in size from 222,000 to 407,000 square feet. The Salt Lake City
distribution center will be constructed and total approximately 205,000 square feet. After evaluation of the existing CSK Dixon,
California, distribution center, we made the decision to relocate this distribution center to a larger facility in Stockton, California. The
Stockton, California, distribution center will be a 520,000 square foot, leased facility that will open in the summer of 2010. These
strategically located distribution centers will provide converted CSK stores with same-day or overnight delivery access to an average