O'Reilly Auto Parts 2012 Annual Report Download - page 9

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7
O’REILLY AUTOMOTIVE 2012 ANNUAL REPORT
To improve upon our already outstanding customer
service, in 2012 we invested $150 million in store-
level inventory enhancements. We evaluated the
competitive position of all of our stores and stra-
tegically and systematically increased the breadth
of parts carried in our stores where it is closest to
our customers.
Enhanced Parts Availability
fundamental drivers for long-term growth in the automotive
aftermarket remain intact and our continued focus on
providing exceptional levels of service, each day, will continue
to enable us to profitably grow our market share.
New Store Growth
New store openings are a powerful component of our
long-term growth strategy, and in 2012 our new stores
outperformed our high expectations, supported by
well trained teams who are excited to deliver O’Reilly’s
outstanding customer service, In 2012, we opened 180 stores
across the country, in both new and existing markets, with
much of our expansion market growth occurring in Florida,
the Ohio Valley, and on the East and West Coasts. We were
able to capitalize on highly profitable backfill opportunities
across the country, where the attractive real estate market,
leverage on existing distribution and advertising expenses
and the outstanding reputation of the O’Reilly brand drove a
strong return on investment. We remain very committed to
driving profitable growth, and as we increase our geographic
footprint across a greater portion of the United States,
we are excited about the expanded selection of favorable,
prospective sites available for new store openings. We
continue to identify and mentor our future managers and
are very confident that we have built a strong bench of
effective leaders ready to provide industry leading customer
service. In 2013, we plan to invest in the opening of 190 new
stores from coast to coast, with aggressive expansion into
Florida, which will be supported by our new state-of-the-
art distribution center that is scheduled to open in the first
quarter of 2014. Our existing network of 24 strategically
located regional distribution centers has capacity to service
over 400 additional stores, and with this capacity spread
throughout the country, we can effectively support each
new store with a strong management team and drive the
continued, profitable investment in our store growth.
Integration of Acquired Parts Stores
Another key component of our profitable growth strategy
has been to act as an opportunistic industry consolidator
by targeting independently owned auto parts stores, as
well as multi-store auto parts chains, that strengthen
our position as the leading automotive aftermarket parts
supplier in our existing markets and provide building blocks
for growth into new markets. Acquisitions have historically
proven to be very accretive to our profitable growth and are
a powerful way to grow our brand awareness and expand
our market share, and we continue to be excited about
future acquisition opportunities. At the end of 2012, we
were pleased to announce our purchase of the auto parts
related assets of VIP Parts, Tires & Service (“VIP”), which
is a large privately held automotive parts, tires and service
chain in the northeast. This acquisition added 56 stores
and one distribution center to our Company, but more
importantly, it established a geographic footprint into the
northeast which will act as a springboard for our continued
growth in New England. During 2013, we will integrate these
acquired stores and distribution center into our systems
and programs, and we will begin to implement our Dual
Market Strategy as we prepare for future profitable growth
throughout this new market.
The automotive aftermarket remains a highly fragmented
market, with the ten largest auto parts chains in the
United States representing approximately only 45% of
the total market share. As we continue to monitor the
competitive environment, we are confident that further
accretive acquisition opportunities still exist; we will remain
disciplined in our approach to evaluating these opportunities,
and we will continue to be opportunistic buyers as we
diligently work to further consolidate our industry while
remaining focused on profitable growth.