Auto Retailers Fall After O’Reilly Announces Comp Sales Miss

Shares of auto retailers are falling after O’Reilly Automotive (ORLY) reported second quarter same-store-sales that were below previous expectations.

SSS MISS: O’Reilly Automotive reported Q2 comparable store sales results of 1.7%, which fell short of previously issued Q2 comparable store sales guidance of 3%-5%.

CEO Greg Henslee stated, “After exiting Q1 and entering April on an improved sales trend, we faced a more challenging sales environment than we expected for the remainder of the quarter.” Henslee added that the Q2 comp sales results of 1.7% represent an improvement over our Q1, but fell below the 3%-5%, “due to what we believe were continued headwinds from a second consecutive mild winter and overall weak consumer demand.” The executive said the comparable store sales shortfall will have a “consequent impact on our operating profitability.” O’Reilly is expected to report full results for the second quarter on July 26 after the market close.

ANALYST COMMENTARY: Following the lower than expected Q2 preannouncement, Raymond James analyst Dan Wewer lowered his price target on O’Reilly Automotive to $250 from $310 and said he is bullish long-term, but is disappointed with ongoing sales challenges facing the company and the industry.

BTIG analyst Alan Rifkin also lowered his price target for O’Reilly to $243 from $310 and said he believes the sustained comp weakness suggests sales are being impacted by factors other than income tax delays and weather. Nonetheless, the analyst thinks O’Reilly’s long-term fundamentals remain strong.

PRICE ACTION: In morning trading, O’Reilly Automotive was down 20.5% to $175.23.

PEERS ALSO DROPPING: O’Reilly peers also declining include Advance Auto Parts (AAP), down 15%, AutoZone (AZO), down 9.6%, Genuine Parts (GPC) dropping 4.2%, and U.S. Auto Parts (PRTS), down 3.3%.