Discuss Company Profile of O'Reilly within the Company Profiles & News !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; O'Reilly Auto Parts (NASDAQ: ORLY), originally known as O'Reilly Automotive, Inc., is a publicly traded chain of auto parts stores ...
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Company Profile of O'Reilly
Company Profile of O'Reilly - May 12th, 2011
O'Reilly Auto Parts (NASDAQ: ORLY), originally known as O'Reilly Automotive, Inc., is a publicly traded chain of auto parts stores that started with one store in Springfield, Missouri in 1957. It has since grown to include more than 3,469 stores in 38 states. The corporate headquarters of O'Reilly is located in Springfield.
O'Reilly Automotive, Inc. sells a variety of new and remanufactured auto parts, accessories, equipment, and supplies to both "do-it-yourself" (DIY) customers and professional car mechanics and service technicians (professional installers). A small portion of its business consists of selling parts wholesale to independent auto parts stores. O'Reilly also provides machining services but does not do any other repair services or sell tires. A family firm, O'Reilly serves customers in mainly smaller communities in the Midwest and the South. Operating about 500 stores in ten states, O'Reilly in 1998 was one of the nation's top ten auto parts chains.
utomotive aftermarket parts, tools, supplies, equipment and accessories in the United States, selling its products to both do-it-yourself (DIY) customers and professional service providers. At December 31, 2010, it operated 3,570 stores in 38 states. Its stores offer products, including new and remanufactured automotive hard parts, such as alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, chassis parts and engine parts; maintenance items, such as oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives and appearance products, and accessories, such as floor mats, seat covers and truck accessories. Its stores offer services, including used oil and battery recycling, battery diagnostic testing, electrical and module testing, loaner tool program, drum and rotor resurfacing, custom hydraulic hoses, and machine shops.
O’Reilly’s stores, on average, carry approximately 22,000 stock keeping units (SKUs) and average approximately 7,100 total square feet in size. At December 31, 2010, it had a total of approximately 25.3 million square feet in its 3,570 stores. The Company’s stores offer DIY and professional service provider customers a range of brand name and private label products for domestic and imported automobiles, vans and trucks. It does not sell tires or perform automotive repairs or installations. Its merchandise consists of products, such as AC Delco, Armor All, Bosch, BWD, Cardone, Castrol, Gates Rubber, Monroe, Moog, Pennzoil, Prestone, Quaker State, STP, Turtle Wax, Valvoline, Wagner, and Wix. In addition to name brand products, its stores carry a variety of private label products under its BestTest, BrakeBest, Master Pro, Micro-Gard, Murray and Omnispark, O’Reilly Auto Parts, Power Torque, Super Start, and Ultima brand names. It also added O’Reilly branded chemicals and commodities, as well as private label products to all converted and nonconverted, acquired CSK stores.
The Company competes with AutoZone, Inc., Advance Auto Parts, NAPA, CARQUEST, the Pep Boys- Manny, Moe and Jack, Inc., Bumper to Bumper, Auto Value and Wal-Mart Stores, Inc.
O'Reilly became a public corporation in April 1993 with the initial public offering of its stock. The following year the company began to remodel stores to conform to a standardized design featuring better lighting, increased parking, higher ceilings, and separate counters for professional installers.
In 1997 O'Reilly added ten new stores in both Nebraska and Oklahoma, eight in Kansas, seven in Iowa (the first in that state), four in Missouri, and one in Arkansas, for a company record high of 259 stores. As of December 31, 1997, O'Reilly owned 131 of those stores, leased 69 from others, and leased 59 stores from O'Reilly family real estate investment partnerships. With 1997 product sales of $316.4 million, up 22.1 percent from 1996, and 1997 net income of $23.1 million, an increase from 1996 net income of $19 million, O'Reilly proclaimed in its annual report that 1997 was "Our best year ever." Other statistics supported that conclusion, for the firm's total assets ($247.6 million) and stockholders' equity ($182 million) reached record levels. Also in 1997, O'Reilly conducted a two-for-one split of its common stock. At the end of 1997 O'Reilly employed 3,945 nonunionized individuals at its parts stores, distribution centers, and headquarters, but a major expansion was imminent.
In January 1998 the firm spent $47.8 million, or $4.35 per common share, to complete the acquisition of the Houston-based public company called Hi-Lo Automotive, Inc. (NYSE: HLO), which had sales of about $238 million for the year ending on December 31, 1997. The merger came after Hi-Lo ended its announced merger with Discount Auto Parts, Inc. Donaldson, Lufkin & Jenrette Securities Corporation advised O'Reilly on this merger, and NationsBank provided the financing. The St. Louis law firm of Gallop Johnson & Neuman, L.C. gave O'Reilly legal counsel on this and other concerns.
The purchase of Hi-Lo furnished O'Reilly with 189 new stores in California, Texas, and Louisiana. Hi-Lo's properties also included a 375,000-square-foot distribution center in Houston. As soon as the deal was complete, O'Reilly began converting Hi-Lo stores to the new owner's systems and strategies. Chub O'Reilly said that this was a major challenge, in part because the company had to replace Hi-Lo's older computers with new IBM computers. With good advance planning, however, this conversion took place rapidly as about 200 Team O'Reilly members left headquarters to supervise the changes at the Hi-Lo stores.
In April 1998 O'Reilly sold its seven Hi-Lo California stores to a competitor, Auto Parts Wholesale, doing business as Carquest of California. "The sale of these stores will allow us to concentrate our efforts on Hi/Lo's core business in Texas and Louisiana," stated President and Chief Operating Officer Larry O'Reilly in an April 30 press release.
The Hi-Lo acquisition, by far the largest in O'Reilly's history, propelled the company into the ranks of the nation's top ten auto parts chains. At the end of the first quarter ending March 31, 1998, O'Reilly operated 460 stores in nine states: Arkansas (17), Illinois (one), Iowa (ten), Kansas (46), Missouri (111), Nebraska (11), Oklahoma (78), Louisiana (17), and Texas (169). The company planned in 1998 to add another 38 stores, as well as its fifth distribution center in Des Moines, Iowa, a warehouse with 160,000 square feet. O'Reilly estimated its 1998 sales would exceed $615 million. O'Reilly also planned to open 80 new stores in 1999.
O'Reilly's competitors in the do-it-yourself market included chains such as Pep Boys, AutoZone, Parts America (formerly called Western Auto), independent stores, car dealerships, and large discount stores (like K-Mart) that carried auto parts. Competing in the professional installer market were car dealers, AutoZone, independent stores, and national warehouse distributors and associations, such as Carquest, Parts Plus, and the National Automotive Parts Association (NAPA).
O'Reilly felt in 1998 that it was prepared to expand and thus help consolidate what it called in its 1997 10-K SEC Report a "still highly fragmented" industry. The ability of chains like O'Reilly and its major competitors to engage in efficient purchasing, inventory, and advertising because of economies of scale gave them a major advantage over small independent parts dealers. The chains also could spend more money on training their store personnel, a necessity as cars became more and more complex with the use of microcomputers and other high-tech electronics. The days of the simple "grease-monkey" were long gone.
O'Reilly's inventory management and distribution system was a good example of a modern high-tech operation. Each O'Reilly store was linked by computer to a distribution center. Bar codes enabled the company to record automatically when a part was sold and then order a replacement part from a distribution center. O'Reilly had an inventory of more than 105,000 SKUs (stock keeping units), so the necessity of such a computerized system was obvious.
Like other firms, O'Reilly worked to make sure its computer systems were prepared to deal with the "millennium bug" and thus be able to recognize the year 2000. The firm's management expected the Y2K project to be "substantially complete by early 1999," according to its 1997 annual report.
To keep its customers happy, O'Reilly started its "Right Part, Right Price, Right Now" policy, which gave customers a five percent discount on the retail price if one of the company's 15,000 most commonly requested items was not available immediately. Items usually were available from another store or a warehouse within 24 hours. According to O'Reilly annual reports, "The Company believes that its principal strengths are its ability to provide both the DIY and Professional Installers same day or overnight availability to more than 105,000 SKUs."
O'Reilly served its professional installer customers by using vans or small trucks to deliver parts and supplies, granting trade credit to qualified individuals, employing sales representatives specializing in the professional installer market, and conducting seminars on technical, safety, and business issues. The firm also published Tech Talk three times a year, Tools & Equipment twice a year, and the Finisher's Choice (paint and body catalog) quarterly for its professional installer market.
The company relied on purchasing parts and supplies from about 350 vendors, including name brand companies such as A.C. Delco, Gates Rubber, Prestone, Quaker State, STP, Armor All, and Turtle Wax. Most products were covered by manufacturers' warranties, but O'Reilly also provided warranties on some products. O'Reilly sold some of its own private label parts as well.
For several years O'Reilly has sponsored race cars as part of its advertising program. At state fairs, smaller local races, and major shows, O'Reilly has promoted its name and image on stock cars and high-powered race cars. For example, in June 1998 the 27th annual O'Reilly Spring Nationals were held at the Tulsa International Raceway. On its web site, O'Reilly listed the dates of more than 100 events between June and November 1998 at which the company was sponsoring contestants, including some truck and tractor pulls and bike racing competitions.
In 1998 O'Reilly remained a family firm. Its officers included Chub O'Reilly, chairman emeritus; Charlie O'Reilly, board chairman; David O'Reilly, president and chief executive officer; Larry O'Reilly, president and chief operating officer; Rosalie O'Reilly Wooten, executive vice-president; and Ted Wise, executive vice-president.
The auto parts industry has recognized the leadership of O'Reilly officers. The Automotive Warehouse Distribution Association honored David O'Reilly and the Automotive Aftermarket magazine presented both David and Larry O'Reilly with Retailers of the Year awards. Such recognition was based in part on the fact that O'Reilly Automotive consistently had increased its annual sales and net income from 1989 through 1997. Based on that financial performance and the major acquisition of Hi-Lo in 1998, O'Reilly Automotive seemed well prepared to continue its role as a major auto parts supplier in its chosen markets.
Principal Subsidiaries: Ozark Automotive Distributors, Inc.; Hi-Lo Automotive, Inc.
Market Cap (Mil.): $8,378.38
Shares Outstanding (Mil.): 137.87
Annual Dividend: --
Yield (%): --
ORLY.O Industry Sector
P/E (TTM): 20.37 9.56 18.75
EPS (TTM): 21.00 -- --
ROI: 11.28 8.56 1.62
ROE: 14.17 9.34 2.48
Sales: $316.39 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: ORLY
SICs: 5013 Motor Vehicle Supplies & New Parts; 5531 Automobile & Home Supply Stores
Name Age Since Current Position
O'Reilly, David 61 2005 Chairman of the Board
Henslee, Gregory 50 2005 Co-President, Chief Executive Officer
Wise, Ted 60 2005 Co-President, Chief Operating Officer
O'Reilly, Lawrence 64 2005 Vice Chairman of the Board
O'Reilly, Charles 71 1999 Vice Chairman of the Board
McFall, Thomas 40 2006 Chief Financial Officer, Executive Vice President - Finance
Shaw, Jeff 48 2004 Senior Vice President - Sales and Operations
Swearengin, Michael 50 2004 Senior Vice President - Merchandise
Johnson, Gregory 45 2007 Senior Vice President - Distribution Operations
Johnson, Randy 55 2010 Senior Vice President - Inventory Management
Lederer, Paul 71 2002 Lead Independent Director
O'Reilly-Wooten, Rosalie 69 2002 Director
Burchfield, Jay 64 1997 Independent Director
Murphy, John 60 2003 Independent Director
Rashkow, Ronald 70 2003 Independent Director
Hendrickson, Thomas 56 2010 Independent Director
233 South Patterson
Springfield, Missouri 65802
Last edited by pratikkk; May 12th, 2011 at 03:10 PM..
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