Genuine Parts Company (NYSE:GPC), owner of NAPA Auto Parts, became the first of the major auto parts companies to report earnings and sales for its first-quarter period ending on March 21.
The key issue to focus on is automotive group comparable sales, which can be seen in the chart below. I've also included the most directly applicable sales numbers for its peers, O'Reilly Automotive Inc (NASDAQ:ORLY), AutoZone, Inc (NYSE:AZO) and Advance Auto Parts, Inc. (NYSE:AAP). The disappointing sales performance of Advance Auto Parts is largely due to the effects of integrating a troublesome acquisition.
As you can see, a 0.5% comparable-sales increase in the first quarter came up against a strong 3.5% increase in the first quarter of 2016 and indicates ongoing growth in the industry.
Does it matter?
Yes, it does -- and it's moderately positive news for the other auto parts companies. Why?
The main reason is that investors had reasons to doubt auto parts sales in the quarter. Advance Auto Parts and O'Reilly Automotive both reported strong sales conditions in December due to the cold weather -- car parts sales tend to increase in harsh weather conditions -- their quarters ended on Dec. 31. However, AutoZone -- the last major auto parts retailer to report -- delivered flat comparable-sales growth in its most recent quarter to mid-February.
Furthermore, AutoZone CEO Wiilliam Rhodes said on the earnings call, "Clearly, this year we experienced more winter conditions early in the quarter than we did last year, but we expected the winter conditions to be more pronounced and last longer. We are exiting this winter with two consecutive fairly mild winters."
All told, automotive sales figures from Genuine Parts Company are a net positive and should allay fears that auto parts sales at its peers will turn negative in the quarter -- that's good news for the auto parts industry.