Aftermarket retailer Advance Auto Parts
Sticking with the old...
High unemployment, coupled with depressed spending, has resulted in consumers looking to repair and maintain their older cars rather than buy new ones in recent years. This has worked in favor of parts retailers such as Advance Auto Parts. Fellow retailer O'Reilly Automotive
The current quarter
Advance's revenue for the quarter grew 5% to $1.3 billion. The rise is explained partly by the net addition of 99 stores last year. Same-store sales rose 2.9%, building off the 8.9% growth from the fourth quarter last year. Higher top-line growth and better supply chain management led to a robust 33% increase in its operating income, with margins rising to 8.4% from 6.6% in the same period last year.
The road ahead
This year, Advance plans to open 120-130 new stores, which will include both Advance and its Autopart International stores, which are geared toward the commercial space. The company is focusing on gaining a bigger share of the commercial pie through expansion of its e-commerce business. The Autopart International business performed really well last year, with comp sales growing by a high 8.6% and a threefold jump in profits from the segment.
The average age of the more than 240 million cars on U.S. roads in 2012 is around 11 years. With nearly two-thirds of them being over 7 years old, coupled with the sluggish recovery, this year can be another bumper one for Advance.
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Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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