Brad Beckham
Chief Executive Officer at O'Reilly Automotive
Thanks, Jeremy. Good morning, everyone, and welcome to the O'Reilly Auto Parts first quarter conference call. Participating on the call with me this morning are Brent Kirby, our President; and Jeremy Fletcher, our Chief Financial Officer; Greg Henslee, our our Executive Chairman; and David O'Reilly, Executive Vice Chairman, are also present on the call.
I'll begin our call today by thanking our over 90,000 team members for their relentless dedication to providing the knowledge and expertise our customers have come to expect and rely on from the professional parts people at O'Reilly Auto Parts. We are truly in a people business where relationships and customer service are paramount, and Team O'Reilly continues to demonstrate their ability to outhustle, out service and, in turn, outperform our competition.
We finished the first quarter with a 3.4% comparable store sales growth on top of a 10.8% in the prior year. Our continued strong top line sales results are dependent on and driven by consistent daily execution across all of our 6,200-plus stores in the U.S., Mexico, Puerto Rico and now Canada.
Driving continued growth in our store volumes does not get easier as our company gets bigger, especially as we build on the significant market share gains we have captured over the last few years. Our single greatest challenge as a company and the driving factor to our success is our ability to build and develop teams and leaders who will be the standard bearers of our culture far into the future.
Our leaders across our stores, distribution centers and corporate offices are relentlessly dedicated to perpetuating our culture and investing in our people. Thank you, Team O'Reilly for your commitment to our customers, our company and your fellow team members.
Now I'd like to start our discussion of the first quarter by walking through the details of our sales performance. Starting with comparable store sales, our growth of 3.4% in the quarter was within our full year guidance range, but slightly below our expectations as we saw some volatility I will discuss in more detail in a moment. We drove solid performance and positive comps in both our DIY and professional businesses in the quarter with the mid-single-digit comps in Professional being the larger driver of our results, consistent with our expectation and ongoing trends. Increases in average ticket values and ticket counts were both contributors to comp growth on both sides of our business with inflation at about 1%, in line with our full year expectations.
Next, I want to provide some color on the cadence of our sales results in the first quarter. As we have discussed in the past, our first quarter can be volatile as we see variability in our business from both the type and severity of winter weather and from the timing of the onset of spring.
We were pleased to generate positive comparable store sales results in each month of the quarter. However, we did experience the choppiness that can be characteristic of first quarter, especially as we exited with a slow start to spring. As we reported on last quarter's earnings call, we produced solid results in January, which benefited from harsh winter weather in many of our markets.
Moving past the winter weather in January, our business was negatively impacted through much of February by the timing of individual income tax refunds. Typically, we see a benefit starting early in February and ramping through the month that coincides with the distribution of tax refunds. However, there was a noticeable delay in the processing of refunds this year that pressured both sides of our business. These pressures moderated as the cumulative amount of refunds begin to catch up to the prior year, and we saw improved trends at the end of February in the first half of March. However, we also experienced unseasonably cool wet weather throughout March across many of our markets. As a result, March and the full quarter finished slightly below our expectations. The trends we saw as we exited the first quarter have continued into April as we still really haven't seen the uptick in our business that typically accompanies sustained favourable spring weather.
The choppiness we saw in the first quarter more significantly impacted DIY business, which is in line with what we have seen historically. Our DIY customers are often working on their vehicles in their driveways. So weather conditions can impact their ability and willingness to perform repair, maintenance and tune up items that may have been on hold during the winter.
While our DIFM business was also impacted by the delayed timing of tax refunds, our professional customers tend to be more insulated from weather pressures and the volatility on this side of our business was more muted during the quarter. We continue to be pleased with the performance of our professional business even as we face very challenging comparisons.
As we outlined in our full year guidance on last quarter's earnings call, we are seeing an expected moderation in professional comps as we calendar significant share gains that drove a professional comp performance that exceeded 20% in the first quarter of last year. Against these challenging comparisons, we believe our professional results in the first quarter of this year reflect continued share gains.
We are excited by our team's ability to leverage the momentum we have created in our professional business and continue to grow our share of what remains a highly fragmented professional market across all of North America. Now I'd like to provide some comments as to how we are thinking about the sales outlook for the balance of the year.
As I noted previously, the volatility we have seen so far in 2024 is not uncommon for our business in the first quarter. As many of you listening today have heard us say before, we are cautious not to overreact to choppiness at this point in the year. As we move forward, we expect any weather-driven variability will moderate and business will normalize into the summer selling season.
Given this outlook, we are maintaining our full year comparable store sales guidance of 3% to 5% and would also expect our quarterly comp results to fall within the same range. Inherent in our guidance expectations is our belief that demand for our industry is resilient and our end consumer continues to be reasonably healthy. In situations of heightened economic pressures, we believe consumers will continue to prioritize investing to maintain their vehicles, particularly given the significant cost and monthly payment burden a new or replacement vehicle.
We believe the composition of our sales results support this view of the consumer in the current environment. We are encouraged to see broad-based performance across our category mix with continued strength in categories such as oil and filters as consumers continue to prioritize recurring maintenance jobs.
Additionally, we are not seeing notable evidence of trade down within our categories rather we are seeing better and best level value spectrum products continue to perform well as consumers prioritize higher-quality products that carry extended warranties and in turn, provide long-term value to their investment in transportation.
However, we still remain cautious of the potential deterioration in the broader macro environment that could push consumers to begin more carefully considering where and how they spend their money. Our experience gives us confidence that these demand headwinds are short term. And over time, the consumer will continue to prioritize their transportation needs given the value proposition that is present.
All of this being said, we will not settle for industry average growth or allow our teams to accept macroeconomic pressures as an impediment to growth. We know there is substantial opportunity to gain a bigger piece of the pie in our industry and the mission we have set before our team is to be the leader in all of our markets and on both sides of our business.
Before I move on from our sales discussion, there are a few items I would like to call out as discrete impacts to our sales. First, the Easter holiday shifted into our first quarter this year which was built into our plan and met our expectations as a headwind of approximately 20 basis points to comparable store sales on the quarter.
Next, we received the benefit of an additional selling day as a result of leap day in the first quarter 2024. We exclude the impact of leap day from our comparable store sales calculation, but this benefit was included in our total sales guidance and came in as expected representing 125 basis points of our total sales increase of 7.2% on the quarter.
Last, we closed on the acquisition of Groupe Del Vasto on January 22, and their operating results from that point forward are included in our reported numbers. The first quarter total sales increase benefited by approximately 70 basis points from the inclusion of Vast-Auto sales results, which are also excluded from our comparable store sales like Mexico.
Moving on to diluted earnings per share. We are increasing our full year EPS guidance to a range of $41.35, the $41.85. Our lift in EPS guidance is driven by the gross margin and SG&A results that Brent will cover next as well as a lower-than-planned tax rate and the impacts of shares repurchased through the date of our earnings release today.
As Brent will share with you here in moment, we have been pleased with our team's ability to manage cost while still making steady progress on the numerous initiatives and projects we have in motion to further enhance our competitive position. As I wrap up my prepared comments, I would like to once again thank Team O'Reilly for their hard work and dedication to start 2024.
Now I'll turn the call over to Brent.
