Brad Beckham
Chief Executive Officer at O'Reilly Automotive
Thanks, Jeremy. Good morning, everyone, and welcome to the O'Reilly Auto parts second 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 Executive Chairman; and David O'Reilly, our Executive Vice Chairman are also present on the call.
I'd like to begin my comments today by thanking our team of over 91,000 hardworking, professional parts people across North America for their continued dedication to our customers during a challenging second quarter. As we'll discuss during our call today, our second quarter results were below our expectations as we face broader headwinds to demand in our industry. However, we are pleased with the job our teams did to uphold our commitment to providing top notch customer service to our customers on both sides of our business.
Despite a sales performance that fell short of what we have come to expect, we continue to outperform the industry. This is the direct result of our team maintaining a high level of attention to detail and doubling down on their efforts to provide even better service to our customers. We finished the second quarter with a 2.3% comparable store sales increase, on top of a 9% in the prior year. The pressure to top-line sales also negatively impacted our operating profit and earnings per share results, and we have revised our full year outlook for these metrics as outlined in our press release last night.
Though our results were below our expectations for the quarter, we were still able to generate increased operating profit and EPS on top of several years of a robust growth. We now expect our full year EPS to come in within a range of $40.75 to $41.25, with the adjustments reflecting our results in the second quarter and revised full year comparable store sales and operational outlook. At the midpoint of our updated range, our guidance represents a forecasted 7% increase in full year EPS, which matches our EPS growth in the first half of 2024. Our ability to generate solid EPS growth in a challenging macro environment, especially in light of the comparison to the 15% growth we delivered in 2023 is a testament to the continue continued strong execution by Team O'Reilly.
Now, I'd like to dig in further to our results in the second quarter by walking through the details of our sales performance, starting with our cadence of sales in the quarter. As we discussed on our last call, our quarter started off with sluggish results in April as we faced headwinds from cool, wet weather during the spring selling season. The softness in our business persisted into May, which we believe reflected broad-based pressure throughout the industry. As we entered June, we saw improved trends driven by strong performance and hot weather-related categories. On a week-to-week basis relative to our original guidance expectations, June represented the strongest performance for our quarter. So far in July, sales trends have remained solid, with weather benefit we saw in June moderating somewhat as we compared a similar favorable hot weather in July of last year.
Our comparable store sales growth in the second quarter was driven by continued strength in our professional business, where we delivered yet another quarter of mid-single-digit comps. While increases in average ticket values were positive contributors to comps on both sides of our business, the majority of our professional sales growth was fueled by robust growth in ticket counts.
Our results in the second quarter came on top of prior year comparisons to mid-teens professional comps in 2023, and we attribute our robust two-year stack performance to our industry-leading customer service and inventory availability. We continue to be excited by our team's ability to leverage the momentum we've created in our professional business and we remain bullish on our prospects to compound our share growth in what remains a highly fragmented professional market.
The strength in our professional business was partially offset by headwinds in DIY comparable store sales, which were down just shy of 1% for the quarter from pressure on ticket counts. Average ticket values on both sides of our business benefited from modest same-SKU inflation of less than 1%.
From a category perspective, our results for the quarter were highlighted by the strong performance in hot weather categories, including batteries, in HVAC, as well as solid performance and maintenance categories like brakes, oil changes, and spark plugs, which we believe reflects the ongoing priority our customers are placing on keeping their vehicles on the road and running well.
The sales softness we experienced in the quarter was more pronounced in the discretionary appearance in accessory categories. These categories comprise of a small percentage of our business and typically are not primary drivers of our comparable store sales results. However, demand for these products is more susceptible to volatility in periods where consumers are pressured, and that dynamic contributed to our sales shortfall in the second quarter.
We also saw some sluggishness on both sides of our business in certain undercar hard part categories which performed below the company average. These types of repair parts are impacted by cumulative wear and tear and have been key contributors to our professional sales growth and share gains over the past two years. While we still believe we are performing well in these categories relative to the industry, our results in the second quarter may be indicative of temporary pressure across the broader industry.
Against this backdrop of mixed results in our business for the first half of 2024, we continue to have confidence in the long-term fundamental drivers of demand for our industry, but also remain cautious about the current market environment. We still view the average consumer as relatively healthy, with strong employment and wage rates underpinning the ability of our customers to invest in the repair and maintenance of their vehicles. However, we also believe we're seeing some level of conservatism in how consumers are managing their spend as they face the cumulative impact of elevated price levels and uncertainty about the broader macroeconomic conditions.
Historically, more challenging periods in our industry are characterized by this type of short-term adjustment on the part of economically constrained DIY consumers. That said, we are cognizant of the potential that demand could be impacted during the back half of the year if this economic uncertainty persists, particularly during an election year. Given this outlook and the trends we have seen in the first half of 2024, we are lowering our full year comparable store sales guidance to 2% to 4%, which reflects both our second quarter results and our updated expectations for the third and fourth quarter.
We believe the pressure that our industry is experiencing will prove to be a short-term headwind. Our experience through multiple similar cycles in our Company's history gives us confidence that the core drivers of demand for the automotive aftermarket remain very solid. The size and growth of the car park in North America, coupled with the quality of vehicles and a continually rising average vehicle age, drive resilient demand in our industry.
We expect to see continued steady growth in total miles driven, underpinned by population growth and the critical nature of the daily transportation needs of vehicle owners. We also believe that the value proposition for a continued investment in an existing vehicle has never been higher and that consumers will continue to prioritize funding the cost of repair and maintenance of older, higher mileage vehicles.
Ultimately, the macroeconomic conditions we face do not affect our Company's philosophy for how we execute our business model. We have instilled in an ownership mentality throughout our organization. Our run it like you own it philosophy does not accept external pressures as an excuse when there is still market share to gain in every local market simply by outhustling and out-servicing our competition.
Even though we believe we gained market share in the first half of 2024 in a tough environment, I can guarantee that none of our teams in our stores, distribution centers and offices are satisfied with a 2.8% year-to-date comparable store sales increase. Our teams are committed to putting in the work it takes to win every day in every one of our markets and remain hungry to achieve performance that matches the high bar we have set as a Company.
As I wrap up my prepared comments, I would like to once again thank Team O'Reilly for your commitment to our customers, our Company and to your fellow team members.
Now, I'll turn the call over to Brent.
