Good morning, everyone. I'd like to welcome everyone here today and everyone who's listening offsite via webcast. My name is Mark Merz, and I would like to officially welcome everyone to our 2019 Analyst Day. Before I get started, I would like to read our forward-looking statement, part of it. We intend to be covered by and we claim the protection of the Safe Harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as estimate, may, could, will, believe, expect, would, consider, should, anticipate, project, plan, intend, and similar words. Forward-looking statements speak only to the day they were made, and we undertake no obligation to publicly update any forward-looking statements, whether a result of new information, future events, or otherwise, except as required by applicable law.
Okay. I'm gonna get the day started today. We're gonna talk a little bit about what our schedule is for the day, how it's gonna progress, and then I'm gonna hand it off to Eric Bird, and he's gonna talk about one of the most important things, the most important thing that sets O'Reilly apart from every competitor that exists, and that's our culture. Eric's gonna do our culture statement for us today. Before we get started, a couple of rules. Everybody, I hope you had a chance to mingle a little bit with the management team for the last half hour. For the next two hours, we'll have about an hour or so of prepared comments from our management team, and then we'll have about an hour or so of Q&A.
We'll end right at 10:30. For those listening offsite, that's when the webcast portion of the day will end. After that, for those who are here, we'll take a short break, then we'll go out and show you our distribution center. We're very proud of the most robust distribution center, distribution network in our industry. This is a great opportunity to show it off and really show you how it works. After that, we'll come back into this room. We'll have a light lunch. Management team will be here, and you'll have an opportunity to visit with them. Promptly at 12:00, we will leave, and we'll go visit two stores, then the shuttles will head for the airport.
That's what today is going to be about. I know many of you have had the opportunity to visit and see an Analyst Day before. Today's event will be no different than prior years. We don't use this as a day to present new guidance, to present new outlook, to present any new information. It's really a day for us just to be able to tell our story. We think it's a great story. It's been very successful for us, and we're very proud to tell it. It's also an opportunity for you to come and meet with the management team. We don't go on the road that much. We don't do a lot of marketing because the management team likes to run the business.
This is just an opportunity for you to come and be able to meet with the management team and talk to them as well. A couple of procedural things. Everyone got a name tag when they came in. Please make sure you're wearing that name tag all over the course of the day while we're in this facility. I wouldn't want David's security team to escort you outside the building because they didn't know who you are. Please keep those name tags on. There are refreshments in the back, in the side room over there in that kitchen area. There's refreshments, and if anybody needs to use the restroom facilities, just go out this back door and make a left. It says break room, and the restroom facilities are right in there.
With that, I'll turn it over to Eric, to give our culture statement. Thanks for coming, everyone.
Good morning, everybody. Thank you for coming this morning. I wanna give our culture statement this morning. We open every meeting here at the company with a culture statement. Today for our culture value, I've chosen to speak on our culture value commitment, because one of the things we want you to see today is our commitment for our culture. Commitment to us means commitment to our culture, our team members, and our customers. We recognize that this culture and our team members is what has given us our success and will drive our success for years to come. That's why we open every meeting with it.
That's why every month when we send out this Team Spirit, which is our corporate newsletter, you'll see right first page inside there a culture talk given by one of our executive management team. Today, while you'll get to see a lot of interesting things from an operational perspective, how we run stores, a distribution center, I think one of the most important takeaways for you all is to be able to observe the commitment to our culture at every level of our organization, from our management team here today to the distribution center team here today that's just done a fantastic job of hosting this event, and you'll get to see what they do out on the floor to our team members in our stores as they serve our customers coming in every day.
With that, I'd like to turn things over to our CEO and Co-President, Greg Johnson. Thank you.
Thanks, Eric. Eric said that our culture is a very important component to our success, and it is. The other things that are very important to our success are our professional parts people in our stores every day and our promote-from-within philosophy. I'm gonna take just a moment this morning to introduce the team. A lot of the people up here, most of you have seen before. You've talked to us on calls. You've seen us at Analyst Day. You've seen us in the corporate office. There are a few that you're not familiar with or you haven't met, and I'm gonna ask them to come up and tell you a little bit about their history with the company, tell their story, so you can kinda get a feel for the tenure of our leadership team. First, I'm CEO.
Most of you know me. I've met most everyone in the room. Jeff Shaw is our Chief Operating Officer. Tom McFall is our CFO. Brad Beckham's our Executive Vice President of Store Operations and Sales. Jason Tarrant, if I could get Jason to come up. Jason is our Senior Vice President of Western Division Store Operations and Sales. I'd like for Jason just to take a minute or two and kinda tell you his story with the company.
Thanks, Greg. Well, good morning and welcome to Denver. Again, my name is Jason Tarrant. I actually just had my 18th year anniversary. I started in 2001 in a small town in Northern California. I was currently a at that time a technician for a large bus barn for the city, and got to know the local parts store there at the time, which was actually a Kragen with part of CSK. Long story short, I came on night and weekends like so many of us in our company, and just started sweeping back room and started selling parts and working freight.
I was obviously somewhat familiar with the automotive industry at the time as a technician, and had so many opportunities to grow and advance in the company and eventually ran stores there. In 2006, I had a chance to move up to the Northwest in the Portland, Oregon market and to take over a district as my first opportunity to really kinda set my feet and grow in leadership. I did that for a handful of years until we were acquired in 2008 by thankfully, O'Reilly Auto Parts, and it's been a great story ever since. Had so many opportunities to grow.
ran a district there for two years until 2008. Then spent a short stint on the sales side in leadership until we opened an operational region there in 2009 and took over that responsibility as a regional director. Did that for a handful of years until I had a chance to move back home and take on a larger operational region, as I've proven myself, and came back home to Northern California in Sacramento, where I'm still at today. Did that for, again, a handful of years until 2015, and had a chance to take over the Western Division as a Divisional Vice President. Again, just had great opportunities in the company through expansion and working with good leadership.
At that point, I did that for, again, a couple more years until we expanded. Then, my supervisor at the time, who many of you probably have met, Keith Sheldon, retired, and I was so, again, thankful to have the opportunity to work for a guy like that who taught me so much over the years. At the beginning of 2018, I took over responsibility of my current role, which is Senior Vice President of the western part of the country. I currently have, you know, kind of the western part of Texas all the way up through, with the exception of Montana, everything through Alaska and Hawaii. It's been a great journey, and I've had a great opportunity and just a great story about our promote-from-within philosophy.
I appreciate you guys being here and, I look forward to a good couple hours and, hope you enjoy it. Thank you.
Thanks, Jason. Next is Jeremy Fletcher. I think most of you know Jeremy. He's somewhere in the back of the room. Jeremy is our SVP and Controller. Most of you know Jeremy. Next I want to introduce Brent Kirby. You know, we talk a lot about promote from within. We are a company that creates opportunity for our team members by promoting from within. A couple of years ago, as we really started to focus heavily on omni, we realized that we just didn't have that knowledge and skill set in-house. We started a process to try to find someone within retail that had omni experience, that was a proven leader in omni. We ended up hiring Brent about a year ago. I'll ask Brent to tell his story real quick.
Sure. Thanks, Greg. Good morning, everyone. As Greg said, new to O'Reilly. Been with O'Reilly about a year. Prior to that, was almost 32 years with Lowe's Companies. Started there in an entry-level role, working my way through school and, worked my way up through store district, regional, divisional leadership with stores. Also led our professional sales, our in-home selling model as we developed that, our digital websites, digital properties, both B2C, B2B, and, then ran our supply chain, our global supply chain at Lowe's the last two years I was there. Had the opportunity to meet many of you, in roles, various roles with Lowe's over the years and, had the opportunity to join this team a year ago, in a very exciting part of specialty retail.
I was really engaged by the culture and the passion of this leadership team and the opportunities that we have. Happy to be here with you today. Thanks for coming.
Thanks, Brent. Next is Diego Santillana. Diego was with us in San Antonio, but I'd like for Diego to come up and tell his story. He's our Divisional Vice President for Southwest Division.
Good morning. As Greg said, my name is Diego Santillana. I have all of this area from Wyoming all the way down to South Texas, so it's a little bit of a stretch. I have been with the company now 13 years. As you can see, I have 23 years of automotive experience, worked for a small parts company in Dallas, Texas. We ended up getting bought out by a company called AutoZone. Ended up working for them for several years, and then had the opportunity to come and work for O'Reilly Auto Parts. Since then, I moved to El Paso, Texas. Had the opportunity to open up a brand-new market out there and get the stores running. Today, we have a lot of stores, a lot of growth there in El Paso, Texas.
Had the opportunity to become the regional manager out there and back in 2010, moved to San Antonio, Texas, to take over that market. As the company grew and as we opened up more stores, had the opportunity to help more individuals, see a lot of individuals grow within the company. Here this afternoon, we're gonna hit some stores, and we're gonna talk a lot about that promote-from-within mentality, the opportunity for team members and individuals to grow within the company are really what makes O'Reilly great and what makes us successful and what's gonna continue to make us successful going on in the future. Just a little bit about me.
Thanks, Diego. You all met Mark. Mark introduced himself early and kicked us off. Next is Thad Slicker. Is Thad in here? Okay, Thad's not in here. Thad is our regional director for this division of distribution. Thad's responsible for four of our DCs, including the DC here in Denver. Thad will be helping lead the tour, the DC tour, so you can meet him there, as will David Slape. David Slape is our DC manager here in Denver, and he'll be available on the tour as well. Last, our regional manager for this area is Keith Cox. I'd ask Keith to come up and tell us a little bit about his story.
Is this on? Good morning, everyone. Actually, today is my 20-year anniversary with the company. Thank you. I started out in Salt Lake City part-time, just working the counter. It was not a career for me at the time. Moved up to store manager with that company, and that was as far as I felt I wanted to go with them. I moved down to back home to Las Cruces, New Mexico in 2003 and ran a store there for a few years. When the acquisition came through, 'cause like I said, I was with Checker Auto, I saw a company that I could make a career out of, 'cause before it wasn't a career. I told my supervisor, and at the time, Diego was one of my supervisors, that I'd like to start furthering my career.
Two years later, I moved up to Albuquerque, New Mexico, became a district manager. Ran that area for about three years, then I moved to Farmington, New Mexico. Ran that area as a district manager for about thee years. January 1st a couple of years ago, got the opportunity to move up to Denver and take the next step in my career as a regional manager. I cover all of Denver, pretty much most of Colorado, except for Colorado Springs and south. I've got stores in Kansas, Nebraska, Wyoming, and one down in Utah. I am living proof of our promote from within philosophy. Thank you.
Great. Thanks, Keith. As Mark said, a lot of what we're going to talk about here today is very similar to what we talked about in prior years at Analyst Day. No really new bright and shiny objects to talk about, with the exception of Brent's going to share some new information on some of our omni initiatives. Let's get into the presentation itself. First, company overview. Some information on our company itself. As of the end of the second quarter, we operate 5,344 stores across 47 states across the U.S. We operate 27, 350-ish of those stores are hub stores or super hub stores. We also operate 27 distribution centers, and we'll be opening our 28th DC in the fourth quarter of this year, which Jeff will speak more to in his presentation.
We employ over 81,000 team members in our stores, distribution centers, and corporate offices. Last 12 months, our trailing 12 months sales as of the end of the first or second quarter was $9.8 billion. Our market cap as of July 29 was $30 billion. Our DIY/DIFM split is about 57% DIY, 43% DIFM. Not much movement in that over the past couple of years. Year-to-date 2019 results, comparable store sales increase of 3.3% for the first half of the year on top of a 4% comparable store sales increase for the same period last year, resulting in a 2-year stack of 7.3%. Gross margin was 52.9% compared to 52.5% in 2018. 18.9% operating margin.
First half of the year, we opened 105 net new stores, and we remain on track to hit our 200-store opening mark by the end of the year. We generated $8.56 in diluted earnings per share, generated $541 million in free cash flow, and repurchased $921 million worth of O'Reilly stock under our share repurchase program. Shift gears a little bit, talk about industry drivers. You know, the biggest contributor or driver for demand in our industry continues to be total miles driven. One of the things, the reason that miles driven continues to grow in our country is because lack of a comprehensive mass transit system.
A lot of you come from metropolitan cities, New York, Boston, Chicago, other areas where there is a mass transit, public mass transit system, and a lot of you probably use those. Across the bulk of the U.S., that's just not the case. You know, consumers depend on their automobiles to get them to work, to get them to the grocery store, wherever they need to go, so they have to make sure their automobiles continue to function. Over the last 20 years, we've seen a 23% increase in miles driven from 1998 to 2018, that's significant. If you look at the chart, the blue line represents fuel prices during that time, the green bars represent miles driven.
You'll notice the dip from 2008 to 2013 during the recession when unemployment was a little higher, when fuel prices were higher, consumers were watching their discretionary spend, probably not taking vacations as much, and thus miles driven was down during that period of time. Since then, growth in annual miles driven has grown back to a more historical trend. Thus far in 2019, we've seen about a 1% increase in miles driven. Industry drivers, more on industry drivers. The top part of this slide really demonstrates the SAAR of light vehicle sales in the blue line, and the shaded bars represent light vehicle population. The growing SAAR in new car sales is representative of consumer confidence.
As long as new car sales continue to grow and scrap rates maintain stable, we feel like that the vehicle population will continue to grow as well. Vehicles are just engineered better than they have been in the past. They're lasting longer. On the bottom of this chart, you see the light vehicle age. It continues to grow, but it grows at a relatively slow pace. You know, a CAGR of 1.8% over the last 10 years. Our expectation is for average vehicle age to continue to grow for the foreseeable future. A little bit about our industry landscape, the automotive aftermarket. On the top part of this, many of you have seen this chart before.
On the top part of this chart, on the dark green line, represents the number of auto parts stores operating in the U.S. That's been relatively stable. You know, over the last 10 years, it's been mid-35,000. It peaked at 37,000 last year in 2018. What really has changed over that period of time is the ownership percentage of these top 10 chains. This represents a lot of consolidation that's taken place in our industry, and these top 10 chains have continued to change and evolve. You know, there's a big gap between the top three when you drop down below that. You know, the bottom half is a lot fewer stores in the top 10 than it would've been, you know, 15 or 20 years ago.
Again, that's a result of a tremendous amount of consolidation within our industry. On the lower side of this slide, the automotive aftermarket as a whole, from the Auto Care Association, is about a $297 billion industry. We feel like that our addressable market is somewhere between $90 billion-$100 billion. If you look at all the components that make up that $297 billion, it includes professional share of labor on the professional side, which we don't get any of that business. Tire sales, we don't sell tires, DIY and professional. When you factor out, when you factor the professional down to a wholesale valuation and DIY, that gets us in a range of $90 billion-$100 billion. There's a lot of runway for us.
There's a lot of entitlement out there, and we feel good about our growth opportunities. Talk a little bit about branding. We talk about this every year. You know, we continue to grow the number of products we have in our proprietary brands. Talking about proprietary brands, if you went back 12, 15 years and looked at our proprietary brands, our proprietary brands or private label brands at that time were more entry-level in nature. They were more entry-level on the good side of our good, better, best range. Over the years, we have expanded our proprietary product offering to where there's a value component within our proprietary brands. There's also premium product within our proprietary brands. It's really more broad than it's ever been. Also, some of our proprietary brands were at one time national brands.
If you looked at Murray Air Conditioning products, that used to be a national brand. We now own the rights to that brand, the same with Precision. Those are now our brands that no one can sell from us. They're recognized national brands, and they're recognized as O'Reilly proprietary brands as well. Also, the other proprietary brands you see here are recognized as premium brands. You look at Super Start batteries, the consumer knows that that Super Start battery is an O'Reilly battery, and when it's time to replace that battery, they need to take it back to O'Reilly Auto Parts. Historically, the proprietary brands probably were more for the DIY customer. Over the years, proprietary brands are being sold to both DIY and DIFM customers. On the bottom of our slide are just some of our national brands, some of our oil brands.
Wix, Gates have been, they've been brands of ours since we started in 1957. Bosch, there's many more. We just put some select brands down there. In each of these categories, there would be a private label entry equivalent product. Gates would have a MasterPro belt. Wix would have a MicroGard filter, for example, to give that consumer options within the good, better, best levels of our product offering. Proprietary brands make up over 45%. It's very close to 46% of our total sales today. Industry-leading parts availability is one of our biggest competitive advantages. When you talk about inventory lifecycle management, really, if you look at the life of a product, look at that demand curve, it looks like a bell curve.
The product, a new car comes out, a new vehicle comes out, and as you enter the maintenance cycle, demand for maintenance-type products starts to grow. Then you have maintenance and failure items that grow, and at some point, that peaks and starts to taper off. When you get a vehicle that's been out there on the road for 10, 11 years, and it's on its 2nd or 3rd ownership cycle, some of that demand will drop off. The challenge that we face, and what we feel we're very good at, is ramping up our inventory position during the building phase of that demand and then ramping down on the backside. For example, a new product comes out to market, a maintenance-type product for a new car.
Say, oil filters, motor oil, the things that occur first from a maintenance standpoint. We'll get those products into our DCs, and as we see demand, push those down to our hub stores and eventually down to our stores through the peak of that life cycle. As we start to see it coming down the backside of that life cycle, demand for those products drops. We start pushing that product back up the supply chain, back into our hub stores and eventually into our DCs to make room for products that are entering the demand curve. We do a really nice job there. Our inventories are tailored to each store. I don't think there's two stores out there that have the same exact inventory.
Our inventory management team looks at vehicle and operation or VIO data for every zip code around our stores, and we custom tailor our inventories to our stores. We also allow our store managers to adjust that inventory based on their customer needs. If they have a customer that has a fleet of light duty vehicles that they're maintaining, we have to make sure we have all the products available there at the store to maintain that fleet. Maximize inventory investment. It's continual evaluation, like I said, of managing that good, better, best cycle. That's what I was talking about on the lead up side of the demand curve and the back side. We have to make sure that we got that right mix.
They're on the front end, and as you hit that peak, we're probably gonna have good, better, best products available for that application. As you get down the back side of that demand cycle and that vehicle may become 10 years old, for example, and be on its second or third owner, we may not see the need to keep that best or that better product even in our stores. We still have it available in the hubs, but that customer's typically more likely to buy the lower cost solution because that vehicle's been on the road longer. We maintain relationships with multiple suppliers. We've done that for years from a risk mitigation standpoint.
We may have a category like batteries or rotating electrical or brakes, some of our larger categories that in our private label or proprietary box, we've got multiple suppliers for that. If one supplier is not shipping well for a given SKU, we can back up and have supplier B fill in to make sure that we maintain a high fill rate on those products. It also helps us leverage competitors from a pricing standpoint. The vendor financing program, we've been very successful there. We ended the second quarter at 107%, and we'll continue to focus on our vendor financing program. You know, our inventory deployment strategy is one of the keys to our success. I think we're better than anyone in the industry with deploying inventory across the supply chain.
Our 27 strategically placed DCs at the top level of our supply chain is just a tremendous competitive advantage for us. That inventory deployment strategy not only helps us be successful from a brick-and-mortar standpoint, it also allows us to deploy that inventory across the nation to make us successful from an omnichannel or e-commerce standpoint. With that, I'll turn the program over to Brent.
Thanks, Greg. As Greg mentioned, you know, we have some very distinct strategic strengths at O'Reilly, professional parts knowledge and parts availability. As we look at the omnichannel opportunity for our company to continue to improve that brand journey, we're evolving just like customers are evolving. We're evolving to meet both our professional and our do it yourself customers on their terms with solutions that meet their specific needs, whether they visit a store, call or click. As we do that, we continue to really peel back what does that inventory availability look like for customers because we know that two-thirds of our buy online pickup in store activity on the B2C side comes from customers that make a purchase and then make a trip to our store. There's a high correlation there.
More customers are going online to do research before they make the trip to the store. We wanna make that the best experience it can be. We've been looking and working to utilize ability to that across our supply chain. As a customer shops us online, we wanna let them know when that part will be available at their store or available to be shipped to their home. We also know that as customers come in the store, they want a simple, seamless experience as they interact with us in the store environment. We've prototyped and tested a new pickup area, and we've been really pleased with the results from that test, and we'll be rolling that test out across the chain in the back half of this year.
As we've looked for time definite fulfillment options, we know that customers shop more and have more brand confidence when they have the confidence around the part they need to get their car back on the road. We've added language to our website around when the product is specifically available. Order in X minutes and have by X day or X time, which is new. We've added that this year, we've seen great response from customers as we've done that. We're also upgrading our back-end shipping software, we're in the process of doing that now to give more reliable estimates to customers and to rate shop carriers on the back end of that experience as well. As Greg mentioned, the 27 DCs are a strategic advantage for us. We've also enabled shipping parcel orders from those 27 DCs in the last 12 months.
We're really excited about the opportunity that that brings for us as we, as we move forward. Search and content. Content is king for a customer doing research online. We recognize that in our industry with the huge amount of SKUs, we have to be best in class at content, and we have to be best in class at helping that customer find the part that they need for their specific application to get their car back on the road. We've been doing a lot of work here to improve that content. We've been working with our suppliers, we've been working with our merchandising team, our electronic catalog team to make sure that we have rich visual content and images that customers need when they're looking for fitment and, you know, alignments of different pieces of the part on the website.
We're also looking at specific fitment and specification information for those parts and how customers shop those parts. In many cases, we're rewriting it and ensuring by category and by part type that we have the specific information and descriptions that the customers need to make the selection and the information that's gonna search well again across Google and other search engines to improve that experience. We also have added machine learning as we're beginning to tune our search for our retail website. We did this late last year, and we continue to see our null search results go down and irrelevant search results go down as we continue to tune these dials to improve the experience for customers shopping us through this channel first. This is an example of some of the experience improvements that we've added this year to our B2C website, oreillyauto.com.
You can see some examples here. You can see a rich visual spinning image of an alternator that gives the customer the opportunity to go in and manipulate the image themselves to zoom in on different pieces of the fitment that they need to see. You see the branding of one of our proprietary brands, Ultima, that Greg mentioned a minute ago. We've also added this Next Day eligible badging if the part comes back that it's available next day in their location, the customer's geofenced location or the store that they've logged into at standard ground rates. We've added that to the website as well. We've also added the consistency that I talked about around specification information and fitment information in the copyright below.
We've seen some great results here with customers engaging with the new design of the B2C site, and we're excited about what we've seen here. Customers need support, whether it's a customer, a professional customer calling us on First Call Online using our professional website or a retail customer on our oreillyauto.com website, we know they need support. We started adding that voice support, toll-free voice support for both websites for many years. We continue to optimize how we support customers through both of these digital properties. Last fall, we added chat experience to oreillyauto.com. We continue to see great engagement. Each time we further engage chat, the more customers engage with us. They have specific questions about parts, fitment, availability of the product to get their car back on the road, and we've continued to expand that.
We added chat messaging capability earlier this year that allows for an asynchronous conversation, just like a text message. A customer can check in and check out of that conversation with us as they're fixing their car or seeking the answers that they need. We've seen great engagement there. We're also using machine learning and bots to engage customers on the website to properly route their request and to handle off-hours requests that we get from our customers, knowing that customers are shopping oreillyauto.com 24/7, 365 days a year. We're continuing to improve the customer experience by listening more intently to our customers, both retail and professional.
We just stood up a voice of the customer framework to enable customers to give us real-time feedback on the satisfaction with their specific interaction and brand sentiment satisfaction over time for oreillyauto.com, for firstcallonline.com, as well as our store channel and our chat and voice channels. We're gonna be able to be more responsive to customers and to prioritize the information and the fixes that they're looking for to complete that brand journey in a satisfactory way and give them a great brand experience. This slide really speaks to the fact that, you know, the store is the center of our omni-channel nucleus.
You've heard us talk about the power of the store, the power of the store team, the professional parts knowledge, parts availability that we have at our stores, and you'll get to see that later on today on the tour. We also recognize that as customers continue to evolve, this outer ring becomes more and more important in how they engage us and may engage us before they ever come into our store for the information they need. We're thinking about this as an ecosystem with the store at the nucleus. When we talk about omni-channel, it really is for our professional customers. It's how they engage with firstcallonline.com and our professional field sales team of reps that are out calling on the shops and working with them there to meet their needs.
For that retail customer, it's how they're engaging with us on oreillyauto.com. Are they getting the information they need? Are they seeing the pricing and availability they need? Are they getting the content fitment and application information they need? We're working to provide that, and we're working to support them through chat and voice support as well as they make that journey. We're really excited about the opportunity here and look forward to sharing more as we continue on this journey. I'd like to turn it over to Jeff Shaw.
Thank you, Brad. Well, good morning, everyone. It's a pleasure to speak with you this morning. Brad and I would like to spend a few minutes this morning discussing the operations side of our business and talk a little bit about the O'Reilly business model. Now our goal as to our operations, you know, has always been to execute our mission statement of being the dominant auto parts supplier in all of our market areas. Now those are tall words, but it's what we focus on and work hard at every day in all of our stores across the country. Now there's several areas that we feel are competitive advantages for us, and we'll review and expand a little on each of those. First being our dual market strategy. Next, our industry-leading parts availability.
I'll talk a little bit about our growth focus, and then Brad will cover our culture-driven leadership and top-notch customer service, as well as expand a little on our First Call program. First, our dual market strategy. Now we've been committed to our dual market strategy for over 35 years now, and we have a proven track record of success serving both the DIY customer and the professional customer. And by us targeting both sides of the business, it allows us to expand in all sizes of markets, from the small rural market to the large metro market, and most importantly, to be able to run profitable stores in those markets. It also leverages our strategically located distribution network that you've heard Greg talk about across the country.
Now that's really a requirement of doing business for the professional customer, it benefits our DIY customers as well. Now we've always expected our store managers to take ownership of their customer service levels, equally driving and supporting the DIY and the professional side of their business. On the professional side of their business, they're supported by a sales force of almost 800 team members out there calling on customers every day in all of our markets across the country. Really the quality of service that it takes to support our professional customers, professional parts people, now that benefits our retail customers as well. Next, our industry-leading parts availability. You know, in today's competitive business environment, parts availability is truly critical to our success.
With our company evolving from a very traditional background, high inventory availability has really always been a requirement of doing business for us. We now have 27 strategically located DCs across the country. These DCs stock an average of 156,000 SKUs, and all of our DCs are linked to what we call regional DCs, which carry over 175,000 SKUs. Our DCs deliver stock orders to our stores 5 nights a week with our own dedicated fleet of 780 over-the-road trucks. Over 90% of our stores receive multiple deliveries a day from either their servicing DC or their local hub store, and these stores receive weekend service as well.
Now to supplement our DC network, as you heard Greg mention earlier, we have 350 hub stores located across the country, deploying that hard-to-find inventory even closer to our customers. You've heard us mention on the last couple of earnings calls that we have 3 new DC projects currently underway. I thought I might provide a little bit of detail on each one of those. The first is Twinsburg, Ohio. Twinsburg is a ground-up facility that will have the capacity to service approximately 300 stores. We plan to open it toward the end of this year, servicing in the neighborhood of 175 stores. Next is Lebanon, Tennessee.
Lebanon will be a reload for our existing Nashville D.C., and it will also allow us to consolidate our Knoxville D.C. and turn that into a super hub in the local market. Lebanon also has the capacity to service around 300 stores, and we plan to open it in the first half of next year, servicing in the neighborhood of 195 stores. Finally, Horn Lake, Mississippi, which is just south of Memphis. Horn Lake is an existing facility, and it will have an initial capacity of 250 stores, and we plan to open it in the back half of next year, servicing around 170 stores. Before I turn it over to Brad, I wanna talk a little bit about our store growth.
We have a very long track record of aggressive greenfield growth year over year. This year, as Greg mentioned, we plan to open 200 new stores as well as converting 20 of the Bennett stores into new O'Reilly locations, which we completed the end of last quarter. As I mentioned earlier, with our network of strategically located DCs, we now have the ability to open stores all across the country without overloading our store ops team in any one given area. What that really means is that we just have more time to recruit and develop our new store teams, which helps our new stores hit the ground running. We've also grown by acquisitions over the years, but we've always been a very opportunistic and strategic buyer.
This may be old news to many of you, but just a quick history of our key acquisitions over the years. In 1998, we acquired Hi-Lo Auto Supply based in Houston, Texas, effectively doubling the size of our company back then. In 2001, we acquired Mid-State Automotive Distributors based in Nashville, and that gave us a presence and distribution in the Southeast to start our expansion there. We followed that up in 2005 with the acquisition of Midwest Auto Parts Distributors based up in Minneapolis. You know, once again, giving us a footprint and distribution to start our growth in the upper Midwest. Really the big one in 2008 when we, when we basically doubled the size of our company again with the acquisition of CSK Auto.
CSK gave us a solid footprint on the West Coast and the ability to really ramp up expansion out west. In 2012, we acquired the VIP Auto stores based up in Maine. Followed that up in 2016 with the acquisition of Bond Auto Parts, which increased our footprint up in the Northeast. In the end of last year, we acquired Bennett Auto Supply based down in South Florida, and we've effectively merged and converted all those stores in the first half of this year. When you look at the slide here, you know, there's several untapped domestic markets, mainly up in the Northeast, that we'll, you know, we'll continue to grow in as well as over time explore international expansion. With that, I'll turn it over to Brad to finish up on the business model.
Thanks, Jeff. Good morning, everybody. Let me see if I can see this monitor here. If we haven't talked about culture enough, you know, I know a lot of you've heard us talk about our culture for really, for a long time, for really decades and over the years as we continue to grow. You know, our culture continues to be while it's intangible, there's a lot of things behind that, more so than just being a banner on the wall or values on the wall. I'm certain that while I've never worked for anybody but O'Reilly, in my career, I'm certain that every company out there has, you know, culture values, has a mission statement, culture documented.
To tell my story just a little bit, I started with O'Reilly back in 1996 in Oklahoma. We were kind of in a four-state market, had 200 stores and started out 17 years old and, like Jason, sweeping floors and putting up freight and stock and driving the delivery truck and working the counter. When I think about really what is stated here, when I think about our culture and ownership, promoting from within, the passion we have, you know, when it comes to winning, execution of our business model, Jeff talked about our build market strategy.
When I think about fundamentals, when we talk about our mission statement and being the dominant auto parts supplier in all our markets, and we talk about, you know, strong desire to win, you know, that's in a very humble way that was instilled in us by the O'Reilly family over the decades, and Ted Wise and Greg Henslee that a lot of you knew and on to, you know, Greg and Jeff, is that's in a very humble manner. I mean, we take our competitors, we have a lot of respect for every one of our competitors.
A lot of you know our public competitors and then the tough competition that we have when it comes to the professional side of the business that are a lot of companies out there, 1 market at a time, that own the far majority of the share on the professional side in the U.S. When we talk about winning, I think that's misunderstood sometimes along with our mission statement. When we talk about those things internally, that is about helping other people win. You know, when I think back to, again, when I started, the first week I was on the job, I didn't know the O'Reilly family. I didn't know our district manager. I for sure didn't know our regional manager. We had 3 regional managers back then. Now we have 63. Jeff was my regional manager in Oklahoma, and I sure didn't know Jeff.
All I knew was the team that I went to work for. When I think back 23 years ago, in that first week, these things were instilled in me by that store manager and that store team. I immediately knew that I had a career path, you know, with our promote from within philosophy. The other thing I knew is that they took a ton of pride and passion in competing and making sure that we were not taking one single customer or one team member on that team for granted. Those were things that while I really didn't know or appreciate back then, were instilled in them by the O'Reilly family and Ted and all the people that have ran our company up until this point.
When I think about fundamentals, I would guess that any companies that you interact with or maybe a sports coach that somebody likes or whatever the case may be that has a true legacy of performance and execution, something greater than just competing or winning, you know, that's what I think about. The best leaders I've ever worked around, especially at O'Reilly, when it comes to fundamentals, we don't get bored with the fundamentals. Though it may be a little bit boring or repetitive, the best leaders, the best coaches, the best athletes when it comes to people, inspiring and motivating people, it's about the fundamentals. It's about mastering the fundamentals and wearing them out every single day and not taking one customer in our world or one team member that's on our team for granted.
You know, we talk tremendously about our promote from within philosophy. While that may seem, you know, somewhat minute to some of you, maybe even to the point of question a little bit, you know, from a talent standpoint. What we've always been able to do and what I always learned from Jeff and Ted, O'Reilly family is that, you know, what we really do is we identify, you know, with raw talent, guys and gals that have a true passion to help other people win, that they have that ability to motivate and inspire and get people bought into something greater than themselves.
That gets back to our culture and a story and something to really build their career on that has a greater good than just selling auto parts or, you know, just related selling or things that happen in our stores every day that, honestly, team members these days, especially as new generations come in, they can get that stuff working for anybody. I mean, there's not a successful retailer or wholesaler or anybody out there, large or small, that doesn't have buzzwords around, you know, driving ticket averages or driving sales, hitting goals and all those things.
I remember early on in my career, Charlie O'Reilly reminded us at a meeting that it may have been when we hit $1 billion in revenue, and he said, "Well, let's make sure we don't get caught up in all those zeros because those happen, those happen one customer and one team member at a time. Let's remember, you know, how we got to this point. We can't live in the past, but let's remember how we got here, and that's those basic fundamentals when it comes to taking care of customers." In our world that, in my world every day, I own store operations. I own our sales team.
When I think about the three senior vice presidents, Jason Tarrant, he has two counterparts, one's in the center part of the country and another one on the East Coast. They all have the same story that Jason does when it comes to growing up in the business. One of them is a 28-year guy in the center part of the country. All that is with O'Reilly. Jason, again, we had the fortune of acquiring Jason and a few other key people that are even in the room from CSK, that really already had the O'Reilly culture. They just didn't have the support from their company and their leaders, and so that's been a great fit. The same thing for Robert Dumas on the East Coast.
Robert's been with us since the acquisition of Midstate in 2001, grew up in the wholesale business, you know. You end up with a leadership team that absolutely has been in every single one of the roles in the stores. While we have to work harder on making sure that they're not over capacity, that we're promoting the right people that have all the intangibles that can take the next step and not promote somebody further than their capacity and ability to motivate, inspire, develop people, build teams, build customer relationships, turn, you know, reduce turnover and all the things that we, the fundamentals that we focus on, the blocking and tackling in our business every single day.
We have to work very hard at that to make sure as we promote from within that, what we end up with is we have somebody that has a true passion for our business and parts. While a lot of us in this room may think retail is retail, our business is a little bit different. Of course, I've, you know, this is all I've ever worked in, but the parts business, it takes having leadership in place that has the credibility, that's been there and done that. When Jason or when one of the 11 division vice presidents, you know, Diego's 10 counterparts, you know, when we're in the stores, it's not a white glove and entourage and coming through there picking them apart.
If we have an image issue or we have a sales issue, or we have a execution point that's just not where it needs to be, we'll work in the counter with them. Because somewhere all the way up to me owning all this extreme ownership, I have failed. You know, we failed to execute through people, maybe having a new leader in place that, you know, maybe has too many stores, has too bigger of a, you know, responsibility than they may should. Everything rolls up to us, and we know what they go through every day. Our job really, and the O'Reilly family always instilled this in us, that, you know, we run our company from the bottom up, meaning from the counter.
You know, from the entry-level team members, drivers that face our customers, our professional customers, more than anybody in the company, to our parts specialists, to our assistant store managers, to our store managers. You know, they don't work rolled up to me. You know, we work with them every day and making sure they have the support they need. As all of you know, we have, as an operator, I don't have a lot of excuses at O'Reilly. We're very fortunate to work for a great leadership team that understands, you know, all our strengths. As markets change, as competitors change, we've got to get better. We have to continue to get better on the supply chain front, on the omni front. In my world, we have to continue to get better on the leadership front.
you know, competitions, you know, we have great respect for our competitors. Honestly, over my, you know, 23 years, the, for lack of better way of saying it, the strong have survived and the weak have gone away. you know, I grew up in Oklahoma, deer hunting, and a big buck in the woods doesn't get big and old by being slow and stupid, you know? we have great competitors.
We, you know, when I think about AutoZone, Advance Auto Parts, NAPA, GPC, all the small competitors that we compete against in every one of our markets, a lot of them that you don't even know on the wholesale side, you know, the White Brothers in an Atlanta, the Auto-Wares in the Michigan markets, the Fast Underc ar, the Parts Authority, Eastern, all those companies similar to Bond and Bennett. You know, one market at a time add up to over 50% of the professional share in the U.S. on the professional side of the business. We, we have a tremendous, you know, opportunity there, but it all happens through people. You know, we have a great business model. We have a great supply chain.
We're very focused on omni, Brent, myself and my team working on really that vision and what that looks like, making sure that we can turn all our strengths from the past into continued tailwinds for the future. As things change, we adapt. We all have to get better in the way that we interact with team members and customers the same. Again, it all happens through people and execution of those basic fundamentals. Most of this what I'm gonna talk about here, it actually applies to both sides of our business. A lot of what is documented here came from the O'Reilly family.
Some of you may even heard Jeff Shaw tell the story that he was at a strategic planning meeting prior to my time. We were a little bit off trying to get a little bit maybe cute or fancy about how we were looking at some changes we need to make. David O'Reilly stopped the meeting and really talked about, you know, well, let's not, let's not reinvent the wheel. You know, while we're in the parts business and we're talking about a lot of great things, you know, truly we're in the customer service business. The definition of customer service has absolutely changed, you know, throughout my career, meaning that customer expectations are higher than ever. You know, team member expectations are higher than ever with our promote from within that we talked about with, you know, millennials, with Gen Z.
We have a lot of work to do to make sure that we continue to be that much better of a place to work because again, all these things happen, you know, they happen through people. Market entitlement, a lot of you heard us over the years talk about entitlement. That, that is our word for share, meaning we're entitled to 100% of the auto parts business in every one of our markets. The way that we look at that, what are we entitled to, can be summed up in 1 word in my world, and that's all. Now when we look at the way we go after share, you know, it's very strategic, you know, in a very disciplined way.
We have always performed the way we've performed through execution and keeping our eye on that entire pie, not, you know, if you were to talk to our operators, which we won't talk to you about, you know, goals and things like that, you know, we don't decide we're gonna grow, you know, 1% or 2% or whatever. You know, we really don't look at it that way.
You know, you can talk to these guys about planning and all that, but in our world, all they know is that if we're doing, you know, $2 million out of a store, you know, but AutoZone's doing $2.5 million and Advance has a $2 million store and we, you know, Worldpac is doing $2 million and White Brothers has a $2 million store on and on. The sum of that is our entitlement. You know, that's that piece of the pie. Obviously, that's tough these days, you know, when it comes to being that much better and having the things in place to make sure that we're executing on all those things. Professional parts people, you've heard us talk about friendliest parts store in town, outhustle and outservice.
Those are all things that came from Charlie O'Reilly himself that are more than just words on a piece of paper. You know, it's more about what's behind that. When we talk to our teams, what that truly means to helping our customers win, meaning making sure that on the retail side, you know, if we have a soccer mom that's in a jam and we've got to get her the right part, even if we have to go outside our network, when you see us say never say no, you know, that's a big part of what we do.
In 96, I don't remember a lot about what I was told when I was onboarded, but I remember my store manager saying that, "Brad, there's a, you know, not a lot of ways you can lose your job around here, but saying no to a customer is one of them." You know, that stuck with me throughout my time, you know, growing up with the company and still sticks with me and our management team today that, you know, we just, we never say no. You know, that becomes a bigger and bigger execution challenge as we get bigger. Again, back to the fundamentals, we wear those things out every single day.
On the professional side, a lot of those things that I just talked about, they absolutely apply to the professional side of the business, just like the retail side. As Jeff talked about, you know, our store managers, they own both sides of this business. You know, they own everything that happens in those four walls. As most of you know, the professional side of the business, that's where we came from. That's where the O'Reilly family founded our company, you know, in Missouri on independent jobbers, and then as things evolved, the professional installer. That's really our bread and butter and how our company was founded and built. It wasn't even necessarily by design that we got more and more into retail.
It's more one of those things that, hey, we have great parts availability, obviously way before my time. Great parts availability, great parts people. You know, even back in the day in the, you know, 60s and on in the 70s, a retail customer couldn't even buy from us. You know, they would go to a shop, and we would sell it to the shop out of that respect for the installer that our business was built on back then. That really carried up until the point that, you know, Auto Shack back then being AutoZone now, bigger box-type retailers that were in the Midwest, I know Tasco or Montgomery Ward, we saw an opportunity that, hey, we have great parts availability. We have great parts people. Why not, you know, sell retail?
Really, retail's always been a great way for us to not only sell retail at a better gross margin, but also support our wholesale business. I mean, retail enables us, especially as time goes on and supply chain, inventory availability, investments continue to be more and more important. You know, that retail side actually helps us fund, you know, what it takes to continue to be a better and better professional provider. As most of you know, we were really 50-50, even though we talked about the model 50-50, you know, we were pretty much 50-50 from a revenue standpoint until we bought CSK, and we didn't lose any wholesale. It's just all the fortune that we had, you know, inheriting the retail business and the retail volumes on the West Coast from CSK.
That was kind of how we ended up a little bit more retail-heavy. We've continued to get stronger and stronger when it comes to really both sides of the business as we've learned from great competitors and continue to figure out ways to do things better and better internally. A few programs we have up here. You know, we have a great team, again, promoted from within, that really understand when you talk about helping other people win when it comes to the shops and the garages, we have a lot of great competitors out there that have a lot of great programs. It's easy for us to get caught up in having programs to drive a metric or check a box on a spreadsheet where we totally focus around our programs. All our programs are built around the shop owner.
It's really not about us at that point. It's about how are we gonna help the independent garage continue to get better and grow. You know, the OE dealers do a better and better job of parts and service. The national and regional accounts, you know, continue to consolidate. The independent garage, though they're, you know, very strong, a lot of them, as they get to a third and fourth generation, you know, it's easy for them to maybe not be investing in technology or investing in making sure they have the best technicians in those bays or whatever the case may be that gets lost through generations of handoff with independent garages. It's up to us to be that consultant and make sure that everything we build around our programs here is helping them run a better business for the future.
That's why that inventory availability, you hear us kinda getting a car off the rack, meaning service levels on the professional side, that's why that's so critical is because, you know, as most of you know, the shop owners, they're only as good as the technicians that they employ. The only way those technicians are productive, and in turn make a good living, is to turn those bays, get that part fast, and turn that bay. If that doesn't happen, the better technicians are gonna go somewhere.
They're gonna go to an OE dealer, they're gonna go to a national account, or they're gonna go to another independent garage that's keeping up with those things and not waiting for a day or two for a part to get shipped in because they're trying to drive their profit on price or whatever the case may be. The best independent owners know that they've got to turn those bays and keep that technician rolling, or they roll their toolbox down the street to somebody else. That's not good for their future. Again, all this that we do is built around even to the point of understanding their labor standards, what it really means, you know, to our delivery service. Obviously, one of our culture values is safety.
You know, when we talk about delivery times, that's not about the route. I mean, the route's the route, and we're very precise when it comes to how fast we need to be for every customer in a certain geography. It's all about the efficiencies in the store. You'll see some things this afternoon that we work very hard on, that we work on every day to have those faster delivery times through really the efficiency we can have in our stores, really small inches and seconds that add up to helping that shop get the car off the rack to that soccer mom that needs to get her van back, and that's really what drives our business on the professional side. I'll end with what, you know, Jeff started with.
You know, being the dominant auto parts supplier in all our markets, this is a lot more than just, you know, chasing share or again, winning. This is a greater good behind our company that our team members buy into, that we're gonna be better for our team members and our customers than anybody else, and this being just the end result of making a difference in other people's lives. Thanks.
Thanks, Brad. You know, I love to follow Brad at these presentations. I followed him at Leadership Conference here in the winter in Dallas. People walk away with the impression of, "Man, Brad was great, and that finance guy was fast." We're gonna roll through these slides pretty quick. To echo something that Brad's too humble and down-to-earth to talk to you about, you know, an example of how O'Reilly's is different and why our stores perform better than our competitors, it was on full display yesterday. You know, we were out visiting stores, they were super busy. Brad and Jason and Diego are too humble and down-to-earth to admit that, you know, they're out there showing great leadership. The stores were busy.
When there were more customers than there were team members on the counter, you know, those 3 guys, senior executives run 500+ stores each, are on the counter waiting on customers. All right. It shows the folks that run our business grew up in the parts business. 2, hands-on leadership. 3, how every single customer is important. Those are the types of things that set O'Reilly apart. If you took a quiz, any of them on the counter, you'll be amazed that you can't step up. We'll take a few minutes on these slides, and then we'll get to Q&A. Store revenue growth. Everybody's seen this one and seen our guidance. Comparable store sales growth, able to generate positive comps in all types of environments, the profitable growth.
It's not enough to just open stores and gain business. We want to gain profitable, sustainable business, translate into earnings per share growth. So this will take a few minutes on. And this shows our cash flow profile, able to generate solid cash flow in good markets and bad markets is that attention to profitable and sustainable, through our commitment to be an investment-grade in our vendor financing program. We've been able to minimize investment in net inventory and continue to help. We invest in the business through large CapEx investment every year. If we don't have the tools, we don't have the inventory, we don't have location, we don't have the training that our team needs. We can't go out and grow that business. And then using the extra cash flow to return to shareholders via buyback.
On the next slide, use of capital. In 2011, we added the third bullet when we started to buy back stock, but we are committed to continue to invest in our existing store base so that we have the tools and the infrastructure and distribution network, inventories at our store and continue to go out and dominate the market
Two, as Jeff talked about, we're gonna be a consolidator in the industry, but we're gonna be rational in what we spend. You know, it's easy to say acquisitions, you know, have been very successful for O'Reilly, but that's because we've turned down a lot, and the ones that we have done, we put a tremendous amount of effort in. Then the third item, to the extent that we have, we have excess cash, we'll return it to shareholders via buyback, which has been a large program, notably in 2011 when we became high investment grade. I think with that, I'm gonna turn it back over. Sorry that we keep cutting in and out. I'm not sure why that is.
Thanks, everybody. Now we're going to spend the next one hour on Q&A. I have to apologize. When I got up here earlier today, I actually didn't introduce myself. My name is Mark Merz. I know most of you, so I apologize that I didn't introduce myself. This is Eric Bird. He's our Manager of external reporting and planning. Eric and I kind of head up the IR team here at O'Reilly. If you ever have any questions whatsoever, anybody here in the room or anybody who's listening outside, pick up the phone and call us, send us an email. Our job is to take care of you.
What is their job?
We just do it when we're not quiet. When we're in quiet periods, we actually help run the finance department at O'Reilly. What we're going to do, Eric's going to take that side of the room, I'm going to take this side of the room. If you just want to raise your hand, we'll bring the mic over to you, ask your question in the mic, and then we'll take it back from you. We'll just move back and forth throughout the room and try to catch everybody. Zach, it looks like you are the first one up, we'll get you and then Sydney, we'll get you next.
Hi. Zachary Fadem, Wells Fargo. Could we dig into the Do It For Me business in a little more detail? How is the size of the market divided among independents, national regional chains, municipals, jobbers, et cetera? What does your mix look like there? And given the fragmentation, maybe we could talk about how the landscape is evolving there in terms of consolidation or competitive environment. Thanks.
Zach, are you talking about the makeup of the shops versus the makeup of our DIFM competitors?
Within the Do It For Me business, just how do you pie that out?
Our competitors.
The customers.
The customers. Okay. Okay. Well, what I would say, and hopefully I'll get around to your question. The way that we've always gone to market is. It's a little bit different from some of the ways some of our competitors go to market that we respect, and not that there's a wrong or right way, there is for us. The way we've always gone to market on the professional side is that we, when we're new to a market or we're very immature early on in that market, we actually, on purpose, go after the smaller accounts. You know, there's a lot of what we call foundation accounts in a market, and that could be even, that could be a landscape company, it could be a construction company, it could be a very small used car lot.
You know, there's a lot, there's hundreds of those in most of our, you know, markets, even whether it be a rural or metro market, there's normally a couple hundred of those at least. Then you get into the independent garages that are really, you know, our bread and butter in so many ways. Then you get into the national regional accounts, and then you get into really the top-tier accounts, if you can just kind of imagine a pyramid of accounts.
We, on purpose, don't go out and swing for the fence in terms of commitment to those big ones until we know that we have our infrastructure in place, that we built a great team, that they can back it up from a service level standpoint, and that we have our DC runs, you know, our availability from the hub DC, whatever the case may be. As all those things come together, we start to, in a very disciplined way, you know, target more up the chain. Quite frankly, a lot of times what we see, especially with some of our independent competitors, is when we come to the market, they actually take some of those smaller accounts for granted, and that was really how our company was founded.
A lot of, in a lot of cases, we take that foundation out from under them, and we build our foundation. Then as we go up the pecking order, that's when consolidation, especially with some of the mom-and-pop parts stores. You know, there's To answer your question, in any given market, there's hundreds of these foundation accounts, then you get into the mid-size accounts that would be probably, I don't wanna quote a number, but a good percentage of the core of the DIFM business in that market. Then you have the national regional accounts and the biggest independent garages in town that make up the kinda the bread and butter, largest volume opportunity shops.
You know, with us, the other thing too is some of our competitors, like a NAPA, you know, being a very traditional competitor that we have tremendous amount of respect for, you know, like us, go after not only the independent garage and that car and light truck opportunity. We have offerings in our stores, hubs, DCs that where our teams go out and earn that construction business, the medium and heavy-duty business, the paint, body, and equipment business. Some of our retail competitors not so much, you know. There's also that whole other layer. I kinda went around there, but that would be my best explanation.
Helpful. Thanks.
Thanks. Simeon Gutman, Morgan Stanley. I have a question on tariffs for whoever wants to answer it. So far to date, it seems like the industry's been pretty rational passing along prices, and it looks like gross margins have been preserved. What's the chances that we don't see gross margin? I think your going assumption is that gross profit dollars maintain in the current tariff environment. Okay, maybe not. What was the chance that gross profit dollars actually accelerate, meaning demand doesn't degrade from one tariff?
What we really need to focus on is maintaining our gross margin percentage. I think that's been pretty consistent throughout the industry. That's the focus when we look at these increases. Historically, when we've seen commodity prices or changes for different lines of products, our industry has worked rather rationally. We saw that in the tariffs to date, and we expect will continue going forward as far as the extent. Greg, do you wanna?
I wanna see what his follow-up was.
The follow-up is on any experience, difference between DIY and do it for me to those different customer groups.
Help me understand. There are differences?
Yeah. Are there any sensitivity to the end customer, the do it yourself versus the mechanic who might be buying the part and passing it along?
Sure, sure. Keep in mind, most of the time, the DIFM customer is doing more repair type work where the automobile is broken, the automobile won't run, brakes, chassis, suspension, starters, whatever it takes to operate that vehicle. Those are typically nondiscretionary in nature. The DIFM customer also does oil changes, things like that, which are more discretionary in nature. What we've seen is on the DIY side of the business, you know, the discretionary component for the DIY customer, such as oil changes, things like that perhaps can be extended as they continue to see pressure either from price increases through tariff or inflation, they might extend those intervals a little bit. Most of our business is still nondiscretionary in nature. That would be more the DIFM side.
On the DIY side for the products that are just repair products, that that customer has to get that part repaired so he can make it to work the next day.
Brent, welcome to O'Reilly. Can you contrast your experience of O'Reilly's omni-channel capabilities to your past employer and contrast the market as well with one distinction being that there's a competitor out there, a couple competitors out there that offer prices that are far lower than the traditional players do, and how do you see navigating that as you approach your job? I have one follow-up question.
Michael, thanks for the question. I think when you think about this segment, especially retail, it's very project centric, it's very application centric, this is product knowledge and the project and the immediacy of need drive the auto parts business probably even more so than home improvement when I think about the comparison between the two. Home improvement, I felt like there was a lot more discretionary. Certainly commercial was a part of the business, here, it's a lot less discretionary, a lot more needs and occasion-based. The immediacy of need is much more important and much more of an opportunity as well.
I think O'Reilly's done a great job of building the supply chain, having the parts knowledge you've heard about today, to compete effectively in that arena. I think the opportunity when I think about omni here, the store is still the center of the omni-channel ecosystem like I talked about here on the slide. I think the opportunity, especially with the retail customer, is they engage us. In many cases, they had to get to a store sometimes to get all the answers they needed. I think we're doing everything we can to make that much more seamless as they engage us digitally. That's an opportunity, we're moving toward that opportunity. The prize is still the same, right? We get to say yes, we sell them the parts, we have the knowledge.
When I think about the online pure play competitors in this space, they don't have that. They don't offer that. They don't have the support. They don't have the local presence. They don't have the immediacy of need. They don't have the parts availability. I think people need a combination of both in this space. I think that's why we're very well positioned here.
Yeah. I'd like to add to that a little bit. When you compare, you noted that retail or these online competitors, you called out a couple that the price points were lower than ours. That's true when you compare national brand to national brand. They don't have the overhead, the cost structure that we have. If you go out on an application by application lookup, you're looking up a set of wiper blades for a car, you're looking up a starter for a car, you're looking up a set of brake pads for a car, what you'll find is in our proprietary brands, we're gonna have a very competitively priced product out there that competes well with those e-commerce only competitors.
My follow-up for you. You touched on the proprietary brands, and I'm gonna extend it out a little bit, and to follow up on the tariff question. Since you last reported. List fours come into play. Can you quantify your overall exposure to Lists one through three, and then how much more exposure in terms of your total receipts do you have, now that List four has come into play? Are you in a more difficult position because 45% of your sales, and presumably a lot of those are coming from China, are, you know, direct imports?
Well, a couple of things.
Thank you.
A couple of things. First, direct imports, we said somewhere between 30% and 40% are coming from China, so it's not quite 100% of what you would see there. That's factoring in some of that's component level, some of that's finished product level. I'm not gonna quantify the numbers around what the impact was to the first, you know, three rounds. Really, we call it four rounds because there were a couple of dates in the 2nd round that impacted us. What I'll tell you is, our merchant team has been looking at this tariff document's a huge document. There's hundreds and thousands of tariff codes, HTS codes, HTS codes rather out there, and our product managers and merchants have been wading through that analyzing what the impact will be for round four.
There's a lot of consumer electronics in there, and I think it's gonna impact other markets, other segments more than it will ours. The components that we're seeing are things like nuts and bolts, fasteners, some AC, some air conditioning, battery chargers, some wire, just really low. It's gonna be a much less of an impact, Michael, on round 4 than we've seen in the prior rounds.
Okay.
Thank you. Chris with JPMorgan. Jumping back to the demand elasticity question, you did a four comp last year with about a point less on pricing, and you're going to do a four comp this year, and you're guiding to a four comp this year. What's the difference, I guess, year-to-year? 'Cause you're losing some volume somewhere. Is it demand elasticity? Is it the weather just hasn't played out as well as it played out, you know, in 2018? How do you assess that difference?
Yeah, I'll start that and then see if Brad or Tom wants to add on. I would say the biggest driver when you look at this year versus last year, you know, the first two quarters would be weather. You know, we had, especially in the second quarter, you know, We hate talking about weather.
We love talking about weather.
Well, we hate talking about weather because at the end of the day, weather does impact our business. You know, weather in the winter defines how much breakage there is and what the spring's gonna be. That played out well for us. Weather in the spring and the timing of those repairs, kinda defined when that, especially the DIY repair cycles come in. You know, DIFM was stronger because it doesn't matter if it's raining outside if you can get your car to a shop. If you're doing the repairs yourself and it's raining or cool almost every weekend, I think some of those repairs have been deferred. I think weather's a major contributor there. Tom, would you like to add to that?
We're below the midpoint of our guidance thus far this year. To Greg's point, you know, weather items are the ones when we look at our performance by category are the reason for that. Your question on four last year, four this year, you know, that's still the midpoint of our guide. What's the difference if you're picking up more pricing? I think we were pretty candid on the fourth quarter call when we set our guidance is that, you know, our low-end consumer on the DIY side is being pressured, right? Consumer counts on the DIY side, you know, we started to see some inflationary events, second quarter last year and put some pressure on them.
With the new tariffs, and the other cost inputs and the rising prices, we knew there was gonna be pressure on DIY, on DIY count. You know, one of the biggest count items is changing oil, right? That's also the most elastic items we do. As people get stretched, they're gonna continue to spread out those oil changes. It impacts our customer count. Continue to develop on the hard part side, professional side, you know, it's impact and when you look back on it really for four years, but those are starting to mature out of the side, which is DIY side's kind of straddled, but more into the DIY side, which is also putting some pressure on DIY counts. I think, you know, we've been pretty, you know, straightforward on that answer, and it continues to be the same.
The question is, will the next round of tariffs put more pressure on those DIY customers? you know, we see in aggregate at the beginning of the year, the tariffs and the cost increases as a net positive where we'd pick up more average ticket than we'd have pressure on the DIY counts. I think, you know, that kinda is how it played out the first half of the year, ex-weather. you know, when we look at the back half of the year, we're expecting that that pressure is gonna fully offset the rising prices.
When we look long term, you know, our industry's been quite unusual in the fact that we haven't had the same SKU inflation for five or six or seven years as we've all generated count gross margin dollars by reducing acquisition costs. Getting back to an environment of, you know, 1% to 1.5% top-line tailwinds, from an average ticket increase and keeping gross profits the same, you know, is something we think you'll see in our industry to help generate count gross margin dollars going forward, which is, you know, more of a standard retail environment.
As a follow-up to that, I guess your experience in terms of the volume impact on the DIY side, has it been as you've expected and consistent all year, and any early signs of this next level of tariff impact on volumes?
You know, we tell you that a lot of the commodity type items and seasonal items are big DIY items, you know, there's been more pressure there 'cause it hasn't been driven by the weather. You know, when you look at spring cleanup, when you look at A/C season, a lot of volume in the DIY side when the weather cooperates. That's in that mix. On the thus far that we talked about on the call that the price changes kind of rolled through over time, and things that are on the water don't count. We work things through our supply chain. You know, we're not gonna comment on the current quarter, but it's gonna come through during the quarter. It's not all hitting at one time.
Thank you.
Go ahead, Mike.
I just had two questions. One was for Greg and then one for Tom. You all had alluded to, on the DIY side, maybe coming in a little bit below expectations, you know, recently. Curious to get your updated thinking about what is, like, a normal DIY comp that we should think about, you know, for Team O'Reilly, and how does that play into a long-term normal comp in aggregate? Just had a follow-up for Tom.
Yeah. You know, we said for a number of quarters, a number of years, that we see more growth going forward on the DIFM side. Vehicles are more complex. The price point of repair parts is growing, we expect that side to grow more quickly than the DIY side. I would say as far as guidance for the DIY side of the business, we'd say somewhere 1 to 3 comp on that side of the business.
Okay. Then if I could, just for Tom, just, you know, several years ago, you all had a 19.8% EBIT margin. Just wanted to see if there's any way to think about that moving forward from the current 19-ish levels. Is it more likely to go higher or lower? What are some of the key drivers that we should keep in mind, you know, that could either cause it to go higher or lower?
Okay. We kind of talked about growing comp gross margin dollars over the last five or six years in our industry by reducing acquisition costs and gross margin percentages went up, all right? Our operating profits almost across the industry have increased. What we would tell you is that that is not the answer. That's the result, all right? 'Cause our job up here is to generate increasing and sustainable operating profit dollar growth. When we start talking about same SKU inflation helping drive the top line and keeping the gross margin percentage the same to offset rising costs, you're gonna see some pressure on the percentage, but continue to generate more operating profit dollars, and that's really the focus for us.
We're not gonna give guidance beyond this year, but when we look at how is our business performing, we look at how are we doing on operating profit dollar growth, how are we doing on getting a good return on our shareholders' invested capital. And different economic environments will present different challenges and opportunities to grow, improve those numbers that may not result in a percentage that you look at and go, "The percentage went up." You know, when we look at when we bought CSK, for example, you know, obviously return on invested capital went down and our operating profits went down because they weren't as profitable as an entity as O'Reilly pre-CSK, but you see we were able to do with that long term.
We're gonna make those decisions about how to generate better operating profit dollar growth, return on invested capital, and it may give you a different percentage.
To go back to private label for a second, can you talk about the penetration of private label between DIY and DIFM, and if you're seeing a more rapid adoption by DIFM for private label? Does your acquisition strategy include buying brands?
I'll take that one. Yeah. First, I'll answer your last question first. Yes, brands are still very important to us. Brands are still very important to a lot of our DIFM customers. You know, some of the national brands have been around, like I said, Wix and Gates, for example. We've sold those brands since 1957, since we opened our doors, and they've been great partners for us. We still value a lot of national brands. A lot of our DIFM customers demand national brands. If you look back 12, 15 years ago, most of our proprietary brand sales probably skewed towards the DIY side of our business. Again, they were more entry-level in nature. Today, we've broadened that offering for proprietary brands to where they are both entry-level and premium brands, and our DIFM customers have accepted those.
There, there are a lot of instances where we have both offerings. We'll have a national brand and a proprietary brand that would be probably more good, better, more entry level. Then there are categories where we don't have a national brand at all. A national company like an East Penn Manufacturing, for example, would be a supplier that would make some of our batteries. JCI would make some of our batteries as well. That's an example where you've got a national company, a national supplier that's manufacturing private label for us, proprietary brands, and we sell primarily proprietary brands in that category.
One thing I'd like to add, I guess we like to do things by committee at O'Reilly, and then that's how the family ran and that's how we run now. We have a product review board that is people from across the industry, or across the organization from all the different disciplines, and we talk about how we're gonna manage our products and our brands.
One of the things I think that we wanna make sure we make a clear point on is when we look at rolling out a brand, we look at whether it's a national name brand or we're gonna develop a house brand. We wanna know what position that brand is gonna be from the start, right? When we look at national brands, we're gonna roll 'em out as premium products. Is it the right one for us to sell? We have a lot of discussion before we change. When we look at house brands, we say, "What are we gonna position this brand to do?" If we look at BrakeBest, for example, BrakeBest is positioned to be a good product where we deliver OE specs at the lowest possible price, and we're gonna be focused on the DIY consumer there, okay?
When we look at Murray, which is traditionally a national brand we've acquired, when we rolled out those products, we said to ourselves, "This is gonna be a brand and an offering that is directed at the installer." It started at a price point and a quality point that was a national name brand. Where do you position the quality and price from the start of the brand is very important, right? We would have a difficult time taking BrakeBest and saying, "Well, you know, that's now our installer-grade product." Where, you know, if you really want the installer-grade product, it's ThermoQuiet . You know, we have some different grades at BrakeBest.
We get into better. It's how you position those brands, both price point and the quality of the product that's in it and the service that's behind them.
Hi, Seth Basham with Wedbush. Thanks for all the color, Brent, on the omni-channel initiatives. Just a few follow-up questions there. In the past, you've quantified some of the metrics like the growth rate online, the mix of sales that are coming online that are being picked up in the store, the percentage of the country that's now available to get free next-day delivery. If you could provide an update on those, that would be helpful.
Yeah. We don't really break down the percent of our business that's penetrated online from a retail perspective. What I can tell you, Seth, is we're continuing to see, as we've enabled some of the fulfillment on the back end and really taken a deeper look at our parcel availability and speed to market of getting that part to the customer that wants a parcel fulfillment, we're continuing to shorten those lead times down to percentages that are, you know, half the time at next-day rates, pretty much. We're still looking at those numbers and looking at the ways that we can better open up our supply chain for that.
The thing that I would also tell you we're looking at, I mentioned the rate shopping software that we're putting in on the back end to make our parcel more efficient. Those are things that we're looking at. We wanna make sure the consumer sees the value of what's available at Next Day Ground. We also have expedited shipping that we're gonna be offering as well. The other thing we're also hear loud and clear from our customers is they won't ship to store, and ship to store is something also that we're enabling from our DCs later this year. We're looking at all those different aspects of fulfillment through the digital channel.
When you think about firstcallonline.com, we've talked a lot about, a lot of that's coming again through our world-class supply chain, shotgun through a store out to the shop, and we give time definite availability on that. We're working to do more of that on the retail side as well from a parcel and/or ship to store fulfillment. We're not ready to talk about any percentages today, other than to let you guys know that we're looking at that hard, and we're gonna continue to make strides and improvement there.
Okay. Last related question there is just on promotional environment online. You guys have done a lot of testings, testing of different promotions.
Yep.
What have you learned, that's most effective?
We continue to look at that too. That space in the automotive aftermarket, you know, again, we're surrounded in a space where a lot of our competitors run online-only offers, therefore we run online-only offers. We continue to always rationalize those offers. Really our position on that is we operate in a promotional environment. We're gonna always assess that environment, and we're gonna be competitive. On the retail side, we're gonna be competitive on the professional side, and we'll adjust our promotions as necessary to do that. We're always looking at the environment.
Good morning, Curtis Nagle, Bank of America. I guess how should we think about the intensity of parts proliferation over the coming years relative to, say, the past five or 10 years? Do you think this gets better? Do you think it gets worse? How does that position you competitively, presumably, you know, at an advantage relative to your national and your smaller competitors?
Yeah. I obviously don't have a crystal ball there, but what I would tell you is the expectation is that from a parts proliferation and SKU growth standpoint, it would continue to grow. I mean, vehicles are getting more complex. You know, I talk a lot about historical numbers, but, you know, a vehicle 10 years ago would have a fraction of the number of sensors that a new vehicle has. You could be talking about crash avoidance. You're talking about all the sensors has to operate everything. You know, 15 years ago, when you drove your vehicle and you pressed down the accelerator pedal, there was a cable that connected to the carburetor that controlled the fuel-air mixture going into the engine, for example. Today, that doesn't exist.
Today, it's an electronic sensor on the pedal that sends an electronic signal to the fuel injection system to do that. These vehicles are getting, 1, they're more efficient by doing those things.
It also adds a tremendous number of sensors and electronic components, and I would expect that to continue. As far as our competitors, you know, as Brad said, we respect our competitors a great deal. All our competitors are facing the same challenges. One of the advantages that we have is what I spoke to, our inventory deployment strategy across 27, soon to be 28 DCs, being able to get those parts to market very quickly. I know that our national competitors will be trying to do the same things.
Yeah, I'm just gonna grab those, Greg, and I would say about that, is that as the parts proliferation, that as cars stay on the road longer, you're stocking those parts longer in the supply chain. One of the things that I think is lost at times, maybe for sure on the from the street side of things, is that we're the only one of our competitors that place in these facilities that have 150, 160, 170,000 SKUs.
You know, we spend, you know, quite a bit of money and capital putting in these DCs that are in the metro markets, where, you know, a lot of our competition historically has put their distribution in locations that are in rural markets where they get free land and tax breaks and a lot of those things.
While NAPA and the two-step independent competitors will have their warehouse with maybe 100,000 SKUs or whatever the case may be in the metro market, I think sometimes with us and our public competitors, there's a little confusion about the different levels of hubs and the fact that, you know, we really in these large metro markets have always had that advantage, and we have a lot of things in place to continue to make sure that we have that part closest to the customer.
Same goes for any e-tailers that are, you know, trying to get in the space, where we have just decades of science and the way that we've built these inventories over the years, not only having the part closest to the customer on the professional side, but as last mile and retail changes, you know, we continue to do things to have that part close from that aspect too, so that's gonna be really important moving forward.
All right. Daniel Imbro from Stephens. I had a follow-up on competition, then a second one for Tom. Just on the competitive landscape, obviously, your peers have improved both on DIY and DIFM. Are we seeing on a field level any change to your entitlement or market share yet? Or are you all still taking share from some of those smaller guys? How much longer can that continue to where you all can grow without cannibalizing each other?
Yeah, I'll take that one. There again, it's a market-by-market case. I mean, every market is different. You know, what we experience in Denver is different than what we experience in Houston because of market maturity. You know, as Brad talked about earlier, I mean, on the DIFM side, it's a highly fragmented market. I mean, the traditional players still control over 50% of the market. Now, as Brad said, I mean, those, the ones that are left, they're better operators. They're stronger. They're doing a lot of things right. You know, our focus every day is to be the, you know, best operator in whatever market we're in.
You know, we talk about macro and big picture, but I mean, if you talk to our ISSes or our store managers or our district managers, all that matters to them is that three-mile radius around their store. Then their goal is to be the best operator, the best parts store in that market to the professional customers and the DIY customers. That's what they're focused on every day is out there providing the best possible service one customer at a time, both retail and professional.
Tom, just to follow up earlier on your DIY and inflation comment. You talked about on the call, this is what you see in normal cycles. Last time we saw this, we were at a much higher level of actual retail inflation. Has something changed on the DIY side where that consumer is more sensitive than they used to be, where a 2% inflation is too much now?
Well, what we talked about was, the cycle was an answer to a question from someone here of when is O'Reilly, is O'Reilly ever gonna count 6% again? That was the question.
Thanks. Yeah.
The answer to the question was, the professional side of our business tends to be more consistent, and the DIY side of the business is more cyclical. Great years for our industry are really good DIY years. Softer years in our industry are softer DIY years. You know, there's a lot of combination of miles driven, employment growth, in wages, gas prices, weather that drive a lot of volatility in the DIY side of the business because between one and three, kind of on average or, you know, zero to five, you know, at some point, isn't a huge variation.
Those things kind of line up to drive more cyclical natures to the DIY side of the business. That was what the question was answering. That's what the answer was to the question.
Thanks. Charles Wittmann from Sterling Capital Management. I'd just like to ask a strategic question, getting back to the pure play online competitors. I just want to know, if you looked out three to five years, how do you see that playing out?
I'll start. These guys may wanna jump in. You know, I think there's gonna be online pure play competitors in the space. Some are better than others. I think some will be here three to five years from now, I think some won't. I think they're gonna struggle to offer what we have the ability to offer when you think about our local
availability, the parts knowledge, and the footprint that we have that serves, you know, serves us domestically. You know, I think they're gonna try to compete on price, but I think the customer's gonna have a need that goes beyond price in many cases. As Greg said earlier, when Michael asked the question, we're very competitive on the good better in terms of with our proprietary brands to compete there. As we continue to get better, especially on the B2B side, or I'm sorry, on the B2C side, with our omni-channel offering and engaging customers as they engage digitally before they come to the store, we feel like we're in a very good position to compete with any and all competitors, both online pure plays as well as brick-and-mortar competitors.
A couple of things that I would add to that just from a sheer operations perspective is, you know, one thing I think is lost at times as well is, in 96, the year I started, one of the first leaders I met from Springfield O'Reilly had 200 stores, was coming to my hometown where I worked in a store to install an old bubble terminal in one of our shops. You know, us and GPC being NAPA, we, as far as the larger companies back then, we really led the charge on what B2B looked like in the automotive aftermarket. We built our professional business by being in front of that and figuring out ways to help shops and our store teams be more productive.
I would just say that, again, from an operator's perspective, competition's great. You know, the years of my career that, you know, we were having 6% comps, we don't learn near as much as we do when, you know, things are a little tough, you know, whatever the case may be. You know, my job, no matter what's going on, is to make sure that we're continuing to get better. We're learning from a leadership standpoint, from an Omni standpoint. I would just continue to say that like we've led in with B2B business with First Call Online and partnering with our shops, you know, some of that may put pressure on some of the weaker, you know, brick-and-mortar competitors as time goes on, but it's not gonna be one of us.
I mean, we know where our focus needs to be around customer experience and Brent leading the charge from an omni standpoint and making sure that we're having that seamless transaction and really taking all the things that we built our company on, professional parts people, trusted advice, great brands, all the things that we've talked about, you know, doing that seamless across all channels. My opinion is, and obviously I'm biased, is that we're positioned as good as anybody to continue to be a better and better omni supplier.
Hi, thanks for taking my question. I have two. In previous years or the last couple years, it sounded as if you had shown more interest or interest in entering international markets. I know there was a quick comment on it today. Can you just talk about any thoughts around that, and any changes you might might have be thinking at this point given your research?
Yeah, I'll take that. Really nothing's changed. You know, we started talking about international three or four years ago. International markets are much more difficult to enter than new markets within the U.S. We've learned a lot. You know, we've talked about the markets that we're more likely to enter first being Mexico, Canada, Caribbean Islands, as opposed to going to Europe or Asia first. What I would tell you is we are looking strategically at all those markets. We're looking at whether we wanna enter those markets greenfield or through strategic acquisitions. You know, we're learning. We don't have anything to announce to you today, but we continue to learn, and we continue to push, and our expectation is to be an international company in the not too distant future.
A second question just regarding the retail side of the business. I'm a big fan of chat option. Do you see the chat option as a substitute for going into the store and asking your, you know, very experienced staff a question?
What we've seen so far with chat is that customers in this space need our professional parts people and their knowledge. What's been great about it is some of those chats have ended up in the customer taking a trip to the store. Some of those chats have ended in the customer transacting with us online for parcel fulfillment. I would tell you the chat has opened up the window to the brand and given customers that virtual pipeline into our professional parts people and their parts knowledge. It's helping them no matter which channel they choose to transact in. The more we've enabled it, the more customers have engaged with it, which is really encouraging to us because we know there's a market for it, and we're working to do more with that opportunity.
The other thing I would say to that is when I think about, you know, a DIY customer or someone that is gonna shop multi-channels, there's still so much of that need that just can't happen unless they're in the store, obviously, the timing being right for them for all our in-store services. You know, I hit a lot of our stores these days, and I can't really visit a store that we're not out in the parking lot truly helping somebody figure out what they have going on, whether it be, you know, a fuse, whether it be testing a battery, whether it be helping them test an alternator, whether it be really in a lot of our in-store services.
You know, another big in-store service that we provide is, you know, basically free rental tools. Those aren't always just hand tools. They're specialty tools. If somebody is doing a brake job and they don't have the right socket, you know, or whatever the case may be, a lot of those in-store services play into that too. I would actually look at it, you know, what you asked the opposite. You know, when I look across our 5,300 stores and, you know, almost 70,000 team members that are in those locations, the opportunity for chat for us is actually the opposite, meaning crowdsourcing opportunities and opportunities to take all these professional parts people that we have across the country and really help them from a lot of different angles across all channels.
We may have somebody in the store that, you know, is in North Carolina that is loves VWs and has a lot of old VWs and really knows them inside and out. We have that opportunity to help that customer that whether it be online, whether it be our customer satisfaction department, chatting with somebody or whatever the case may be. Operationally, we're working with Brent and his team with a lot of the initiatives that we're talking about to make sure we're thinking about that globally and how that impacts the stores.
Michael Lasser again from UBS. Tom, as you, We still have 10 minutes for the Q&A session. As you plan your business for 2020, are you still expecting SG&A per store to grow in the 2.5% range? A follow-up. We're all so accustomed to see O'Reilly vastly outperform its competitors in terms of same-store sales growth and other financial metrics. In the last few years, that gap has narrowed. Is that because your competitors, your big competitors have gotten better? Is it more because the industry has gotten more consolidated, and so there's just less share for O'Reilly to take in some of those fragmented areas? Thank you.
We're not gonna give 2020 guidance. What I would tell you is that it doesn't look like wage growth is gonna cool off anytime soon, outside of the merchandise that we pay. To the extent that we continue to see this trend of elevated wage growth, we'll see elevated SG&A. I'll let these gentlemen answer on the question on the comp gap, in some of the performance metrics and what we're seeing in the market. I also there's a lot of things that go into comps. There's the timing, there's the regional, there's the two-year stack, there's the three-year stack. You know, the best way to put up a good comp in a quarter is to put up a really bad comp the quarter, the previous year.
As far as performance, vis-a-vis our competitor, I'll let these gentlemen answer.
I'll just say a couple of things. You, Tom hit on most of it. You know, you gotta look at the timing of when we're announcing. That's a big part, especially as much seasonality we've had, as much weather as we've had here the first part of this year. I mean, we've had weeks that were very, very much stronger than the prior two weeks, for example. The timing of when we all release our results is impacted by those weather patterns and the timing of those releases. Tom's other point, which I can't help but reiterate, is you've obviously got to look beyond one year. Look at what we're comparing against versus what some of our competitors are comparing against from a stack standpoint.
Yeah, the only thing I would add, Michael. Yeah. We, as Brad said, we obviously focus on all our competitors, and we have the utmost respect for all our competitors in every market. There's a lot of talk about our publicly traded peers, but they're, again, there's a lot of good traditional operators in many of these bigger metro, even semi-metro markets that we compete against. And, you know, no doubt, we'd be kidding ourselves if we didn't think that everybody was getting tougher. To survive, you've got to get better. If you don't get better, get sharper, execute better, you're gonna go away.
I mean, everybody is focused on being a better operator, and, you know, we focus on it one customer in one market at a time and focused on being the best operator in each one of those markets.
Thanks. It's Michael Montani from Evercore. Just wanted to follow up on the store component for a moment. Is there a certain number of stores where you feel there would be saturation? Is that more like 6,000 or 7,000 stores? Is 200 stores per year domestically still the right way to think about things for the next few years?
Well, really, our guidance hasn't changed a lot there, Mike. You know, we're saying, looking at what our competitors are, looking at the markets, looking out over the next 10 years, we still think somewhere between 6,000, 6,500 stores is a good target number of U.S. domestic stores. Then, of course, outside the U.S. borders, there's opportunities as well. As far as like Tom says, we're not guiding to store count for 2020 today, but I would expect to see fairly consistent store growth plans exclusive of acquisitions. Like in the past, if we have a major acquisition, we may back that number off. Other than that, I would expect similar growth.
The other thing I would say to that is that, you know, the gap in footprint that we have, you know, between basically Northern Virginia and up to, you know, the Boston market, where we kinda skipped over some markets because of the, you know, acquisition of VIP's parts business and then Bond and installing the distribution center in Boston that you've been to. You know, generally speaking, when you look at that population and you look at that vehicle count, me as an operator, I mean, that's almost a third of the population of the United States.
We have a tremendous opportunity in that footprint from what we know from a share standpoint and our opportunities there, what we've learned in New England. We have a great leadership team, you know, that kinda comes in from the Mid-Atlantic and down from New England that are ready to, you know, tackle those markets. Obviously, that all comes chicken or the egg with distribution and, you know, all those plans. That gap in footprint has tremendous opportunities on both sides of the business. It has more opportunities with national and regional accounts.
You know, we've always sometimes made the decision to not be as aggressive after some of the national accounts because we really can't commit to servicing them by store in a way that some of our competitors, you know, NAPA Auto Parts, AutoZone, Advance Auto Parts, you know, can do so being, you know, having such density in that part of the country. That last part we have is really an important part for us.
Okay. A follow-up on market share in the current environment. Can you tell us what your market share is in some of your most mature markets outside of the home market? In explaining this year's, you know, lower end of the range comp, is there any rhyme or reason to some markets where you have the most market share growing slower, or has it been just a weather story and proportional to your across the country that way?
I start with that, Simeon. From what we've seen looking at our regional, you know, district regional, divisional performance so far this year, as we've talked about on the calls, it really is a weather story. It's just been where we've had the cold and snowy weather or the rainy weather, we just haven't performed as well as we would have, especially on the DIY side of the business. You know, as far as the market share, you know, obviously, in the Midwest, we've been the longest. We probably have markets where, you know, we truly are a dominant supplier. You know, we own the majority of that market. Markets where we're new, West Coast, Florida, the Northeast, you know, we don't have as much share.
You know, we see the opportunity to continue to grow that share, and yet you grow it, you know, one customer at a time. You know, we always evaluate business, you know, customers to understand if it's gonna be good business for both of us, not just good business for them, meaning profitability. I mean, some customers, you know, it's all about the price, and they want the best price, the biggest rebate. You know, sometimes that just doesn't work for us to wanna be a first call with that type customer, and we're much happier being a strong second call and filling in and win that business over time with just good old solid service and relationships. Yeah.
What else I'd say, Simeon, when you look at our most mature markets, you know, my history with the company, you know, starting out in Oklahoma and then going to Texas with Hi-Lo and then going out east where I spent the majority of, you know, my career being based out of Atlanta and being involved with our expansion out east and other acquisitions. I mean, me coming back to the old part of the company, I think most everybody in the room, while I can't speak directly to, you'd be surprised, you know, even in our most mature markets, how much share we still have out there, you know, on really both sides of the business.
I mean, Springfield, Missouri, where, you know, we've been since 57, you know, we have tough two-steppers, you know, right there in town that are tough competitors. You know, AutoZone is their, Advance isn't and but AutoZone came in that market and does a great job, and they're a formidable competitor. In the oldest part of the company, specifically, you know, where we may not have as much DIFM opportunity, you know, we're still, you know, we were behind, you know, Zone specifically. We have a ton of respect for the retailer that they are and the job they do. A lot of the markets in the old part of the company, you know, where, you know, we have some stores that are 20, 30 years old.
While we're prideful and feel like we have a great knowledgeable team, maybe we haven't done the best job with image and appearance, even though a lot of the hardcore DIY customers may know our team and shop us, we may not be quite as inviting and be open to making sure that our image and appearance is truly grand opening ready. Really, I can't, when Jeff talked about the markets where we truly dominate, I mean, I can literally count on one hand, even in our oldest division, the markets where we're truly the only parts store in town. I mean, most of our mature markets, I mean, there's an AutoZone, there's an Advance, and/or, Carquest. There's, you know, one or two independents, as you know.
We still have a tremendous opportunity for share, you know, even in the oldest part of the company, and that just goes up, you know, in and around all the things on the East and West Coast.
Okay. Well, that concludes the time that we've had for our Q&A and our prepared comments. I'd like to thank everyone who dialed in and listened on the webcast for joining us today. If you have any follow-up questions, again, feel free to reach out to me, Mark Merz, or Eric Bird, and we'll be more than happy to get those answered. Thank you for everyone for coming today. If everyone here in the room could just stay seated for just 1 minute.