2007 Dynamic Dozen Honoree: O'Reilly Automotive

The executives at O’Reilly Automotive Inc. are talking in billions these days.

After hitting a $2 billion sales goal in 2005 and recording $2.28 billion in 2006 sales, executives are looking to sell $2 billion more by the end of 2010.

The lofty goal is on the minds of co-presidents Greg Henslee and Ted Wise.

“Everybody says the first million is the hardest,” said Henslee, who also acts as CEO. “In our case, the first billion was pretty hard.”

The second billion dollars sold in 2005 helped push the Springfield-based auto parts retailer to No. 5 in Springfield Business Journal’s 2007 Dynamic Dozen. O’Reilly’s revenues have increased 34 percent since 2004.

The publicly traded company (Nasdaq: ORLY) also held the No. 5 spot on the 2005 Dynamic Dozen.

Growth vehicles

The plan of attack to double revenues in four years is multipronged.

“The primary vehicle will be our organic store growth,” said Wise, also O’Reilly’s chief operating officer.

O’Reilly plans to open about 195 stores this year, in line with its goal of growing square footage at a rate of about 12 percent a year. The company has averaged 177 new O’Reilly stores a year since 2004, and there were 1,640 stores at the end of 2006.

“We’ll need a little help more than likely,” Wise added, pointing to a major acquisition as the second growth vehicle. “We’re always looking for an acquisition.”

For instance, the 2005 goal was aided by an acquisition of Minneapolis-based Midwest Auto Parts, a Minneapolis chain of 71 stores. Other growth spurts can be partly attributed to purchases – Mid-State Automotive in 2001 and Hi/Lo Auto in 1998.

O’Reilly also must hit its comparable store sales guidance, typically between 4 percent and 6 percent, the executives said. By contrast, 2006 was a soft year at 3.3 percent growth in comparable store sales.

“While 3.3 percent led our industry in comp store sales growth, it’s a little below our historical average,” Henslee said, noting that 2005 comparable store sales increased 7.5 percent and 2004 increased 6.8 percent.

Talk of the town

By design, there should be much hype around the stores this year. This is a special time as O’Reilly is celebrating its 50th anniversary in business.

The celebration kicked off in mid-February at O’Reilly’s annual managers’ conference in Dallas, where O’Reilly family members and corporate executives met with 2,200 store, district and regional managers to review performance, discuss goals and rally around this historic year.

O’Reilly officials have gone all-out, commissioning a 1957 Chevrolet built by Boyd Coddington of “American Hot Rod” and appropriately named The Chubster after Chub O’Reilly, who co-founded the company in December 1957. Chub O’Reilly died in 2005.

The classic car will be showcased at events throughout the year, and stores will sell raffle tickets for a year-end giveaway.

Raffle profits will go to United Way, Henslee said.

“With respect to Chub and the generous and caring personality that he had, we’re going to make the donation on his behalf,” Henslee said.

Other store promotions and sales and Team O’Reilly days throughout the year will be centered around the anniversary, Henslee added.

O’Reilly spends about 1.4 percent of annual revenues on advertising and marketing. In 2006, that equated to $35 million.

Already known for sponsoring local and national motorsports events, O’Reilly is growing its brand awareness in the athletics sector.

Perhaps its biggest athletics agreement is with Texas Tech University and basketball coach Bobby Knight. What started with O’Reilly as sponsor of Knight’s weekly TV show has evolved into the well-known coach wearing O’Reilly’s green clover logo on his coaching sweaters. The logo also appears on the Texas Tech arena floor.

“We were just at the right place at the right time with Bobby Knight,” Wise said, noting that Texas is a big market, including the five stores in the school’s hometown of Lubbock.

“He was the first coach that ever wore somebody else’s logo ...,” Wise said. “He was looking for a way to express himself.”

O’Reilly was able to parlay that into national TV exposure when Knight and Texas Tech last year launched the ESPN original show “Knight School.” The company also has sponsored ESPNU’s Bracketbusters college basketball lineup and recently reached a deal with University of New Orleans for naming rights on the school’s arena floor.

“It’s just a balanced approach,” Wise said, adding that marketing efforts also are made on the local level, including the growing Hispanic sector.

“We look for a lot of grassroots between the local tracks, the local fairs, car shows and festivals.”

Information accurate at the time of the honor.[[In-content Ad]]