Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the geographic performance since the beginning of February and its correlation with the arrival of spring?
A: (Brad W. Beckham, CEO) - In January, harsh winter weather positively impacted demand in true winter markets. February normalized early but was impacted by delays in tax refunds, affecting business volatility. Unfavorably cool and wet weather in March across many markets led to performance below expectations. The DIY business was particularly affected by weather conditions, impacting customers' ability to work on their vehicles.
Q: In markets where spring has arrived, have the comps been consistent with the 3% to 5% outlook for the quarters in the year?
A: (Jeremy Adam Fletcher, CFO) - The business performance has not shown consistent and sustained improvement due to ongoing choppiness. Areas with more volatility are particularly impacted, and the shifting timing of tax refunds has also contributed to inconsistent weekly performance.
Q: Are you seeing any evidence of deferral in bigger ticket repairs or maintenance like oil changes?
A: (Brad W. Beckham, CEO) - No significant changes in consumer behavior regarding essential maintenance and repairs have been observed. Categories like truck and towing accessories have seen some pressure, which could be weather-related. The company continues to see strong performance in nondiscretionary, needs-based categories.
Q: How is SG&A per store growth expected to moderate through the year despite expected acceleration in comps?
A: (Brent G. Kirby, President) - The primary driver of SG&A per store is store payroll, managed in response to market demand. Planned investment depreciation also impacts SG&A growth. The company anticipates a moderation in SG&A growth as it moves through the year, reflecting a comparison against 2023 investments.
Q: With the DIY segment showing softness in discretionary categories, is this a change in trend?
A: (Jeremy Adam Fletcher, CFO) - The first quarter often shows volatility in discretionary categories, influenced by tax refund timing and weather. While there is some pressure in these categories, it is not viewed as a significant change in consumer behavior. Core categories related to vehicle maintenance and repair continue to perform well.
Q: What is the potential size of your business in Mexico, considering the current store count and market conditions?
A: (Brad W. Beckham, CEO) - Mexico presents a significant growth opportunity due to its highly fragmented market and older vehicle age. The company is optimistic about its expansion in Mexico, leveraging its distribution network and team to capture a larger market share. The exact size or store count target in Mexico over time was not specified, but the market is viewed as a key growth area.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
