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O’Reilly Automotive Tumbles Most Since IPO in 1993

O’Reilly Automotive Inc. had its biggest ever decline after saying sales growth was slower than expected and second-quarter profit will be on the lower end of the company’s forecast range.

O’Reilly dropped 14 percent to $82.61 at the close in New York, for the steepest decline since its initial public offering in April 1993. The retailer of auto parts, tools and accessories had risen 21 percent this year through yesterday.

While comparable-store sales improved in May after a slow start in April, in June they fell below expectations, and same-store sales for the second quarter ending this month may increase as much as 2.5 percent, Springfield, Missouri-based O’Reilly said. That compared with the earlier forecast of as much as 5 percent.

“The announcement overall is rather surprising but seems to reflect negative overhang from the abnormally warm winter that put less wear and tear on vehicles,” Peter Keith, a New York-based analyst for Piper Jaffray & Co., wrote in a note to clients. He rates O’Reilly overweight, the equivalent of buy.

Piper Jaffray is maintaining its rating on O’Reilly because of the company’s “strong positioning” in commercial sales and “healthy” gross margins, Keith said.

Profit for the second quarter will be on the lower end of the range of $1.13 to $1.17 a share, according to a statement released yesterday after the close. That compared with an average estimate of $1.19, according to data compiled by Bloomberg.

O’Reilly plans to release its second-quarter results on July 25.

Shares of other auto retailers also fell. AutoZone Inc. dropped 4.7 percent to $359, while Advance Auto Parts Inc. declined 0.4 percent to $65.59.

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