stockrowWhat it does
O’Reilly Automotive is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories. The aftermarket serves vehicles already on the road: O’Reilly sells replacement and maintenance products to people working on their own vehicles and to professional repair businesses. The company was founded in 1957, is headquartered in Springfield and is led by Chief Executive Officer Brad Beckham.
Its products range from batteries, brakes, alternators and fuel pumps to oil, filters, wiper blades and vehicle accessories. It carries both new and remanufactured parts, as well as products for domestic and imported automobiles, vans and trucks. Customers can choose among products at different quality and price levels, including national brands and O’Reilly’s own labels.
Stores also help customers identify and obtain parts. Services include battery testing, replacement of batteries, wipers and bulbs, check-engine-light code extraction, a loaner tool program and referrals to local repair shops. Customers can return used oil, oil filters and batteries for recycling at designated locations.
O’Reilly connects its stores to distribution centers and larger hub stores that hold additional inventory. That network gives stores access to parts they do not carry on their own shelves. Customers can also research and order products online, with pickup or delivery options. Professional customers have a separate ordering platform and can receive local delivery.
How it makes money
O’Reilly earns revenue by selling automotive parts and related products through a single automotive aftermarket parts segment. Its customers buy products for maintenance and repair, from oil and filters to replacement components such as starters and brake parts. The company sells through stores and online to both individual vehicle owners and professional service providers.
FY2025 segment revenue was $17.8 billion; in the third quarter of 2026, sales increased $416 million.
The company offers national brands alongside proprietary products across what it calls good, better and best price and quality levels. Sales and gross profit dollars are generally highest for products in the best quality category. O’Reilly says customers’ willingness to choose higher-priced products is a driver of sales and profitability. Its private-label products represented over 50% of total revenue in the first quarter of 2026.
Maintenance needs and mechanical failures create continuing demand for parts, although the timing and frequency of purchases vary. O’Reilly says miles driven, the number of vehicles and vehicle age influence demand. Older vehicles generally go through more maintenance cycles and have more frequent mechanical failures, while more durable components in newer vehicles can require less frequent repairs.
Professional service provider sales carry a lower gross margin percentage than DIY sales. In 2025, gross profit was $9.17 billion, or 51.6% of sales, and operating income was $3.46 billion, or 19.5% of sales. The company has typically passed industry-wide increases in product acquisition costs through to customers in selling prices, while also using supplier programs, purchasing volume and selective forward buying to manage costs.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Automotive Aftermarket Parts Segment | $17.8 billion | 100.0% | 6.42% |
Customers and how it sells
O’Reilly calls its approach to serving individual vehicle owners and professional service providers its dual market strategy. In 2025, approximately 50% of sales came from DIY customers and approximately 50% from professional customers. Every store can support and supply professional service providers, and the company has a sales staff dedicated to calling on and serving those customers.
DIY customers can shop in stores or use the retail website to look up parts, seek assistance and order for pickup or home delivery. Professional customers can order through O’Reilly’s professional website and mobile application, with local delivery available. Store employees receive automotive systems and product training to help customers find parts for their vehicles.
At December 31, 2025, the company operated 6,447 stores in 48 U.S. states and Puerto Rico, 112 stores in Mexico and 26 stores in Canada. It opens stores in both densely populated and smaller markets, typically locating new sites in clusters that complement its distribution network.
In the third quarter of 2026, professional comparable-store sales rose slightly over 10 percent. DIY transaction counts faced a low single digit headwind, which O’Reilly believes reflected pressure on consumers; higher average tickets more than offset that decline.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Automotive Aftermarket Parts Segment | $17.8 billion | 100.0% | 6.42% |
Suppliers and costs
O’Reilly purchases automotive products from over 655 suppliers. Its five largest suppliers accounted for approximately 23% of total purchases in 2025, with the largest accounting for approximately 8%. The company has no long-term contracts with material purchase commitments with its suppliers and believes alternative sources exist at competitive costs for substantially all products it sells.
Automotive manufacturers produce O’Reilly’s proprietary private-label products. The company also purchases national brands. It uses supplier payment and seasonal purchasing discounts and has arrangements with some suppliers that extend inventory payment terms.
Product acquisition, distribution, store staffing and benefits are among the costs of operating the business. In 2025, improved acquisition costs and distribution efficiencies helped gross margin, while insurance costs and enhancements to store compensation and benefits contributed to higher selling, general and administrative expenses as a percentage of sales.
For most products it sells, O’Reilly is not the importer of record; suppliers pay applicable tariffs directly. In the third quarter of 2026, the company recognized a $39 million benefit from tariff refunds passed through by suppliers. Petroleum product costs and pricing also put pressure on gross margin during the quarter, and higher fuel prices affected supply-chain costs.
- Revenue$17.8B
- Cost of revenue−$8.6B
- Selling, general and administrative−$5.7B
- Operating income$3.5B
Competitive position
O’Reilly competes in both the DIY and professional portions of the automotive aftermarket. Rivals include national chains such as AutoZone, Advance Auto Parts, CARQUEST and NAPA, as well as regional chains, independent wholesalers, auto dealers, mass merchandisers and online retailers. Wal-Mart Stores and Amazon are among the retailers selling replacement parts, maintenance items and accessories.
Competition covers price, product availability, location, customer service and brand recognition. O’Reilly seeks to differentiate itself through trained store personnel, a broad selection of parts, online ordering and delivery, and a distribution network that supplies stores with hard-to-find products. Its dual market model uses the same store and distribution infrastructure to serve both customer groups.
Our reading: The distribution network is a meaningful competitive advantage because it makes a wider inventory available quickly, but maintaining stores, hubs and inventory also requires substantial capital. More than 95% of stores receive multiple same-day and weekend deliveries of hard-to-find parts from distribution centers and hubs.
Our reading: Serving both customer groups and training employees support differentiation, particularly where repair shops need technically knowledgeable staff, but these advantages face competition from other national chains and independent suppliers.
O’Reilly estimates its share is 10% even in its most mature markets. It has said a sizable portion of its recent share gains is coming from weaker or smaller independent competitors.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| AutoZone, Inc. | DIY and professional automotive aftermarket parts | High |
| Advance Auto Parts | DIY and professional automotive aftermarket parts | High |
| Wal-Mart Stores, Inc. | Replacement parts, maintenance items and accessories | Medium |
| Amazon.com, Inc. | Online replacement parts, maintenance items and accessories | Medium |
Growth opportunities
O’Reilly’s growth strategy combines new stores, higher sales at existing stores, selective acquisitions and expanded digital capabilities. It seeks sites in clusters that can be supplied by its distribution network, then adds locations in surrounding areas. The company also continues to invest in distribution capacity and store-level inventory to support access to parts.
The company opened 207 net, new stores in 2025 and planned 225 to 235 net, new stores in 2026. By the end of the third quarter of 2026, it had opened 173 net new stores year to date and said it remained on pace for its annual target. It is applying its tiered distribution approach in Mexico and Canada as well as the United States.
At existing stores, O’Reilly seeks to grow sales through customer service, product availability and improvements to its store and online experience. Its third-quarter 2026 comparable store sales growth was 7.2%. The company raised its full-year comparable-store sales guidance to 5.5% to 6.5%, while remaining cautious that consumer pressures could intensify.
O’Reilly considers the number of vehicles, miles driven and vehicle age important long-term demand drivers. It has observed stable growth in miles driven and a growing, aging U.S. vehicle fleet. It expects continued demand for aftermarket products as consumers maintain their vehicles, though it cannot predict the effect of future economic changes on demand.
- $13.3BFY2021
- $14.4BFY2022
- $15.8BFY2023
- $16.7BFY2024
- $17.8BFY2025
- $19.0BFY2026 guidance
Structural risks
- Consumer demand: Deteriorating economic conditions can reduce demand and cause financial hardship for customers. O’Reilly believes the decline in DIY transaction counts in the third quarter of 2026 reflected pressure on consumers, and it remains cautious that those pressures could intensify.
- Competition: The automotive aftermarket is highly competitive on price, availability, service and location. O’Reilly competes with national and regional chains, independent suppliers, dealers and online retailers across both customer groups.
- Supply and costs: Relationships with key suppliers and availability of key products are risks. Tariffs, acquisition costs and fuel prices can affect costs; in the third quarter of 2026, petroleum product pricing and mix pressured gross margins.
- Debt and financing: Debt obligations can expose the company to interest-rate changes, require cash for principal and interest, and limit flexibility. Reduced demand or changes in buying patterns could also affect its ability to meet credit-agreement covenants.
- Execution and systems: Interruptions or failures of information technology systems could harm operations. O’Reilly cannot assure future growth, and acquisitions involve risks, including the possibility of being unable to identify suitable targets or acquire them on favorable terms.
Bottom line
Our reading
O’Reilly is an auto-parts retailer built around serving both vehicle owners and repair professionals, supported by stores, trained staff and a tiered distribution network. Our reading: Its ability to get the right parts to customers quickly is central to that model, while maintaining the network requires capital. Demand for maintenance and repair supports the business, but consumer pressure, competition, product costs and debt obligations remain important exposures.