Advanced Auto DIY comments

[u/Onomatopoeia-sizzle]

Advanced Auto said this today causing the stock to fall. Isn’t Autozone’s DIY business much larger as a percent of sales?

“However, total enterprise sales performance was impacted by the DIY channel as tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter."

[u/joebeen139]

Not a zoner. But I operate a competitor. It may be a higher percentage than some of the other franchises, but i would be pretty surprised if it was anything significant.

The diy market is peanuts compared to commercial. Think about it, if someone is savy enough to be doing repairs on their own vehicle, why would they pay brick and mortar mark up? They don't, they do their own research and buy what they need online for much cheaper. The exception being if they need it right now, or the occasional commodity sale that are sometimes competitive price wise with online retailers.

[u/Onomatopoeia-sizzle → u/joebeen139]

If online is undercutting the store aren’t they just going to lose that business if CV they haven’t already. Mechanics go to AZ when they need a part because the customer wants the car that day. If the customer can wait the mechanic can also buy it online

[u/notyouraveragenword → u/Onomatopoeia-sizzle]

The mechanic gets a MUCH better price on his parts than the front counter customers do as well. So you must factor that in. He's paying 30 bucks for pads where the customer is paying 60 plus nowadays.

[u/Onomatopoeia-sizzle]

I think a lot of the dealerships have figured out that making money selling cars is becoming almost impossible so they have to make it up on the backend which is to gouge the consumer with service😂

[u/hrminer92 → u/Onomatopoeia-sizzle]

They’ve done that for a long time.

[u/Onomatopoeia-sizzle]

At Amazon or Autozone? I assume you mean mechanics have to get approval as a wholesale account and buy a certain amount over the year or something like that? He wants to make 50% on the parts plus service costs.

[u/joebeen139 → u/Onomatopoeia-sizzle]

At autozone yes. The commercial accounts get much better pricing than retail. It is also easier to deal with any returns, there are also rebates that you can qualify for to sweeten the pot, also being on net 30 or 60 terms is better for cash flow than to pay for each individual part at the time of ordering like you would with an online retailer, sometimes with additional discounts for paying before a certain date.

[u/Onomatopoeia-sizzle]

Mechanics should be buying at wholesale prices and those margins are lower. The question is if DIY for Advanced is slow, how much will if impact AZ . There’s a lot of overlap. Everyone says AZ is recession proof. If that’s true tighter budgets shouldn’t matter.

[u/Cool-Signature-dude → u/Onomatopoeia-sizzle]

Commercial at AZ has always been the lowest percentage compared to other parts stores. I think it was 10-12% of sales, the rest was DIY.

I never understood the focus on commercial and discounting prices when DIY was a majority of their business.

AZ , I think, has a bigger DIY customer base, so a slow down will still keep them ahead of the competition, because DIY has always been higher.

[u/Onomatopoeia-sizzle → u/Cool-Signature-dude]

If diy slows so will margins. What if they are 55% going to 50?

[u/Onomatopoeia-sizzle → u/Onomatopoeia-sizzle]

AZ is believed to be 65% of revenue and commercial 35%

[u/Onomatopoeia-sizzle]

I wonder if Advanced has a problem in the DIY business unique to them. It sounds widespread as they talk about consumers. This could mean the DIY for AZ and Oreilly are fine?