Nevertheless, even with car sales rising, vehicle owners are keeping their cars and trucks longer before replacing them. That has benefited parts-oriented chains AutoZone, Inc. (NYSE:AZO) and O’Reilly Automotive Inc (NASDAQ:ORLY), with both companies looking for expansion opportunities. AutoZone, Inc. (NYSE:AZO) in particular has focused on growing its e-commerce business, which posted 80% growth in its fiscal second-quarter. Meanwhile, O’Reilly Automotive Inc (NASDAQ:ORLY) has looked to more traditional expansion through its acquisition of VIP Auto Parts, greatly boosting its presence within New England and also looking at growth opportunities in California, Florida, and the greater Chicago area.
Still, Pep Boys sees opportunity in serving customers directly, and it’s moving to expand. Yesterday, the company said that it had bought 17 discount-tire stores in the Southern California market. The Pep Boys – Manny, Moe & Jack (NYSE:PBY) has made big efforts to boost its tire business, and the move expands Pep Boys’ presence in greater Los Angeles, which is already an important market for the company.
In the Pep Boys earnings report, look to see whether the company’s service-oriented strategy is continuing to pay off in greater sales. If Pep Boys can succeed in that area, it could prove to be instrumental in keeping a competitive advantage over AutoZone, Inc. (NYSE:AZO), O’Reilly Automotive Inc (NASDAQ:ORLY), and more traditional auto-parts retailers.
The article Are Soaring New-Car Sales a Threat to Pep Boys Earnings? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Ford and General Motors and owns shares of Ford and O’Reilly Automotive.
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