Gregory Johnson
President & Chief Executive Officer at O'Reilly Automotive
Thanks, Tom. Good morning, everyone, and welcome to the O'Reilly Auto Parts first quarter conference call. Participating on the call with me this morning are Brad Beckham, our Chief Operating Officer; and Tom McFall, our Chief Financial Officer; Brent Kirby, our Chief Supply Chain Officer; Greg Henslee, our Executive Chairman; and David O'Reilly, our Executive Vice Chairman, are also present on the call.
I'd like to begin our call today by thanking Team O'Reilly for their hard work and commitment to drive another solid quarter, ensuring we deliver excellent service to each and every customer. Our team of over 84,000 dedicated professional parts people across the U.S. and Mexico continually reinforces our O'Reilly culture of excellent customer service. Their unwavering commitment to achieving such high standards and going the extra mile for our customers is key to our repeated success.
Our first quarter results were headlined by a 4.8% increase in comparable store sales, which is on top of the record 24.8% comparable store sales we delivered in the first quarter last year, resulting in an impressive comparable store sales 2-year stack of 29.6%. These top line results produced diluted earnings per share of $7.17, which is an increase of 2% over our extremely strong first quarter of 2021 when we grew EPS by 78%, representing an outstanding 34% compounded annual growth rate when compared to the first quarter of 2020.
Now I'd like to provide some color on our comparable store sales results and what we saw on both sides of our business as we move through the quarter. I'll begin by reiterating what we noted in our press release yesterday. Historically, weather creates volatility in our first quarter from both the type and severity of winter weather at the beginning of the quarter and from the timing of the onset of spring weather, and we definitely experienced choppiness in our first quarter this year. We encountered the volatility more significantly on the DIY side of our business, which I'll cover in a few minutes, but I'll start by discussing our professional business, which is much more consistent and the stronger performer in the quarter.
In our professional business, we started the quarter with some pressure from the Omicron variant. And outside of this short period, our professional business in the quarter was consistent and in line with our expectations, with comp strongly positive in each month of the quarter. We're encouraged by the resiliency and consistency of our professional customer demand and still anticipate this side of the business to be the larger driver of our growth in 2022 as we share and consolidate the market -- as we grow share and consolidate the market. We have been pleased with the results from the professional pricing initiative we began rolling out company-wide in February. Brad will provide more color on this initiative in his remarks, but I'd like to comment that the market reaction from our competitors, thus far has been muted as expected and pricing remains rational.
Turning to the DIY business. As I mentioned earlier, we saw much more volatility during the quarter on this side of the business. Early in the quarter, in addition to the headwind from inclement weather and Omicron, we also faced headwinds to DIY traffic for macroeconomic pressures stemming from the spike in gas prices and global instability. However, over the last 8 weeks, beginning in March and stretching into the beginning of our second quarter through the call today, volumes have become more consistent, though still hampered by less than ideal spring weather as our business benefits when we see an early start to spring.
Our DIY customers also often perform their routine jobs outside of their driveways and will take advantage when warmer weather hits to catch up on the repair, maintenance and tune up items that have been temporarily on hold at the end of winter. This year, we have seen cold wet weather persist through much of spring in many of our markets. However, the corresponding impact to demand matches up with what we have historically seen in similar environments and we've been encouraged that DIY results have stabilized from volatility earlier in the quarter.
From a cadence perspective, our DIY business faced very challenging year-over-year comparisons in March, driven by government stimulus payments that -- during that month of the last year. We also faced a step-up in professional comp comparison in March due to last year's stimulus, though to a lesser degree than our DIY business. However, the cadence for total comparable store sales for the quarter levels out on a 2- and 3-year stack basis, which eliminates the pandemic and stimulus impacts, with March being in the relative strongest over this extended period of time.
The durable nature of our sales volumes, as evidenced by a 2-year stack of nearly 30%, demonstrates our team's ability to differentiate our in-store experience and service levels to the many new customers we encountered over the last 2 years and convert those new customers into repeat loyal customers.
Next, I'd like to provide some color on our ticket count and average performance. The pressure to DIY ticket counts from the volatility we experienced throughout the quarter was offset by strong growth in average ticket, resulting in flat DIY comps for the quarter. We also saw a strong benefit from average ticket on the professional side of our business, which combined with an increase in ticket count drove double-digit professional comp growth. The continued strength in average ticket is in line with our expectation and reflects the benefit from the pass-through of cost increases into selling prices. Same SKU inflation was in line with our expectation for the quarter in the high single digits.
However, we have seen additional pricing increases since we communicated our guidance outlook on last quarter's call. These additional price increases and any additional inflation moving forward will help our average ticket throughout the year but may create traffic headwinds as consumers deal with broader inflation across the economy.
Now I'd like to turn our sales guidance. Now I'd like to turn our -- to our sales guidance and full year outlook. We are maintaining our full year comparable store sales guidance to a range of 5% to 7% and total sales guidance of $14.2 billion to $14.5 billion. Based on first quarter results, we are currently trending below our midpoint, but where we land will partly depend on how much of the wet weather impacts we experienced in the first quarter have deferred business later in the spring. We do believe we experienced necessary harsh winter to support demand of undercurrent categories as we move through the next 2 quarters.
We also saw volatility in the DIY traffic in the first quarter that was likely driven in part by economic shocks from the spike in gas prices and global instability, and we remain cautious in how we think about the impact of macroeconomic pressures as we move forward. However, we also continue to remain confident with the broader industry backdrop with steady recovery of miles driven and increasing employment underpinning stable, robust growth trends in the automotive aftermarket. This, coupled with a strong value proposition, compelling consumers to invest in their vehicles as a result of the combination of quality engineered and manufactured vehicles capable of being driven to higher mileages and new vehicle supply constraints, elevating demand for used vehicles.
Beyond these macro factors, we remain confident in our ability to capture market share on both sides of the business through our service-driven business model and robust supply chain.
Shifting to gross margin. For the quarter, our gross margin of 51.8% was 126 basis point decrease from the first quarter of 2021 gross margin, in line with our expectations for the quarter with a decrease driven by the rollout of our professional pricing initiative. As a reminder, we began rolling out this initiative in February, so we did not see the full impact in the first quarter. But our gross margin results from both professional pricing and the higher mix of professional business was in line with our plan.
Our gross margin outlook for the full year remains unchanged at a range of 50.8% to 51.3%. Earnings per share for the first quarter of $7.17 represents a 2-year increase over $7.06 in the first quarter of 2021 and a compounded 2-year growth rate of over 34% compared to the first quarter of 2020. Again, I would like to thank team O'Reilly for their unrelenting focus on driving profitable growth through excellent customer service. We are maintaining our full year 2022 EPS guidance of $32.35 to $32.85. Our EPS guidance includes the impact of shares repurchased through this call but does not include any additional share repurchases.
Before I turn the call over to Brad, I'd like to take a moment to discuss the executive leadership transition we announced in our press release yesterday. After almost 16 years of exceptional leadership and service, Tom expressed his interest in taking on a different role with the company. Therefore, effective May 9, 2022, Tom will step down from his role as Chief Financial Officer and will continue his employment with O'Reilly in the role of Executive Vice President. And at that time, Jeremy Fletcher, our Senior Vice President of Finance and Controller, will be promoted to the position of Executive Vice President and Chief Financial Officer.
Tom has been an important part of our success during his tenure, not only providing valuable operational and financial guidance, but also by identifying and mentoring many of today's senior leaders. We are very happy that Tom will continue to be an important part of our executive leadership team, and he will retain his current responsibilities for our information technology, real estate, legal and risk management efforts. We place great importance on succession planning as an integral part of our culture, and Tom has done an extraordinary job preparing Jeremy for this new role.
Jeremy has been an O'Reilly team member for 16 years, with the last 5 years of service as Senior Vice President of Finance and Controller, and is also an exceptional leader who is well suited for the position of Chief Financial Officer. I'm very confident in his ability to help lead our company to continued success well into the future.
To wrap up my comments, I want to again thank Team O'Reilly. Your dedication to living out our culture and taking care of our customers every day drives our continued success. I'll now turn the call over to Brad Beckham. Brad?
