O'Reilly Automotive Maps Record Store Growth, Mexico Push at Analyst Day

Key Points

• Record store expansion: O’Reilly plans to open 232 stores in 2026, its highest annual total, supported by new distribution capacity and growth opportunities across underserved U.S. markets.
• International growth: The company expects to open 20–25 stores in Mexico, where it sees potential for more than 1,000 locations over time, and plans to add three to five Canadian stores while developing its platform.
• Demand and competitive advantages: Comparable-store sales rose 7% through the second quarter, while O’Reilly highlighted its inventory network, promote-from-within culture, proprietary brands exceeding 55% of sales, and opportunities from an aging and increasingly complex vehicle fleet.

O'Reilly Automotive NASDAQ: ORLY used its 2026 Analyst Day to highlight its promote-from-within culture, distribution network, store expansion plans and opportunities in Mexico and Canada, while reiterating that it would not provide new outlook or update guidance beyond its most recent earnings release.

Chief Executive Officer Brad Beckham said the company’s culture remains the foundation of its operating model, tracing it to the company’s 1957 founding and its formal documentation in 1998 following the acquisition of Hi/LO Auto Supply. Beckham, who said he recently marked 30 years with O’Reilly, emphasized the company’s practice of developing leaders internally.

According to Beckham, all approximately 660 district managers have previously run a successful O’Reilly store, while all 78 regional directors have run both stores and districts. The company’s 14 division vice presidents have held store, district and regional leadership roles, he said. O’Reilly has about 95,000 team members, including roughly 70,000 store employees.

Distribution Network and Inventory Availability

Management repeatedly pointed to O’Reilly’s distribution capabilities as a competitive differentiator. The company operates 32 regional distribution centers, generally located in metropolitan areas, and approximately 399 hub stores. Beckham said the regional facilities carry roughly 160,000 to 170,000 SKUs on average, while President Brent Kirby said the Atlanta-area facility hosting the event holds more than 180,000 SKUs.

Kirby said O’Reilly tailors inventory at its distribution centers, hubs and stores based on local vehicles in operation and demand patterns rather than using a standardized product assortment. The company uses a multi-echelon inventory model, moving parts from distribution centers to hubs and spoke stores as demand develops, and moving slower-selling products back through the network as demand declines.

The company replenishes stores five nights per week and provides multiple daily deliveries to stores within a 250-mile radius of distribution centers through its city-counter network, Kirby said. That structure enables stores and professional customers to access parts held at distribution centers with time-specific delivery commitments.

O’Reilly opened its current Atlanta distribution center in the fourth quarter of 2024, replacing an older facility in Forest Park. Beckham said the move did not materially change inventory availability in the market but provided a larger, more modern facility on the north side of Atlanta. The company also expanded its Lakeland, Florida, distribution center by 140,000 square feet, increasing its capacity from 275 stores to 425 stores, and is constructing a new distribution center in Fort Worth, Texas.

Store Growth and International Platforms

O’Reilly expects to open 232 stores in 2026, which Kirby said would represent the company’s highest annual store-opening total. Management said it continues to see opportunities in fill-in markets, greenfield expansion areas in the Mid-Atlantic and Northeast, and selective tuck-in acquisitions.

The company cited Delaware, the District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Puerto Rico and international markets as areas of opportunity. Its Stafford, Virginia, distribution center recently came online to support growth in Northern Virginia, Washington, D.C., Baltimore and surrounding markets.

In Mexico, O’Reilly has grown to 126 stores after opening its 100th location during the middle of 2025. Management estimated the Mexican total addressable market at roughly $15 billion and said it expects to open 20 to 25 stores there in 2026. Beckham said the company sees potential for more than 1,000 stores over time, though it has not established a formal terminal store-count target.

In Canada, O’Reilly is building on its Vast-Auto acquisition, which closed nearly two years ago. The first prototype store opened in Brockville, Ontario, in the fourth quarter of 2025 under the Parts City banner. Kirby said O’Reilly expects to open three to five Canadian stores this year while it develops product lines, distribution capabilities and systems needed to eventually operate company stores under the O’Reilly banner.

Sales Drivers, Vehicle Trends and Margins

Beckham said comparable-store sales increased 7% through the second quarter, with management particularly encouraged by growth in units, traffic and share gains rather than inflation alone. He said the company believes it remains in the early stages of consolidating a fragmented U.S. auto-parts market, which management estimates represents about $175 billion in addressable opportunity.

Management described miles driven as the largest demand driver for the industry. Beckham cited 3.3 trillion miles driven in 2025, 293 million light-duty vehicles in the U.S. vehicle population and an average vehicle age of 12.8 years. Kirby said hybrid vehicles represented about 15% of 2025 new-vehicle sales and that increasing vehicle complexity should create additional maintenance and repair opportunities as those vehicles age.

Chief Financial Officer Jeremy Fletcher said O’Reilly’s focus remains on profit-dollar growth and expanding market share, even as the company seeks incremental improvement in operating-margin rates over the longer term. Management said it has continued to invest in store growth, distribution capacity, technology, proprietary brands and customer service rather than prioritize near-term margin expansion at the expense of growth.

Kirby said proprietary brands account for more than 55% of sales, up from about 52% at the company’s prior analyst day. He also said O’Reilly is modernizing its professional and retail digital platforms, including its O’Reilly Pro app, while expanding use of customer data in its retail loyalty program.

About O'Reilly Automotive (NASDAQ:ORLY)

O'Reilly Automotive, Inc is a specialty retailer of automotive aftermarket parts, tools, supplies and accessories. The company serves do-it-yourself customers, professional service technicians and commercial garages, offering products for maintaining and repairing cars, trucks and other vehicles.

Its merchandise includes replacement parts such as brakes, filters, belts, batteries and ignition components, as well as shop equipment, tools, fluids, lighting and appearance products. O'Reilly also provides services such as parts lookup, battery testing and installation, loaner tool programs, used-oil recycling and commercial delivery to professional customers.

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