1、Equity Research 12 February 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.In
2、vestors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 24.Restricted-Internal Reading Between the“Hard”Lines December/January:Auto Part Retailers Due to the most recent government
3、shutdown,our monthly report has been delayed as publications of macroeconomic data were unavailable until recently.This report has consolidated the most updated data from December and January releases.Latest macroeconomic data points:In November 2018,US Vehicle Miles of Travel increased 0.3%to 258.5
4、 million miles.Retail sales by U.S.Census NAICS code for automotive parts,accessories&tire stores increased 2.7%on an unadjusted basis to$7.64 billion as of November 2018.Light vehicle retail sales have declined(2.8)%Y/Y to 16.7 million in January.Gas prices(ex.Diesel)have continued to decline Y/Y.N
5、ews worthy highlights:MNRO reported 3Q19 results,as comp store sales increased 3.3%driven by tires+3%and brakes+12%.Barclays European Autos&Auto Parts initiated on the European Auto Parts and Tire Makers sub-sector(Cash is King,2/5/2019),Barclays US Autos&Auto Parts reviewed guidance updates from De
6、troit(Not the guide-down spree many were expecting,1/22/2019).We upgraded AAP from EW to OW(Advancing to Go,Collecting$205 1/7/2019)as we feel confident a stable base for operations has been established with the ability to focus on value creation.Weather updates:In December 2018,all regions excludin
7、g the West and Southwest experienced warmer temperatures than last year.Every region also experienced more precipitation as well,with regions such as the Southeast,Central,West and Southwest experiencing 100%+more precipitation.In January,temperatures were mixed,with colder weather in the East North
8、 Central,West,Northwest and Southwest,but warmer temperatures in the Northeast,Southeast,Central,West North Central and South.All regions except the West North Central and Northwest also experienced more precipitation.ORLY and MNRO both reported softness in December due to unfavourable weather trend
9、s,and a pull-forward of seasonal product into November.However,both noted recovery QTD with strength in January as weather worsened.E-Commerce promotions:In December 2018,AZO had a total of five promotions compared to four promotions in December 2017.AAP had one promotion,compared to two promotions
10、in December 2017.ORLY had two promotions this December compared to one promotion in December 2017.Trading:The S&P outperformed the auto part retailers this month,with the group up an average of 0.8%in January and the S&P up 7.9%in January.Short interest over the month of January has increased for AA
11、P,remained relatively flat for AZO,and declined for ORLY:short interest for AAP increased from 4.4%to 5.2%;short interest for AZO remained 2.9%;short interest for ORLY decreased from 2%to 1.6%.In January,Consensus FY18 comp store sales increased 10bps to 2.3%for AAP,increased 50 bps to 2.4%for AZO a
12、nd increased 10 bps to 3.9%for ORLY.INDUSTRY UPDATE U.S.Retail Broadlines/Hardlines POSITIVE Unchanged U.S.Retail Broadlines/Hardlines Matthew McClintock,CPA,CFA+1 212 526 5257 BCI,US Jordana Cooper+1 212 526 7166 BCI,US Caitlin Howard+1 212 526 4809 BCI,US Thomas Chadwick+1 212 526-3385 BCI,US Barc
13、lays|Reading Between the HardLines 12 February 2019 2 Calendar of Upcoming Auto Part Related Events February.3 Most Recent Macro Economic Data.4 Miles Driven.4 Light Vehicle Retail Sales SAAR.5 Census Sales by NAICS Code.6 Gas Prices.8 CPI-U:Motor&Oil Fuel Index.9 GDP.9 Employment.11 News Updates.12
14、 Insights on Auto Parts Industry.12 Highlights from Barclays Research.12 Laterals from Related Companies.12 Weather Tracker.13 E-Commerce Promotional Tracker.18 Trading Commentary.20 Stock Performance.20 Consensus.20 Short Interest.21 Appendix:Less Frequently Updated Data Points.22 Cars in Sweet Spo
15、t(Vehicle Sales/Total Registrations).22 Mean Age of Light Vehicles in Operation in U.S.22 Motor Vehicle Registrations in U.S.23 Licensed Drivers in the U.S.23 Barclays|Reading Between the HardLines 12 February 2019 3 Calendar of Upcoming Auto Part Related Events February Monday Tuesday Wednesday Thu
16、rsday Friday 4 5 6 7 8 10:00 ISM non-mfg(Jan)15:00 Consumer credit(Dec)11 12 13 14 15 6:00 NFIB small business optimism(Jan)10:00 JOLTS(Dec)8:30 CPI(Jan)8:30 PPI(Jan)8:30 Import prices(Jan)8:30 Retail sales(Jan)10:00 U/M consumer sentiment 18 19 20 21 22 Presidents Day 14:00 FOMC minutes(29-30 Jan)1
17、0:00 Leading indicators(Jan)25 26 27 28 9:00 S&P/Case-Shiller home prices(Dec)10:00 Consumer confidence(Feb)8:30 GDP(Q4 2nd)9:45 Chicago PMI(Feb)Source:Barclays Research,Company Reports,US Economic Indicator Calendar Barclays|Reading Between the HardLines 12 February 2019 4 Most Recent Macro Economi
18、c Data Miles Driven In November,U.S.Vehicle Miles of Travel increased 0.3%y/y to 258.5 million miles.In comparison,miles driven was up 1.2%y/y in October.Sequentially,miles driven decreased(8.4)%.Data are published on a two-month lag from the U.S.Department of Transportations Office of Federal Highw
19、ay Administration.FIGURE 1 U.S.Vehicle Miles of Travel(Y/Y percent change)Source:U.S.Department of Transportation,Federal Reserve Economic Data,Haver Analytics,Barclays Research FIGURE 2 Trailing 12-Month Total Vehicles Miles Traveled,Millions of Miles Source:U.S.Department of Transportation,Federal
20、 Reserve Economic Data,Barclays Research -2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%Nov-2014Jan-2015Mar-2015May-2015Jul-2015Sep-2015Nov-2015Jan-2016Mar-2016May-2016Jul-2016Sep-2016Nov-2016Jan-2017Mar-2017May-2017Jul-2017Sep-2017Nov-2017Jan-2018Mar-2018May-2018Jul-2018Sep-2018Nov-2018Y/Y%Change0.0%0.5%1.0%1.5
21、%2.0%2.5%3.0%Nov-2014Jan-2015Mar-2015May-2015Jul-2015Sep-2015Nov-2015Jan-2016Mar-2016May-2016Jul-2016Sep-2016Nov-2016Jan-2017Mar-2017May-2017Jul-2017Sep-2017Nov-2017Jan-2018Mar-2018May-2018Jul-2018Sep-2018Y/Y%ChangeBarclays|Reading Between the HardLines 12 February 2019 5 Light Vehicle Retail Sales
22、SAAR In January,vehicle retail sales decreased(2.8)%y/y to 16.7 billion.Sequentially,vehicle retail sales declined(4.8)%compared to December.The Bureau of Economic Analysis publishes seasonally adjusted light vehicle retail sales at the beginning of each new month.FIGURE 3 Total Light Vehicle Retail
23、 Sales-SAAR(Imported+Domestic)Source:Bureau of Economic Analysis,Haver Analytics,Barclays Research FIGURE 4 Total Light Vehicle Retail Sales Y/Y Percent Change Source:Bureau of Economic Analysis,Haver Analytics,Barclays Research 16.7bn02468101214161820Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13
24、Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18May-18Sep-18Jan-19Units(millions)-10.0%-5.0%0.0%5.0%10.0%15.0%20.0%25.0%30.0%Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18May-18S
25、ep-18Jan-19Y/Y%ChangeBarclays|Reading Between the HardLines 12 February 2019 6 Census Sales by NAICS Code The U.S.Census breaks down monthly retail sales by specific NAICS codes;we specifically look at code 4413,which is automotive parts,accessories and tire stores.On an adjusted basis,November 2018
26、 automotive parts,accessories,and tire store sales increased 2.6%to$7.74 billion compared to$7.54 billion during November the prior year.On an unadjusted basis,November 2018 automotive parts,accessories,and tire store sales increased 2.7%to$7.64 billion compared to$7.44 billion during November the p
27、rior year.We note that the U.S.Census Bureau does not give advance retail sales data for the specific NAICS code 4413.FIGURE 5 Unadjusted U.S.Census Retail Sales Auto parts,accessories stores(Millions$USD)Source:U.S.Census Bureau,Barclays Research FIGURE 6 Unadjusted U.S.Census Retail Sales Auto par
28、ts,accessories stores Y/Y Percent Change Source:U.S.Census Bureau,Barclays Research$5,500$6,000$6,500$7,000$7,500$8,000$8,500Y/Y%Change-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%Y/Y%ChangeBarclays|Reading Between the HardLines 12 February 2019 7 FIGURE 7 Adjusted U.S.Census Retail Sales-Auto parts,accessori
29、es stores(Millions$USD)Source:U.S.Census Bureau,Barclays Research FIGURE 8 Adjusted U.S.Census Retail Sales Auto parts,accessories stores-Y/Y Percent Change Source:U.S.Census Bureau,Barclays Research$7,200$7,300$7,400$7,500$7,600$7,700$7,800Y/Y%Change-3.0%-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%Y/Y%Change
30、Barclays|Reading Between the HardLines 12 February 2019 8 Gas Prices Gas prices have decreased MSD and DD over the last year,however diesel prices decreased LSD.Average price of regular gas for the first week of February(2/1)was$2.26,compared to$2.59 last year.Mid and premium gas prices have decreas
31、ed to$2.59 and$2.84 from$2.87 and$3.11,respectively.Diesel prices decreased(2.2)%Y/Y.AAA updates this data daily and the U.S.Energy Information Administration updates this data weekly;the next release date will be on February 7th.FIGURE 9 AAA Gas Price Tracker Y/Y Percent Change in Price March Sourc
32、e:AAA,Barclays Research FIGURE 10 Gas Price Tracker 5 Years Regular Gas Source:U.S.Energy Information Administration,Barclays Research -12.9%-9.7%-8.7%-2.2%-14.0%-12.0%-10.0%-8.0%-6.0%-4.0%-2.0%0.0%RegularMidPremiumDiesel%change y/y%change0.000.501.001.502.002.503.003.504.004.50201220132014201520162
33、017201820122013201420142016201220132017201520182019Barclays|Reading Between the HardLines 12 February 2019 9 CPI-U:Motor&Oil Fuel Index In December,the motor fuel index decreased(1.9)%y/y.This is in contrast to a 5.2%y/y increase in November.The index is published on a monthly basis as the other CPI
34、 data set is published.The motor fuel index is a component of the private transportation index.FIGURE 11 CPI-U:Motor Fuel(y/y percentage change)+Source:Bureau of Labor Statistics,Haver Analytics,Barclays Research GDP According to the third estimate,GDP increased 3.4%in the 3rd quarter;in the second
35、quarter real GDP increased 3.5%.The increase in real GDP in the 3rd quarter reflected positive contributions from PCE,private inventory investment,state and local government spending,federal government spending and nonresidential fixed investments.This was partly offset by negative contributions fro
36、m exports and fixed residential investments.Imports increased in the 3rd quarter.The next estimate for 3Q18 GDP will be released on February 28th,2019.FIGURE 12 GDP Source:Haver Analytics,Bureau of Economic Analysis-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%40.0%Dec 2013Mar 2014Jun 2014Sep 2014Dec 2
37、014Mar 2015Jun 2015Sep 2015Dec 2015Mar 2016Jun 2016Sep 2016Dec 2016Mar 2017Jun 2017Sep 2017Dec 2017Mar 2018Jun 2018Sep 2018Dec 2018Y/Y%Change0.0%1.0%2.0%3.0%4.0%5.0%12/1/20114/1/20128/1/201212/1/20124/1/20138/1/201312/1/20134/1/20148/1/201412/1/20144/1/20158/1/201512/1/20154/1/20168/1/201612/1/20164
38、/1/20178/1/201712/1/20174/1/20188/1/201812/1/2018%Change in GDPReal GDPBarclays|Reading Between the HardLines 12 February 2019 10 FIGURE 13 United States Economic Outlook Source:Global Economics Weekly Barclays|Reading Between the HardLines 12 February 2019 11 Employment In January,304,000 new jobs
39、were created and the unemployment rate edged up to 4.0%from 3.9%in November.The Bureau of Labor Statistics reports this statistic at the beginning of every month and November unemployment figures will be released on March 8th,2019.FIGURE 14 Unemployment Rate Source:Bureau of Labor Statistics,Barclay
40、s Research In January,ADP nonfarm private payroll increased by 213,000 jobs.In December,ADP nonfarm private payroll increased by 271,000 jobs.FIGURE 15 ADP Nonfarm Private Payroll Employment Monthly Change(thousands)Source:Bureau of Labor Statistics,Haver Analytics,Barclays Research 0.0%1.0%2.0%3.0%
41、4.0%5.0%6.0%Unemployment Rate(%)0.0%0.1%0.1%0.2%0.2%0.3%0.3%1/1/20115/1/20119/1/20111/1/20125/1/20129/1/20121/1/20135/1/20139/1/20131/1/20145/1/20149/1/20141/1/20155/1/20159/1/20151/1/20165/1/20169/1/20161/1/20175/1/20179/1/20171/1/20185/1/20189/1/20181/1/2019(m/m%Change)Barclays|Reading Between the
42、 HardLines 12 February 2019 12 News Updates Insights on Auto Parts Industry February 7,2019 Tire Business Auto&tire industry reps react favourably to State of the Union.Particularly,reps appreciated the presidents passage of legislation to fund infrastructure improvements.However,there were some con
43、cerns over tariffs,trade agreements,and other issues such as paid family leave.January 22,2019 AAP announces partnership with the Midwest Auto Care Alliance(MWACA).Through the partnership,AAP will help members through service and programs designed to improve shop performance and profitability.Januar
44、y 14,2019 CES for the Auto Industry:Digital Technologies to Steer Car Into An Immersive Experience.CES 2019 gave a clear message that the automotive industry is looking to near term autonomous and connected solutions.Highlights from Barclays Research February 5,2019 European Autos&Auto Parts Cash is
45、 King.The European Autos&Auto Parts initiate on the European auto parts and tire makers sub-sector.The current environment leads the European Autos&Auto Parts group to favour defensive and asset-light business models with solid earnings/FCF momentum.January 22,2019 US Autos&Auto Parts Not the guide-
46、down spree many were expecting.The US Autos&Auto Parts team reviews guidance updates at Detroit conferences.Many companies are appropriately aware of late-cycle concerns,but most are generally planning for a stable production environment in 2019.January 13,2019 US Autos&Auto Parts All eyes back to t
47、he macro.The US Autos&Auto Parts takes a closer look to which suppliers were hit the hardest by operational and macro issues last year.January 7,2019 Retail Broadlines/Hardlines Advancing To Go,Collecting$205.We upgraded AAP to Overweight from Equal Weight and increased our PT from$170 to$205.We hav
48、e been reluctant to recommend AAP for the past several years as the company was in the midst of a highly disruptive restructuring.However,we now feel confident that a stable base for operations has been established,providing management with the ability to shift the focus towards ample opportunities
49、for value creation.Laterals from Related Companies February 11,2019 MPAA reports 3Q19 results.MPAA,a supplier to AAP,AZO,and ORLY reported 3Q18 EPS of$0.35.Sales increased 10.6%to$124.1 million,driven by an increase in its rotating electrical business.MPAA noted with respect to off-short wage inflat
50、ion,it is evaluating alternative operating efficiencies and pricing strategies.February 5,2019 Goodyear to sell commercial tires direct to customers online.Goodyear announced it is expanding its e-commerce program to include its commercial products.The pilot program is scheduled to launch in 2Q19 an