David Meniane, CEO of aftermarket auto parts retailer CarParts.com, joined Cheddar News to talk about the company’s sales success attributed to its execution despite the supply chain disruptions around the world. "We offer a great solution. It's the same quality parts as a brick and mortar, but we're 30, 40, and sometimes 50 percent cheaper because of our supply chain," he said. "So the direct to consumer model gives the consumer an option to get more competitive prices."

Opening Bell

CarParts.com Sees Record Earnings Despite Supply Disruptions, Inflation

joining me now is David Minyan Ceo of car parts dot com. David, your company reported record quarterly sales $176.2 million of 12% year over year? What were some of the main drivers behind the company's growth this quarter? Hey Alicia, thanks for having me. Hey, listen, I think it's been great execution by the whole team. It's up 44% on a two year stack. We've been making a lot of investments in the business for the last three years. We've been loading up, uh, an inventory through the whole global supply chain disruption and just focusing on the customer and high quality parts, competitive prices and just execution. Car parks dot com reported its 10th consecutive quarter of year, over year sales growth. Is this the growth that you're seeing, um, as a picture of what is happening in the broader auto industry, especially over the better part of the last year. Yeah, what we're seeing is just an acceleration of online penetration. Um, you know, I don't know if you know, but the, the aftermarket industry is a $300 billion 300 million cars on the road and all these cars need parts, the average age of a car on the road is to 12.2 years. So the, the other thing too is that the online penetration, the amount of purchases that remain online is actually significantly lower than most industries. So what we're seeing is that as we continue to make investments in the business, that acceleration online is growing? I'm always fascinated behind the why? right? Why are we seeing that growth? Is it something that, that birth a little bit or accelerated, you know, further through the pandemic and, and, and under the inflationary pressures. I mean you try to get a new car right now, good luck. Eh, the prices are high or they're still supply change issues that are, that are making it difficult to actually get one in your hands in a reasonable time. So it seems like people are holding onto those cars, their cars even longer than historically in the past. Is that the case of what you're seeing and if so, how long do you expect that to last? Yeah, 100%. You're absolutely right. So consumers are holding onto their cars longer and in order to keep them on the road, they need to buy parts and accessories. What we're also seeing is that the consumer right now is getting squeezed. You look at gas prices, you look at interest rates, you look at the cost of first necessities and if there's An opportunity for the customer to save money, a company like us, we offer a great solution. It's the same quality parts as a brick and mortar, but we're 3040, sometimes 50% cheaper because of our supply chain. So the direct to consumer model gives the consumer an option to get more competitive prices. So on one hand, those inflationary pressures on the new car market or even the supply chain disruptions and issues, they are benefiting you guys. But I wonder on the other hand, when it comes to inflation, you're not completely immune to it? How is that impacting prices? And I think you've pointed to a moment ago how you're mitigating that with that direct to consumer model? Yeah, I think every retailer and every consumer is facing some, you know, some part of inflation for us, it's, you know, the cost of goods, the transportation cost, the labor cost, and we just got to find efficiencies through the supply chain. We got to work with our vendors to get the most competitive price. And what we do is we try to take those savings and pass them on to the consumer. Now the prices of parts and the prices of everything are going up. But what we try to do is be more competitive than everyone else and still generate that demand and help the consumer get back on the road. Obviously, most of the cars that are on the road right now, our traditional combustion engine vehicles, they're also traditionally, like longer vehicles, vehicles have been on the road for quite some time. That's a dominant part of your market and certainly where you seem to thrive. I wonder though, with the growth and demand for electric vehicles kind of hitting the market and accelerating over the last two years and then into what is going to be the immediate future? How do you view the transition to e v, is it a tailwind or a headwind for your business in your company? I think it's an opportunity and we've seen that transition through the numbers, you're absolutely right. The number of EVs on the road is growing and that trend is not going to stop. You know, for us, 90% of the parts that we sell are agnostic to the powertrain and what that means is that whether you have a combust engine or an electric vehicle or a hybrid, we can fulfill those parts. Ultimately, what we sell is what the customer needs and we source the parts based on the vehicles that are on the road. So for us and for me personally, TVs hybrid are a huge opportunity for a company like us. Speaking of that opportunity last year, your company launched a marketplace for E V s and hybrid vehicles. Do you see the demand for E V parts growing in the future as more people transition to electric vehicles? And I wonder what's the timeline for true growth because if you're, you're purchasing an electric vehicle, it's likely new and it's gonna last you a few years I think or you would hope before you kind of need some parts for it. Yeah, that's a great question. And so for us, our sweet spot, our cars between eight and 15 years old. So we have a lot of time to prepare for this as the number of E V. S kind of accelerates and the sales accelerate. We got, you know, 789 years behind, but we're already starting to put all the pieces together on, on the supply side on the car parts dot com slash tv, the hub. We're providing consumers information about how to keep their cars on the road and definitely sourcing newer parts, uh, for Priuses and Chevy volts and you know, you know, Tesla is definitely a big opportunity, but that's a couple of years away. Before I have to let you go here, just walk us through your guidance for the rest of 2022. What's your outlook, you know, then also more broadly for the auto repair market? Yeah, our, our guidance is pretty specific. What we've said is that for the back half of the year we're gonna grow double digit year over year and I think what we wanted to do was send a signal to the street that yes, the consumer is getting squeezed. Yes, it's a challenging environment but a company like us because of all the investments that we've made, we're gonna continue executing in the back half of the year and deliver really strong results, both on the top line and profitability and actually that was my last question, but I've got one more for you just to kind of be on balance here in terms of headwinds, there's certainly seems like there's a lot of tail winds moving forward and you're enjoying a lot of tailwinds coming out of the pandemic, but we know things are shifting rapidly. You know, there's a lot of focus on the macroeconomic environment in terms of possible headwinds. What do you see as those possible headwinds and how are you mitigating around that? Yeah, I think number one is the overall consumer sentiment and the amount of discretionary income that consumers have, again, you know, the consumer is getting squeezed. You know, the price of milk and eggs and bread has gone up, The price of gas has gone up, Interest rates are going up, so consumers have less money in their pocket and it's our job and companies like us to figure out a way to provide more value at more competitive prices. And for us it's a relentless focus on execution and efficiencies to still meet the customer needs. David, really appreciate your time and your insight. David, Mannion Ceo of car parts dot com