Oct 29, 2026 earnings call — Strong comps, margin tailwind from tariff refunds
O'Reilly reported third quarter comparable store sales of 7.2% and raised full-year revenue guidance to $19 billion to $19.3 billion.
Revenue $5.1B (est $5.0B) · EPS $0.97 (est $0.93)
Key quotes
"Our third quarter 26 results represent comparable store sales growth on a 2 year stack basis of 12.8%."
"The largest driver of this gross margin expansion, as we noted in our press release yesterday, was a $39 million benefit from tariff refunds."
"During the third quarter, we opened 63 new stores across North America, bringing our year to date new store openings to 173 net new stores."
Analyst Q&A 6
tariff refunds and gross margin
Q (Scot Ciccarelli · Truist): Analyst asked if gross margin should be adjusted by removing the $39 million tariff refund and whether refunds affected pricing decisions.
A: Management said the tariff refunds are a one-off item and it is appropriate to view gross margin excluding them. They said they did not factor the refund benefit into pricing decisions and that other category mix and timing drove margin dynamics.
"I think the most appropriate thing is, The reason why we called it out in the press release yesterday is we do view the tariff refunds as a unique item, as a 1-off item." — Jeremy Adam Fletcher (CFO)
SG&A per store and petroleum price pass-through
Q (David Bellinger · Mizuho): First, how much of the 4.5%–5% SG&A growth per store is controllable versus industry-driven costs like wages and fuel? Second, will more price increases recapture the 40 basis points of gross margin lost from petroleum categories?
A: Management said most of the increased SG&A in the back half is from their internal actions to match higher store service levels and incentive pay tied to stronger sales. They noted some external cost pressure from fuel, freight and benefits. On petroleum, they said prices are competitive and historically pass through over time, so they can adjust rates but timing and market turn determine recovery.
"what we will tell you is based on historical, I cannot tell you exactly what is gonna happen in Q4" — Brent G. Kirby (PRESIDENT)
SG&A growth and incremental profitability
Q (Simeon Gutman · Morgan Stanley): Is incremental profitability being hit because operating costs to grow (SG&A) are higher? Will SG&A moderate so incremental margins widen?
A: Management said part of the higher SG&A reflects greater cost inflation and deliberate investments to capture share, including technology and store/network maintenance. They view those investments as important for long-term operating profit dollar growth, though some spending sets a higher short-term floor and some pressures are outside their control.
"I think there is some component of just more significant cost inflation within that number than what we would have seen if, you know, maybe in years past, say, 10, 12 years ago." — Jeremy Adam Fletcher (CFO)
weather (El Niño) impact on comps
Q (Kate McShane · Goldman Sachs): How will the expected Super El Niño affect same-store sales, especially cold-weather DIY categories, and how would the company manage it compared with prior cycles?
A: Management said they do not rely on weather predictions and will focus on service levels and share gains regardless of winter severity. They noted some product failures can occur even in mild winters and that they remain confident in taking share on both sides of the business.
"I think our conviction just continues to be that no matter what the winter plays out like, that we continue to have our ability to take share on both sides of the business." — Brad W. Beckham
2027 comp outlook and buybacks vs costs
Q (Michael Lasser · UBS): Will next year likely be a below-average comp year after outsized share gains this year? Also, is the company shifting toward buybacks as operating costs stay elevated?
A: Management said they will not give a precise comp guide now and need more data on inflation and weather, but internally they expect to keep gaining share and not step back. On buybacks, they said increasing leverage to repurchase shares is an opportunistic choice, not a strategic shift; they will balance leverage, invest in the business, and return excess capital to shareholders.
"We have long said that we have a leverage target that is that is higher than where we had been at." — Jeremy Adam Fletcher (CFO)
store growth and distribution capacity
Q (Steven Forbes · Guggenheim): How will planned store growth for 2027 be supported regionally by DC capacity and automation, and can store openings keep accelerating in later years?
A: Management said 2027 store growth will be spread across most states and supported by distribution expansion and technology investments. They are pleased with returns from automation so far, expect additional DC projects to add capacity, and will continue to evaluate ROI; they will not give multi-year store growth percentages today.
"So far, we are pleased. With what we are seeing in terms of the return on those investments and the results we are getting." — Brent G. Kirby (PRESIDENT)