Is Amazon Dismantling the Auto Parts Industry?

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O’Reilly Automotive Inc. (NASDAQ: ORLY) was under fire early Wednesday morning after the auto parts retailer announced its same-store sales numbers ahead of its earnings report. Although this news is specific to just O’Reilly and sent shares to a 52-week low, it could be indicative of the industry as a whole.

Take a look at its competition: Advance Auto Parts Inc. (NYSE: AAP) and AutoZone Inc. (NYSE: AZO) also hit multiyear lows on the day as well. So there has to be some bigger power at work here, and it seems that Amazon.com Inc. (NASDAQ: AMZN) is the one to blame.

As for O’Reilly’s report, the company said that its same-store sales increased only 1.7%, below its previously issued guidance of 3% to 5%. This also fell below the consensus at FactSect that called for 3.9%.

CEO Greg Henslee commented that the company has faced a more challenging sales environment than it expected for the quarter due to continued headwinds. Henslee closed by saying:

We remain confident in the long-term health of our industry and our team’s ability to provide exceptional customer service and take market share in this challenging demand environment.

This “challenging demand environment” could refer to its brick-and-mortar competition in Advance Auto and AutoZone, but it seems more appropriate to consider Amazon’s entrance into this industry as a big headwind for those involved.

Keep in mind that within the past year, Amazon has made deals with the largest auto parts makers in the United States. And at this point, most large auto parts suppliers are selling to Amazon.

Just this past September, Jefferies issued a report saying that Amazon was offering same-day delivery for auto parts in 40 major U.S. cities. Not only this, but the firm also noted that the prices were on average 23% less than these major chains.

If O’Reilly and the auto parts industry can’t find a way to even the playing field, Amazon just might take over, just like it did with Whole Foods in its newest move into grocers.

Shares of O’Reilly were last seen trading down about 18% at $180.66, with a consensus analyst price target of $294.82 and a 52-week range of $179.56 to $292.84.

Advance Auto was down more than 12% at $103.44. The stock has a 52-week range of $102.24 to $177.83 and a consensus price target of $156.57.

AutoZone shares were down more than 8% at $523.08, with a consensus price target of $740.45 and a 52-week trading range of $520.86 to $819.54.

Amazon was up fractionally at $959.70, with a 52-week range of $710.10 to $1,017.00. The consensus price target is $1,120.44.