CarParts.com CEO on post-pandemic opportunity in auto parts e-commerce (NASDAQ:PRTS)

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CarParts.com (NASDAQ: PRTS) was one of the stars of the lockdown era, rising from a share price of around $1 to over $20 at its pandemic peak. Since then, however, the stock has quickly fallen back to earth.

Nonetheless, CEO David Meniane sees a future growth path to these lofty levels.

“The auto parts industry is one of the last to be disrupted by the internet,” he said. “Whether it’s pet food, clothing, electronics or whatever, the percentage of transactions done online is around 20-30%. For auto parts, it’s less. by 5%.

As such, Meniane sees a long streak of penetration for online sales to grow and come to compete with many of the brick-and-mortar players currently dominating the space. He cited the company’s “Do-It-For-Me capability,” which allows customers to select a part and schedule an appointment with a certified repair shop in their area as a key to expanding the addressable market. and provide service to customers less eager to purchase parts. for their own DIY efforts.

Aging cars

Soaring prices for automobiles and used automobiles in particular have encouraged many consumers to extend the life of their automobiles. According to S&P Mobility, the average age of cars on the roads in the United States rose to 12.2 years in 2022, a record. In 2002, the average age according to IHS Markit was 9.6 years.

As the average age of automobiles has increased, the purchase of auto parts to keep older vehicles on the road has also increased. Although the decision to extend the life of cars has some correlation with soaring used car prices, Meniane said the trend has more to do with improvements in manufacturing and increased longevity of authors in general. .

“Cars will continue to age, regardless of the economic environment,” he concluded. “Kia and Hyundai, for example, have made significant manufacturing improvements. These cars last longer, giving us the ability to generate more revenue over a longer period of time. »

Meniane added that his company’s website has specially curated auto parts for electric vehicle owners and their specific needs, which he says will help the company increase its market share in the future.

David Meniane, CEO of CarParts.com Inc. (Photo courtesy)

Profit target for now

In the short term, Meniane has made it clear that the business will focus on profitability rather than the rapid growth he still envisions.

“The macro environment is changing, so we’re taking a more conservative approach and wanting to be ready for whatever is thrown at us,” he said. “We’re focused on free cash flow, focusing on having no debt, just the fundamentals of a strong, stable business. That’s the pivot we do.

Meniane concluded that the company does not subscribe to the “growth at all costs” mantra that has become popular among e-commerce companies in recent years. In the current environment, he expects the “laser focus on positive unit economics” to be rewarded by the market.

CarParts.com (PRTS) shares surge 31.9% higher since Wednesday’s close. However, the stock still marked an almost 55% down since the start of the year.

Read the company’s latest earnings call transcript.

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