Valvoline Instant Oil Change Same-Store Sales Up Double Digits

Total quick lubes sales at Valvoline Inc. rose 26.6% to $200 million in the fiscal second quarter ended March 31, 2019, attributable to organic system-wide same-store sales growth of 10.8% and the addition of 186 net new stores when compared to the prior year.

The year-over-year increase in the number of Valvoline Instant Oil Change (VIOC) locations came from 76 net shop openings and 110 acquired locations. For the quarter, 26 net new shops were added: 12 company-owned and 14 franchise locations. Valvoline ended the quarter with 1,327 total VIOC shops.

VIOC company-owned same-store sales growth was 10.2% on top of an 11.2% gain a year ago for a two-year stack of +21.4%. Franchised same-store sales increased 11.2% on top of an 8.5% gain a year ago for a two-year stack of +19.7%.

According to management, same-store sales growth came from both increased transactions and average ticket. Marketing investments made in customer acquisition and retention programs sent transactions higher, while premium mix, pricing and an increase in revenue from non-oil-change services led to the improvement in average ticket.

Quick lubes gross profit margin decreased from 40.1% to 39.6% because of the reclassification of certain costs in connection with the adoption of a new revenue recognition standard. Nonetheless, segment operating income rose 15.8% to $44 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 15% to $53 million.

On April 12, Valvoline acquired 12 service centers in the Las Vegas area.

Management has increased its full-year same-store sales guidance for VIOC. The previous range was +7% to +8%. The new expectation is for +8% to +9%. The company still expects between 27 and 32 new company-owned VIOC shops this fiscal year, as well as between 60 and 70 new franchised VIOC locations.