(Adds closing stock prices, short interest data)
July 5 (Reuters) - Shares of U.S. auto parts retailers fell sharply on Wednesday after O'Reilly Automotive Inc said its same-store sales were much below the company's estimates for the second quarter because of a mild winter and weak demand.
O'Reilly's stock ended down 18.9 percent to $178.77, its biggest daily percentage drop on record, and also took down shares of its peers.
The company said sales at stores open for at least 12 months rose 1.7 percent, compared with its forecast of an increase of 3 percent to 5 percent.
Analysts on average were expecting O'Reilly's quarterly same-store sales to rise about 4 percent, according to Thomson Reuters I/B/E/S.
Weak demand likely reflected muted confidence from lower-end consumers, people earning less than $50,000 annually, who had less cash, partly because of rising healthcare, debt and housing costs, Wedbush analyst Seth Basham said.
These consumers are among the do-it-yourself (DIY) after-market auto parts industry's core customer group.
Confidence among minorities, such as Hispanics, a key group for DIY auto retailers, was sinking. They avoided leisure trips and saved money for fear of being detained under the Trump administration's immigration policy, Basham said.
Rising competition from e-commerce players such as Amazon.com Inc may also have been one of the factors impacting O'Reilly's same-store sales, analysts said.
O'Reilly's, which generated about 58 percent of its 2016 sales from DIY customers, said comparable store-sales shortfall would also have an impact on its operating profitability in the second quarter.
Shares of rivals Autozone Inc and Advance Auto Parts Inc, also hit multi-year lows.
Advance Auto closed down 11.1 percent at $105.21 and Autozone dropped 9.6 percent to $516.83.
Short sellers had been preparing to make money on the sector. Short interest in the three retailers hit a 2017 high of $4.8 billion on June 14, according to S3 Partners data. It dropped to $4.2 billion by Monday and is expected to slide to $3.7 billion after Wednesday's price action.
"Weve seen additional shorting in all three stocks as short sellers continue to build their positions in anticipation of further weakness in the sector," S3 Partners wrote on Wednesday after the market close.
O'Reilly will report second-quarter results on July 26.
Shorts in the three stocks have made about $1.83 billion so far this year, S3 Partners said. (Reporting by Ankit Ajmera in Bengaluru; additional reporting by Rodrigo Campos in New York; Editing by Gabriella Borter and Grant McCool)