AutoZone motors ahead, comps soften
The nation’s leading auto parts retailer produced modest sales and profit growth during its third quarter but managed to achieve double digit earnings per share growth thanks to stock buyback activity.
AutoZone sales increased 4% to $2.6 billion during the quarter ended May 7, thanks to the addition of new stores and a 2% same-store sales increase. Net income increased 6% to $327.5 million, while earning per share increased 12.6% to $10.77 as the company spent $533 million to repurchase 687,000 shares.
The share repurchase activity kept alive AutZone’s streak of 39 consecutive quarters of double digit earnings per share growth.
“AutoZoners across the company remain committed to providing superior service to our customers and that dedication has resulted in consistent, solid performance,” said AutoZone chairman, president and CEO Bill Rhodes. “During the quarter, we continued implementation of our inventory availability initiatives. At the end of the quarter, we have expanded our increased frequency of distribution center deliveries initiative to 1,600 domestic AutoZone stores and expect by the end of the fiscal year to be servicing approximately 2,000 of our over 5,000 domestic AutoZone stores.”
The company also plans to open approximately four additional distribution facilities it calls “Mega Hubs” by the end of the fiscal year to finish with a total of 11.
“The results of our initiatives continue to meet or exceed our expectations, further confirming our new inventory deployment strategy,” Rhodes said. “Regarding the third quarter’s results, sales were below our expectations as weather negatively impacted sales primarily in Midwestern, Middle Atlantic, and Northeastern states.”
During the quarter, AutoZone opened 33 new stores in the U.S. and seven new stores in Mexico. The company now operates a total of 5,226 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 458 stores in Mexico, 25 IMC branches, and eight stores in Brazil for a total count of 5,717.