AutoZone moves into the fast lane in Q2

Efforts to rework its distribution process netted big wins in the second quarter for AutoZone, which reported increases in same-store sales and profit.



The auto parts retailer posted net sales of $2.3 billion for its second quarter ended Feb. 13, an increase of 5.3% from the second quarter of fiscal 2015. Same-store sales increased 3.6% for the quarter. Net income for the quarter increased 8% over the same period last year to $228.6 million, while diluted earnings per share increased 14.2% to $7.43 per share from $6.51 per share in the year-ago quarter.



“We would like to thank our entire organization for delivering another quarter of solid results: our thirty-eighth consecutive quarter of double digit earnings per share growth. Our strong culture of providing exceptional customer service continues to be a key point of differentiation. 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 1,300 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. We also plan to open approximately five additional Mega Hubs by the end of the fiscal year. Our results to date continue to meet or exceed our expectations, further confirming our new inventory deployment strategy. While we continue to strategically invest in our business in order to support our growth, we remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively,” said Bill Rhodes, chairman, president and CEO.



The company recently implemented a plan to increase inventory levels and selection, as well as opening mega hub locations and making more frequent deliveries to stores. The company’s inventory increased 3.9% over the same period last year, driven primarily by new store openings over the last twelve months. Inventory per location was $633 thousand versus $631 thousand last year and $624 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis was a negative $57 thousand versus negative $47 thousand last year and negative $66 thousand last quarter.



Under its share repurchase program, AutoZone repurchased 197 thousand shares of its common stock for $150 million during the second quarter, at an average price of $761 per share. At the end of the second quarter, the company had $548 million remaining under its current share repurchase authorization.



During the quarter ended Feb. 13, AutoZone opened 30 new stores and relocated two stores in the U.S., opened nine new stores in Mexico, and opened two new IMC branches. As of Feb. 13, the company had 5,193 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 451 stores in Mexico, 24 IMC branches, and eight stores in Brazil for a total count of 5,676.