AutoZone wins again, extends streak

Slow and steady is winning the race at AutoZone where the company just notched its 34th consecutive quarter of double digit profit growth and has a stock pricing heading toward $700.

AutoZone’s sales in the company’s second quarter ended Feb. 14, increased 7.7% to slightly more than $2.1 billion and same store sales increased 3.6%. Net income increased 9.8% to $218 million with an aggressive stock buyback program enabling earnings per share to advance 15.6% to $6.51 cents from $5.63 the prior year and well ahead of analysts’ estimate of $6.38.

“We continued to diligently work on our inventory availability initiatives, including recently expanding our multi-deliveries per week test to more than 300 additional stores. Also, the expanded hard parts inventory we have deployed throughout our chain over the last year continues to be a contributor to our sales success,” said Bill Rhodes, AutoZone chairman, president and CEO. “While we have continued 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.”

Capital usage in the second quarter involved the addition of 37 new stores in the U.S. and five new stores in Mexico. The company now operates 5,042 stores in the U.S. and 411 stores in Mexico.

Share repurchase activity is another major usage of capital and has helped the company maintain its double digit earnings per share streak. In the second quarter, AutoZone said it spent $26 million to repurchase 43,000 shares at an average price of $606. Year to date, the company has repurchased 614,000 shares for $326 million at an average price of $530 per share. The company has plenty of dry powder to buy back more share during the second half of its fiscal year with $544 million remaining under its current share repurchase authorization.