AutoZone Q1 Profit Rises, Results Beat View

(RTTNews) - Automotive parts retailer AutoZone, Inc. (AZO) on Tuesday reported a 9 percent increase in profit for the first quarter from last year on higher sales and margins, reflecting inventory improvements and lower gas prices.

Bill Rhodes, chairman, president and chief executive officer, said, "Our sales growth improved significantly this quarter which we believe was a result of our continued efforts to improve the business, most notably inventory availability, combined with lower gas prices and favorable weather in the last two weeks of our quarter."

AutoZone's net income for the first quarter increased to $238.31 million or $7.27 per share from $218.09 million or $6.29 per share in the previous year. On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $7.16 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 8 percent to $2.26 billion from $2.09 billion in the prior-year quarter. Analysts were looking for revenue of $2.21 billion.

Domestic same store sales, or sales for stores open at least one year, grew 4.5 percent for the quarter, compared to an increase of 0.9 percent in the year-ago period.

Gross margin for the quarter rose to 52.1 percent from 51.9 percent last year.

The improvement in gross margin reflects higher merchandise margins and lower shrink expense. These were partially offset by the impact of negative 24 basis points on margin from the acquisition of Interamerican Motor Corp. or IMC completed this quarter.

AutoZone's inventory increased 11.3 percent from last year, driven by increased product placement, new stores and the recent acquisition of IMC. Inventory per store was $604 thousand compared to $566 thousand last year.

Under its share repurchase program, AutoZone repurchased 571 thousand shares of its common stock for $300 million during the quarter, at an average price of $525 per share. At the end of the quarter, the company had $570 million remaining under its current share repurchase authorization.

During the quarter, AutoZone opened 22 new stores in the U.S., 4 new stores in Mexico, and completed the acquisition of IMC's 17 branches.

At the end of the quarter, the company had 5,006 Autozone stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 406 stores in Mexico, five stores in Brazil, and 17 IMC branches for a total count of 5,434.

AZO closed Monday's trading at $581.05, down $6.9 or 1.17 percent on a volume of 400,186 shares.