Autozone Q1 Profit Tops View, But Sales Miss

(RTTNews) - Automotive parts retailer AutoZone, Inc. (AZO) reported Tuesday a profit for the first quarter that increased seven percent from last year, reflecting improved margins, lower expenses, and sales growth. Earnings per share topped analysts' expectations by a penny, while quarterly sales missed their estimates by a whisker.

"Our organization has been very focused this past quarter on several strategic fronts. We are currently deploying updated and expanded inventory assortments across our domestic stores based on our recently enhanced models," Chairman, President and CEO Bill Rhodes said.

The Memphis, Tennessee-based specialty retailer and distributor of automotive replacement parts reported net income of $218.09 million or $6.29 per share for the first quarter, higher than $203.45 million or $5.41 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $6.28 per share in the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter improved 5.1 percent to $2.09 billion from $1.99 billion in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of $2.10 billion by a whisker.

Domestic same store sales, or sales at established stores, increased 0.9 percent on top of a 0.3 percent growth last year.

Gross margin percentage expanded 10 basis points to 51.9 percent from last year's 51.8 percent, due to lower acquisition costs, partially offset primarily by the inclusion of the recent acquisition of AutoAnything.

Operating expenses, as a percentage of sales, declined 10 basis points to 33.5 percent from last year's 33.6 percent.

Total auto parts sales for the quarter increased 3.6 percent to $2.02 billion from the year-ago quarter, with sales per average store growing to $394,000 from $388,000 a year ago, and sales per average square foot edging up to $60 from last year's $59.

Inventory for the quarter increased 9.1 percent from last year, driven by a combination of increased product placement in stores and new store openings. Inventory per store was $566,000, up from $537,000 in the prior-year quarter.

"Finally, we are continuing to test other initiatives to enhance inventory availability. While these tests remain in early stages, we are learning a great deal, and we are optimistic that we will identify further opportunities to deploy inventory in a fiscally prudent manner. We remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively," Rhodes added.

AZO closed Monday's regular trading session at $457.34, up $0.46 on a volume of 0.57 million shares. In the past 52-week period, the company's stock has been trading in a broad range of $341.98 to $470.47.