AutoZone Q2 Profit Rises, Beats View

(RTTNews) - Automotive parts retailer AutoZone, Inc. (AZO) on Tuesday reported an 8 percent increase in profit for the second quarter from last year, reflecting growth in sales and higher inventory on new store openings. Earnings per share for the quarter beat analysts' expectations, while revenues matched their estimates.

AutoZone's net income for the second quarter increased to $228.61 million or $7.43 per share from $211.72 million or $6.51 per share in the previous-year quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $7.28 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 5.3 percent to $2.26 billion from $2.14 billion in the prior-year quarter. Analysts were looking for revenue of $2.26 billion.

Domestic same store sales, or sales for stores open at least one year, grew 3.6 percent for the quarter, the same as in the year-ago period.

Gross margin for the quarter edged up to 52.7 percent from 52.2 percent last year. The improvement in gross margin reflects higher merchandise margins. This was partially offset by higher supply chain costs associated with current year inventory initiatives.

AutoZone's inventory increased 3.9 percent from last year, driven primarily by new store openings over the last twelve months.

AutoZone said that at the end of the quarter, it has expanded its 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 its over 5,000 domestic AutoZone stores.

The company also plans to open about five additional Mega Hubs by the end of the fiscal year.

AZO closed Monday's trading at $774.57. In Tuesday's pre-market activity, the stock is adding $20.43 or 2.64 percent to $795.00.