AutoZone Q2 Profit Rises, Results Beat View

(RTTNews) - Automotive parts retailer AutoZone, Inc. (AZO) on Tuesday reported a 10 percent increase in profit for the second quarter from last year, reflecting higher inventory on increased product placement and new stores. Both revenue and earnings per share for the quarter beat analysts' estimates.

Bill Rhodes, chairman, president and chief executive officer, said, "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."

AutoZone's net income for the second quarter increased to $211.72 million or $6.51 per share from $192.83 million or $5.63 per share in the previous-year quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $6.38 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 8 percent to $2.14 billion from $1.99 billion in the prior-year quarter. Analysts were looking for revenue of $2.12 billion.

Domestic same store sales, or sales for stores open at least one year, grew 3.6 percent for the quarter, compared to an increase of 4.3 percent in the year-ago period.

Gross margin for the quarter edged up to 52.2 percent from 52.1 percent last year.

The improvement in gross margin reflects higher merchandise margins. This was partially offset by the impact of negative 29 basis points on margin from the acquisition of Interamerican Motor Corp. or IMC during September 2014.

AutoZone's inventory increased 11.9 percent from last year, driven by increased product placement, new stores and the recent acquisition of IMC. Inventory per location was $631 thousand compared to $589 thousand last year.

Under its share repurchase program, AutoZone repurchased 43 thousand shares of its common stock for $26 million during the quarter, at an average price of $606 per share. At the end of the quarter, the company had $544 million remaining under its current share repurchase authorization.

During the quarter, AutoZone opened 37 new stores in the U.S., 5 new stores in Mexico, closed one store in the U.S., and relocated one store in the U.S. IMC also opened one new branch.

At the end of the quarter, the company had 5,042 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 411 stores in Mexico, five stores in Brazil, and 18 IMC branches for a total count of 5,476.

AZO closed Monday's trading at $649.53, up $6.85 or 1.07 percent on a volume of 326,449 shares.