AutoZone Q2 Profit Up 9%, Results Beat View

(RTTNews) - Automotive parts retailer AutoZone, Inc. (AZO) on Tuesday reported a 9 percent increase in profit for the second quarter from last year, reflecting higher sales and improved margins. Both revenue and earnings per share beat analysts' estimates.

The Memphis, Tennessee-based specialty retailer and distributor of automotive replacement parts reported net income for the second quarter of $192.83 million or $5.63 per share, up from $176.25 million or $4.78 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $5.55 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 7 percent to $1.99 billion from $1.86 billion in the same quarter last year and beat analysts' consensus revenue estimate of $1.97 billion.

Domestic same store sales or sales at established stores increased 4.3 percent in the quarter. This compared to a decline of 1.7 percent in the year-ago period.

Gross margin percentage expanded 20 basis points to 52.1 percent from last year's 51.9 percent, reflecting higher merchandise margins and lower shrink expense. These were partly offset by the inclusion of the recent acquisition of AutoAnything.

Operating expenses, as a percentage of sales, rose 50 basis points to 35.2 percent from last year's 34.7 percent. The increase in operating expenses was primarily due to the timing of advertising costs.

Total auto parts sales for the quarter increased 6.5 percent from the year-ago period to $1.91 billion, with sales per average store growing to $366,000 from $356,000 a year ago, and sales per average square foot edging up to $56 from last year's $54.

Inventory for the quarter increased 12 percent from last year, driven by a combination of increased product placement in stores and new store openings. Inventory per store was $589,000, up from $544,000 in the prior-year quarter.

AZO closed Monday's regular trading session at $541.23, up $2.79 or 0.52 percent on a volume of 0.38 million shares.