AutoZone Results Misses Expectations

AutoZone, Inc. AZO announced that its profit grew 6.0 percent in the third quarter from the last year driven by 4.0 percent increase in net sales. The company also gained from 2.0 percent growth in the same stores.

AutoZone reported net income of $327.5 million in the third quarter, up from $309.07 million in the year-ago quarter. Its earnings advanced 12.6 percent to $10.77 a share from $9.57 a share in the comparable period.

The company's net sales were $2.6 billion for third quarter, an increase of 4.0 percent from the previous quarter's 2.49 billion. Its domestic same store sales or sales for stores open at least one year, witnessed 2.0 percent growth for the quarter.

AutoZone's chairman, president and CEO, Bill Rhodes, commented, "We would like to thank our entire organization for delivering another quarter of solid results: our thirty-ninth consecutive quarter of double digit earnings per share growth. AutoZoners across the company remain committed to providing superior service to our customers and that dedication has resulted in consistent, solid performance. During the quarter, we continued implementation of our inventory availability initiatives. At the end of the quarter, we have expanded our increased frequency of distribution center deliveries initiative to 1,600 domestic AutoZone stores and expect by the end of the fiscal year to be servicing approximately 2,000 of our over 5,000 domestic AutoZone stores."

He continued, "We also plan to open approximately four additional Mega Hubs by the end of the fiscal year to finish with a total of 11. The results of our initiatives continue to meet or exceed our expectations, further confirming our new inventory deployment strategy. Regarding the third quarter's results, sales were below our expectations as weather negatively impacted sales primarily in Midwestern, Middle Atlantic, and Northeastern states. Additionally, the quarter was impacted by a legal charge along with a discrete tax benefit, which netted to a reduction to earnings per share of $0.11 per share. As we continue to strategically invest in our business in order to support our long term growth, remaining committed to our disciplined approach to growing operating earnings and utilizing our capital effectively, we are excited by our opportunities this summer."

The company said that it bought back 687 thousand shares of its common stock for $533 million in the third quarter, at an average price of $775 per share. It still had $765 million remaining under its current share repurchase authorization.

In the pre-market trading on Tuesday, the stock traded 0.82 percent down.