AutoZone Inc. (AZO) on Wednesday reported a 7 percent increase in profit for the fourth quarter from last year, reflecting improved margins and sales growth. Earnings per share beat analysts' expectations, while revenue missed their estimates. The auto-parts retailer also noted that same-store sales growth was below its own expectations.
The Memphis, Tennessee-based company's domestic same store sales, or sales for stores open at least one year, increased 2.1 percent for the quarter. This compares to an increase of 4.5 percent in the year-ago period.
Bill Rhodes, chairman, president and chief executive officer of AutoZone said, "While our same store sales performance was below our expectations for the quarter, we are confident we are well positioned to again deliver strong results for our new fiscal year."
The demand for automotive replacement parts and maintenance tools has sprung up primarily from necessity, rather than extravagance, as weak economic conditions have forced many consumers to delay purchases of new cars and to repair and maintain existing vehicles instead.
AutoZone's gross margin percentage for the quarter expanded 60 basis points from last year to 51.8 percent, reflecting an improvement in merchandise margins primarily from lower acquisition costs.
Operating expenses, as a percentage of sales, edged up to 31.6 percent from 31.4 percent last year. Operating expenses were negatively impacted by higher store payroll and higher self-insurance costs, partially offset by lower incentive compensation.
AutoZone's net income for the fourth quarter was $323.73 million or $8.46 per share, up from $301.47 million or $7.18 per share in the year-ago period.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $8.41 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter rose 5 percent to $2.76 billion from $2.64 billion in the prior year, but missed analysts' consensus estimate of $2.80 billion.
Total auto parts sales for the quarter increased 4.6 percent from last year to $2.71 billion, with sales per average store growing to $546,000 from $543,000 a year ago.
Inventory for the quarter increased 6.6 percent from last year, driven primarily by new store openings.
For fiscal year 2012, AutoZone's net income increased to $930.37 million or $23.48 per share from $848.97 million or $19.47 per share in the prior year. Net sales rose 7 percent to $8.60 billion from $8.07 billion in the previous year.
Analysts expected the company to earn $23.37 per share for the year on revenues of $8.64 billion.
Domestic same store sales for the year increased 3.9 percent.
For the fiscal year, AutoZone repurchased 3.8 million shares of its common stock for $1.4 billion, at an average price of $359 per share. At the fiscal year end, the company had $356 million remaining under its current share repurchase authorization.
AZO closed Tuesday's trading at $357.84. In Wednesday's pre-market, the stock is down $14.53 or 4.06 percent to $343.31.
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