Auto-parts retailer AutoZone Inc. (AZO) on Tuesday reported a 6 percent increase in profit for the first quarter from last year, reflecting improved margins and sales growth. Earnings per share beat analysts' expectations, while revenue missed their estimates.
AutoZone also said it has agreed to purchase the assets and select liabilities of AutoAnything, an online retailer of specialized automotive products. Financial terms of the deal were not disclosed.
Memphis, Tennessee-based AutoZone's domestic same store sales, or sales for stores open for at least one year, edged up 0.2 percent for the first quarter. This compares to an increase of 4.6 percent in the year-ago period.
AutoZone's gross margin percentage for the quarter expanded 70 basis points from last year to 51.8 percent, reflecting an improvement in merchandise margins primarily from lower acquisition costs and shrink expense.
Operating expenses, as a percentage of sales, were 33.6 percent compared to 33.4 percent in the same period last year. The increase in operating expenses, as a percentage of sales, was negatively impacted by higher store payroll, partially offset by lower advertising expense.
AutoZone's net income for the first quarter was $203.45 million or $5.41 per share, up from $191.13 million or $4.68 per share in the year-ago period.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $5.39 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter rose 4 percent to $1.99 billion from $1.92 billion in the prior-year period, but missed analysts' consensus estimate of $2.02 billion.
Bill Rhodes, chairman, president and chief executive officer of AutoZone said, "Regional sales discrepancies continued to challenge our results, however we began to see improvements in our more challenged regions late in the quarter."
Total auto parts sales for the quarter increased 3.4 percent from last year to $1.95 billion, while sales per average store declined to $388,000 from $391,000 a year ago.
Inventory increased 6.8 percent over the same period last year, driven primarily by new store openings.
Under its share repurchase program, AutoZone repurchased 855 thousand shares of its common stock for $317 million during the first quarter, at an average price of $371 per share. At the end of the first quarter, the company had $788 million remaining under its current share repurchase authorization.
AZO closed Monday's trading at $378.01, down $5.76 on a volume of 491,200 shares.
by RTT Staff Writer
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