Auto-parts retailer AutoZone Inc. (AZO) Wednesday said profit in the third quarter increased nearly 7 percent from last year, amid improved sales. However, domestic same store sales saw a marginal drop.
Bill Rhodes, CEO, said, ''We are pleased to report our twenty-seventh consecutive quarter of double digit earnings per share growth. Our organization executed our game plan and delivered another quarter of solid performance.''
Net income increased to $265.58 million from $248.59 million in the year-ago quarter. On a per share basis, earnings rose to $7.27 from $6.28.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $7.23 per share for the quarter. Analysts' estimates typically exclude special items.
Gross margin improved to 51.8 percent from 51.6 percent, primarily due to lower acquisition costs.
Net sales rose to $2.21 billion from the prior year's $2.11 billion. Analysts had a consensus revenue estimate of $2.22 billion for the quarter.
Domestic same store sales or sales at stores open at least one year slid 0.1 percent for the quarter.
Rhodes noted that sales results for the quarter finished below the company's expectations. Yet, there were noticeable improvements during the final four weeks of the quarter, specifically in the more recently challenged Northeastern and Midwestern markets.
Inventory increased 6.3 percent, driven by higher store count and continued strategic investments in hard parts assortment. Net inventory, which is merchandise inventories less accounts payable per store, was a negative $63 thousand compared to negative $48 thousand last year.
Under its share repurchase program, AutoZone bought back 833 thousand shares of its common stock for $325 million during the quarter, at an average price of $390 per share. The company had $278 million remaining under its share repurchase authorization when the quarter ended.
During the quarter ended May 4, AutoZone opened 33 new stores and relocated three stores. The retailer closed one store in the U.S. and opened seven new stores in Mexico.
The stock settled at $409.05 on Tuesday.
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