Auto-parts retailer AutoZone Inc. (AZO) Tuesday said profit in the second quarter increased from the prior year, helped by a marginal growth in sales. However, same store sales slipped, amid a delay in processing of tax returns.
Net income advanced 5.6 percent to $176.25 million or $4.78 per share from $166.93 million or $4.15 per share in the prior year. On average, 20 analysts polled by Thomson Reuters expected earnings per share of $4.76 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales grew 2.8 percent to $1.86 billion from $1.8 billion in the same period last year, missing consensus estimates of $1.88 billion.
Domestic same store sales, or sales for stores open at least one year, slid 1.8 percent for the quarter.
Bill Rhodes, CEO, said, "While we are pleased to report our twenty-sixth consecutive quarter of double digit earnings per share growth, we were not pleased with our same store sales results for the quarter."
Noting that it has historically seen sales increase significantly during the final two weeks of the second quarter, AutoZone said total domestic auto parts same store sales for this period dropped 8 percent this year. The company believes that this was due mainly to the two week delay in processing of tax returns.
Sales in the upcoming quarter are expected to recover to more normalized sales volumes.
Inventory increased 7 percent, driven by an increase in store count and continued strategic investments in hard parts assortment. Net inventory, which is merchandise inventories less accounts payable per store, was a negative $54 thousand compared to negative $51 thousand last year.
Gross margin improved to 51.9 percent from 51.3 percent, primarily driven by lower acquisition costs.
AutoZone repurchased 513 thousand shares for $185 million during the quarter, at an average price of $361 per share. At the end of the quarter, the company had $603 million remaining under its current share repurchase authorization.
During the quarter, AutoZone opened 32 new stores in the U.S. and opened nine new stores in Mexico.
AZO closed at $378.54 on Monday. The stock is losing 2.3 percent in pre-market activity.
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