MEMPHIS, TN – AutoZone has reported net sales of $1.474 billion for its third quarter (12 weeks) ended May 5, an increase of 4 percent from fiscal third quarter 2006. Domestic same store sales, or sales for stores open at least one year, increased 0.4 percent for the quarter.

Net income for the quarter increased 5 percent over the same period last year to $151.6 million, while diluted earnings per share increased 15 percent to $2.17 per share from $1.89 per share reported in the year-ago quarter.

For the quarter, gross profit, as a percentage of sales, was 49.9 percent (versus 49.7 percent last year). The improvement in gross margin was largely due to the company's ongoing category management initiatives and a focus on driving supply chain efficiencies. Additionally, operating expenses, as a percentage of sales, were 31.9 percent (versus 31.8 percent last year). The increase in operating expenses, as a percentage of sales, reflected higher occupancy costs versus last year.

Under its share repurchase program, AutoZone repurchased 1.9 million shares of its common stock for $244.8 million during the third quarter, at an average price of $128 per share. For the fiscal year to date, the company has repurchased 3.8 million shares of its common stock for $464.5 million, at an average price of $123 per share.

The company's adjusted inventory per store, which includes supplier owned pay-on-scan inventory, as of May 5, was $504,000 versus $495,000 last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store level to $73 thousand from $82 thousand last year.

"We continue to be pleased with our earnings performance, and are encouraged with the progress we are making on our major initiatives. While we experienced disappointing sales in the first half of April, we were pleased to deliver 15 percent growth in earnings per share for the quarter. As we enter our busiest selling season, we feel we are well positioned based on the progress we have made with our sales initiatives including improving merchandise assortment and implementation of Z-net, our updated electronic parts catalog. As our operating model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, president and chief executive officer.

During the quarter, AutoZone opened 33 new stores and replaced five stores in the U.S. Additionally, the company re-opened one of the remaining two U.S. stores closed due to hurricane-related damage in last year's first quarter. As of May 5, the company had 3,881 stores in 48 states plus the District of Columbia and Puerto Rico in the U.S. and 110 stores in Mexico.

For more information about AutoZone go to: http://www.autozone.com.