AutoZone Inc. has reported net sales of $2.5 billion for its first quarter (12 weeks) ended Nov. 19, 2016, an increase of 3.4 percent from the first quarter of fiscal 2016 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 1.6 percent for the quarter.
Net income for the quarter increased 7.8 percent over the same period last year to $278.1 million, while diluted earnings per share increased 13 percent to $9.36 per share from $8.29 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.7 percent (versus 52.5 percent for the same period last year). The company said the improvement in gross margin was attributable to lower acquisition costs, partially offset by higher supply chain costs associated with current year inventory initiatives (-14 bps). Operating expenses, as a percentage of sales, were 34.1 percent (versus 34.2 percent the same period last year). Operating expenses, as a percentage of sales, were relatively flat to last year as favorability across several areas was offset by higher domestic store payroll (-9 bps).
Under its share repurchase program, AutoZone repurchased 478,000 shares of its common stock for $363 million during the first quarter, at an average price of $759 per share. At the end of the first quarter, the company had $783 million remaining under its current share repurchase authorization.
The company’s inventory increased 7.3 percent over the same period last year, driven by new stores and increased product placement. Inventory per location was $647,000 versus $624,000 last year and $625,000 last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $67,000 versus negative $66,000 last year and negative $80,000 last quarter.
“I would like to thank our entire organization for delivering another quarter of very solid results,” said Bill Rhodes, chairman, president and CEO. “We are pleased to report our 41st consecutive quarter of double-digit earnings per share growth. We remain committed to providing superior customer service and trustworthy advice. For the quarter, we reached record first quarter sales and earnings per share while opening 21 new locations and 35 commercial programs. We also continued with the rollout of our inventory availability initiatives, including expanding our multi-deliveries per week to 161 net additional stores. We will continue with our deliberately paced multiple delivery rollouts in 2017, and we will continue to open more Mega Hub locations. We have opened our second distribution center in Mexico, and we are in the process of building two new domestic distribution centers. We believe these initiatives will allow us to continue to meet our customers’ needs across all selling channels. As we continue to invest capital in all our businesses, we remain committed to our disciplined approach of increasing operating earnings and utilizing our capital effectively.”
During the quarter, AutoZone opened 16 new stores and relocated two stores in the U.S., and opened five new stores in Mexico. As of Nov. 19, the company had 5,313 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 488 stores in Mexico, 26 IMC branches and eight stores in Brazil for a total count of 5,835.
