AutoZone, Inc. recently reported net sales of $2.5 billion for its second quarter (12 weeks) ended February 15, 2020, an increase of 2.6% from the second quarter of fiscal 2019 (12 weeks). Domestic same store sales, or sales for stores open at least one year, decreased 0.8% for the quarter.
Operating profit increased 2.0% to $407.9 million. Net income for the quarter increased 1.6% over the same period last year to $299.3 million, while diluted earnings per share increased 7.8% to $12.39 per share from $11.49 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, increased to 54.3% (versus 54.1% the same period last year) primarily driven by supply chain leverage. Operating expenses, as a percentage of sales, were 38.1% (versus 37.7% the same period last year), with deleverage primarily driven by domestic store payroll.
Under its share repurchase program, AutoZone repurchased 267 thousand shares of its common stock for $314.8 million during the second quarter, at an average price of $1,180 per share. At the end of the second quarter, the company had $962 million remaining under its current share repurchase authorization.
The company’s inventory increased 7.0% over the same period last year, driven by new stores and increased product placement. Inventory per store was $713 thousand versus $690 thousand last year and $694 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was a negative $41 thousand versus negative $58 thousand last year and negative $71 thousand last quarter.
“I would like to thank all AutoZoners across the enterprise for their strong focus on delivering an excellent and differentiated customer experience. Our sales performance in our fiscal second quarter did not meet our plans or expectations. We had particularly challenging sales in specific weather sensitive categories and geographies, indicating to us that the mild winter was a considerable headwind to our and our industry’s sales performance. In light of the challenging sales environment, our team again delivered solid earnings, growing EBIT by 2.0% and EPS by 7.8%. As we enter our seasonally strong second half of the year, we are optimistic about our prospects for the balance of the year. We continue to make good progress on our strategic initiatives primarily focused on great service, further penetration of the Commercial market, enhanced inventory assortments, improved local market expanded parts availability and leveraging technology to improve customer interactions and make us more efficient. We will continue to manage this business for the long-term and will invest capital using our disciplined approach all focused on delivering great service, terrific opportunities for our AutoZoners and ultimately strong returns for our investors while supporting the communities we serve,” said Bill Rhodes, chairman, president and CEO.
During the quarter ended February 15, 2020, AutoZone opened 25 new stores in the U.S., two in Mexico and one in Brazil. As of February 15, 2020, the company had 5,815 stores in the U.S., 608 stores in Mexico and 38 stores in Brazil for a total store count of 6,461.