AutoZone has reported net sales of $3.9 billion for its third quarter (12 weeks) ended May 7, 2022, an increase of 5.9% from the third quarter of fiscal 2021 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.6% for the quarter.

“We are very proud to report solid same store sales growth on top of last year’s remarkable 28.9%. Both our retail and commercial sales performance exceeded our expectations this quarter,” said Bill Rhodes, chairman, president and CEO. “While our commercial sales growth accelerated to 26%, our retail sales also remained healthy considering the tough comparison from a year ago. We continue to believe the initiatives we have in place position us well for our upcoming fourth quarter.”

For the quarter, gross profit, as a percentage of sales, was 51.91%, a decrease of 54 basis points versus the prior year. AutoZone said the decrease in gross margin was primarily driven by accelerated growth in its lower margin Commercial business. Operating expenses, as a percentage of sales, were 31.58% versus 30.44% last year. The increase in operating expenses, as a percentage of sales, was driven by payroll deleverage as last year’s historic comparable store sales drove significant leverage.

Operating profit decreased 2.2% to $785.7 million. Net income for the quarter decreased 0.6% over the same period last year to $592.6 million, while diluted earnings per share increased 9.6% to $29.03 from $26.48 in the year-ago quarter.

Under its share repurchase program, AutoZone repurchased 449,000 shares of its common stock for $900 million during the third quarter, at an average price of $2,006 per share. At the end of the third quarter, the company had $2.058 billion remaining under its current share repurchase authorization.

The company’s inventory increased 13.9% over the same period last year, primarily driven by inflation with the remaining growth driven by our growth initiatives, including megahubs, hubs and new stores. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $216 thousand versus negative $167 thousand last year and negative $198 thousand last quarter.

“We remain committed to providing the best and safest place to shop for everyone’s automotive needs. During these unique and challenging times, we strive to deliver exceptional customer service while focusing on our growth initiatives. We will take nothing for granted as we continue to prudently invest in our business and remain focused on generating solid returns on capital. We are committed to our long-term approach of increasing operating earnings and free cash flows while utilizing our balance sheet effectively,” said Rhodes.  

During the quarter, AutoZone opened 24 new stores in the U.S., opened four stores in Mexico and three stores in Brazil. As of May 7, 2022, the company had 6,115 stores in the U.S., 673 in Mexico and 58 in Brazil for a total store count of 6,846.