MEMPHIS, TN — AutoZone reported sales of $1.286 billion for its first fiscal quarter, which ended on November 20, up 0.3 percent over fiscal 2003. Same store sales, or sales for domestic stores open at least one year, decreased 3 percent for the quarter. Gross profit, as a percentage of sales, for the quarter improved by 44 basis points while operating expenses, as a percentage of sales, increased by 40 basis points. This resulted in an operating margin of 16.8 percent, up 4 basis points from last year. Operating profit increased 0.6 percent over the prior year.
Net income, as a percentage of sales, for the quarter was up slightly over the same period last year to $123 million, and diluted earnings per share, reflecting net income and the benefit of the company’s share repurchase program, increased 12.7 percent to $1.52 per share from $1.35 per share reported in the year-ago quarter.
Return on invested capital for the trailing four quarters increased to 24.9 percent from 24 percent the previous year.
Under its ongoing share repurchase program, AutoZone repurchased 400,000 shares of its common stock for $30 million during the first quarter, at an average price of $84 per share. Since 1998, cumulative share repurchases have totaled $3.7 billion, or 82.6 million shares at an average price of $45 per share.
For the quarter, gross profit, as a percentage of sales, was 48.3 percent (versus 47.8 percent last year) while operating expenses, as a percentage of sales, were 31.4 percent (versus 31 percent last year). However, both the prior year’s gross profit, as a percentage of sales, and operating profit, as a percentage of sales, benefited 125 basis points from a $16 million pre-tax benefit due to warranty negotiations. The opening of 28 new AutoZone stores along with higher utility and fuel costs contributed to the increase in operating, selling, general and administrative expenses as a percent of sales.
The company’s gross inventory levels (the reported balance sheet inventory, which is total inventory less supplier owned Pay On Scan inventory) per store as of November 20, were $464 thousand versus $459 thousand last year. Net inventory, defined as gross inventory less accounts payable, declined on a per store level to $40 thousand from $44 thousand last year.
AutoZone Chairman, President and CEO Steve Odland said high gas prices during the first quarter posed a challenge for the retailer, as many consumers held off on doing some preventative maintenance.
During the quarter, AutoZone opened 23 new stores, re-opened five stores under the AutoZone brand formerly operated as ABC Auto Parts, a regional auto parts chain, and replaced one store in the U.S. while additionally opening one new store in Mexico. As of November 20, the company had 3,448 domestic stores and 64 stores in Mexico.
For more information about AutoZone, go to: www.autozone.com.
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