MEMPHIS, Tenn. — AutoZone reported net sales of $1.5 billion for its first quarter (12 weeks) ended Nov. 22, an increase of 1.6 percent from fiscal first quarter 2008 (12 weeks). Domestic same store sales, or sales for stores open at least one year, decreased 1.5 percent for the quarter.
Operating income for the quarter increased $1.2 million, or 0.5 percent, over the same period last year to $238.5 million, while diluted earnings per share increased 10.1 percent to $2.23 per share from $2.02 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 50.1 percent (versus 49.9 percent last year). The improvement in gross margin was positively impacted by category management efforts. Operating expenses, as a percentage of sales, were 34 percent (versus 33.6 percent last year). The increase in operating expenses, as a percentage of sales, primarily reflected higher occupancy costs and self insurance expenses versus last year.
Under its share repurchase program, AutoZone repurchased 2.2 million shares of its common stock for $272 million during the first quarter, at an average price of $122 per share. The company has $337 million remaining under its current share repurchase authorization.
The company’s GAAP inventory increased 6.6 percent over the same period last year. However, adjusted inventory per store, which includes supplier owned pay-on-scan inventory, was $513 thousand versus $507 thousand last year, an increase of 1.3 percent. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $43 thousand from $50 thousand last year.
"We are pleased to report our ninth consecutive quarter of double digit earnings per share growth. In this challenging macro economic environment, growing operating income is difficult, but through the dedication and commitment of our 57,000+ AutoZoners across North America, we were able to accomplish this goal. We were disappointed with our sales performance early in the quarter, as we were impacted by the disruption caused by Hurricanes Gustav and Ike. Beginning in October, our sales were more consistent with recent quarterly performance. Despite the challenges in the broader economy, we remain committed to our long range plans and believe the ultimate determinant of our success will be our strategies and our execution of those strategies. At the end of the first quarter, our balance sheet was in excellent condition and we remain committed to our disciplined approach to growing operating earnings while utilizing our capital effectively," said Bill Rhodes, chairman, president and chief executive officer.
During the quarter AutoZone opened 30 new stores and replaced two stores in the U.S. and opened two stores in Mexico. As of Nov. 22, the company had 4,122 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 150 stores in Mexico.
