AutoZone today reported net sales of $2.5 billion for its second quarter (12 weeks) ended Feb. 9, 2019, an increase of 1.6 percent from the second quarter of fiscal 2018 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.6 percent for the quarter.

Net income for the quarter increased 1.8 percent over the same period last year to $294.6 million, while diluted earnings per share increased 10.7 percent to $11.49 per share from $10.38 per share in the year-ago quarter. Net income and diluted earnings per share benefited from Tax Reform in both years from a lower effective tax rate, and last year also benefited from the revaluation of deferred taxes, which were offset by last year’s after-tax impact from impairment charges related to the sale of two businesses.

For the quarter, gross profit, as a percentage of sales, was 54.1 percent (versus 52.9 percent for the same period last year). AutoZone said the increase in gross margin was attributable to the impact of the sale of two businesses completed in the prior year (71 bps) and higher merchandise margins.

Under its share repurchase program, AutoZone repurchased 422,000 shares of its common stock for $350 million during the second quarter, at an average price of $830 per share. At the end of the second quarter, the company had $635 million remaining under its current share repurchase authorization.

AutoZone’s inventory increased 5.4 percent over the same period last year, driven by new stores and increased product placement, partially offset by the sale of two businesses completed in the prior year.

Bill Rhodes, chairman, president and CEO of AutoZone, noted that historically, the second quarter is the lowest sales season for the company, however DIY and commercial business helped speed up growth. “Every year, our second quarter’s financial results are challenging as it is our seasonally lowest sales quarter and weather impacts can drive significant variability in sales,” said Rhodes. “Today, we are pleased to report solid performance in DIY while our commercial business growth rate accelerated for the fourth consecutive quarter. Our industry fundamentals remain strong, and we continue to be excited about the initiatives we have underway to further enhance our inventory availability, to continue to accelerate Commercial and to meet our customers how, when and where they want to be met with our omni-channel efforts. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and utilizing our balance sheet and capital effectively.”