MEMPHIS, Tenn. – AutoZone has reported net sales of $2 billion for its first quarter (12 weeks) ended Nov. 17, 2012, an increase of 3.5 percent.
Domestic same store sales, or sales for stores open at least one year, increased 0.2 percent for the quarter. Net income for the quarter increased $12.3 million, or 6.4 percent, over the same period last year to $203.5 million, while diluted earnings per share increased 15.7 percent to $5.41 per share from $4.68 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 51.8 percent (versus 51.1 percent for last year’s quarter). The company said the improvement in gross margin was primarily attributable to an improvement in merchandise margins (53 bps) driven by lower acquisition costs and lower shrink expense. Operating expenses, as a percentage of sales, were 33.6 percent (versus 33.4 percent last year). The increase in operating expenses, as a percentage of sales, was negatively impacted by higher store payroll (34 bps), partially offset by lower advertising expense.
Under its share repurchase program, AutoZone repurchased 855,000 shares of its common stock for $317 million during the first quarter, at an average price of $371 per share. At the end of the first quarter, the company had $788 million remaining under its current share repurchase authorization. Driven by improved earnings and a declining equity base, return on capital reached 33 percent at quarter end.
The company’s inventory increased 6.8 percent over the same period last year, driven primarily by new store openings. Inventory per store was $537 thousand versus $524,000 last year and $525,000 last quarter. Net inventory, defined as merchandise inventories less accounts payable, was flat, relative to last year, on a per store basis, at negative $64 thousand per store.
Additionally, AutoZone announced it has entered into a definitive agreement to purchase the assets and select liabilities of AutoAnything, an online retailer of specialized automotive products.
"I would like to thank our entire organization for the solid performance delivered this past quarter," said Bill Rhodes, chairman, president and CEO. "We are pleased to report our 25th consecutive quarter of double-digit earnings per share growth. While this past quarter’s sales results were lower than planned, they were not surprising to us. Regional sales discrepancies continued to challenge our results, however, we began to see improvements in our more challenged regions late in the quarter. We believe the initiatives we have in place are correct for delivering solid financial results, as we remain excited about our opportunities for the remainder of fiscal 2013. Our financial success will continue to be driven by the tremendous contributions of our more than 70,000 dedicated AutoZoners, and it is their dedication that will continue to differentiate us from our competition.
"Also, we look forward to formally welcoming the AutoAnything team to AutoZone," Rhodes added. "The company’s culture and leadership is an outstanding fit with our company as we look forward to growing our e-commerce initiatives for many years to come. I want to reiterate we remain committed to delivering exceptional, ‘WOW!’ customer service while growing through our retail, commercial, international, ALLDATA and e-commerce initiatives. We will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively."
