MEMPHIS, Tenn. – AutoZone has reported net sales of $3 billion for its fourth quarter (16 weeks) ended Aug. 30, 2014, an increase of 4.5 percent from the fourth quarter of fiscal 2013 (16 weeks).
 
Including sales from the additional week in last year’s quarter, sales decreased 1.5 percent. Domestic same store sales, or sales for stores open at least one year, increased 2.1 percent for the quarter.
 
On a 16-week basis, net income for the quarter increased 7.4 percent over the same period last year to $373.7 million, while diluted earnings per share increased 15.6 percent to $11.28 per share from $9.76 per share in the year-ago quarter. Including the additional week in last fiscal year, net income for the quarter increased 0.7 percent over the previous year’s quarter, while diluted earnings per share increased 8.3 percent.
 
For the quarter, gross profit, as a percentage of sales, was 52.3 percent (versus 51.8 percent for last year’s quarter). The company said the improvement in gross margin was attributable to lower acquisition costs and lower shrink expense, partially offset by higher supply chain costs associated with current-year inventory initiatives (25 bps). Operating expenses, as a percentage of sales, were 31.6 percent (versus 31.3 percent last year). The increase in operating expenses, as a percentage of sales, was primarily due to a combination of deleverage from the 17th week of sales last year (-11 bps), higher incentive compensation (-16 bps), and planned information system investments (-13 bps).
 
For the fiscal year ended Aug. 30, 2014, sales were $9.5 billion, an increase of 5.6 percent from the prior year, on a 52-week basis, while domestic same store sales were up 2.8 percent for the year. Operating profit increased 5.6 percent on an operating margin of 19.3 percent.

For fiscal 2014, net income, excluding the extra week, increased 7.7 percent to $1.1 billion, while diluted earnings per share for the period increased 16.3 percent to $31.57 from $27.15.
 
Including results from the additional week last fiscal year, sales increased 3.6 percent from the prior year, and operating profit increased 3.2 percent.
Net income, including the extra week, increased 5.2 percent, and diluted earnings per share increased 13.6 percent. Return on invested capital was
31.9 percent, while full year cash flow before share repurchases and changes in debt was $925 million.
 
Under its share repurchase program, AutoZone repurchased 356,000 shares of its common stock for $188 million during the fourth quarter, at an average price of $528 per share. The primary difference in repurchases this quarter versus last year is the capacity generated from the extra week of sales last year. For the fiscal year, the Company repurchased 2.232 million shares of its common stock for $1.1 billion, at an average price of $492 per share. At year-end, the company had $869 million remaining under its current share repurchase authorization.
 
The company’s inventory increased 9.8 percent over the same period last year, driven by increased product placement and new stores during the fiscal year. Inventory per store was $582,000 versus $550,000 last year and $594,000 last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis was a negative $87,000 versus negative $86,000 last year and negative $84,000 last quarter.
 
"I would like to thank our entire organization for the solid performance delivered this past fiscal year. We are pleased to report that the fourth quarter of fiscal 2014, on a 16-week adjusted basis, marked our 32nd consecutive quarter of double-digit earnings per share growth. Since our inception, we’ve been committed to providing exceptional customer service and trustworthy advice that we see as the differentiator across our industry. Simply put, our AutoZoners’ passion to live our Pledge has allowed us to continue to deliver consistent, exceptional financial results. For the year, we reached many milestones which included generating over $1 billion in net income (on a 52-week basis), opening 424 net additional commercial programs, and reaching an agreement to acquire Interamerican Motor Corp. (IMC). As we have routinely stated, we will remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, chairman, president and CEO.