MEMPHIS, TN — AutoZone has reported sales of $1.204 billion for its fiscal second quarter, which ended on Feb. 12. This is up 3.9 percent over fiscal second quarter 2004. Same store sales, or sales for domestic stores open at least one year, were flat for the quarter. Operating profit increased 12.2 percent over the prior year, the company said.
Net income for the quarter increased by 30.4 percent over the same period last year to $119.5 million, and diluted earnings per share increased 41.9 percent to $1.48 per share from $1.04 per share reported in the year-ago quarter.
Return on invested capital for the trailing four quarters increased to 25.4 percent from 24.5 percent the previous year.
For the quarter, gross profit, as a percentage of sales, was 48.4 percent (versus 48.7 percent last year) while operating expenses, as a percentage of sales, were 32.7 percent (versus 34.1 percent last year). The company said the slight reduction in gross margin was due largely to one-time expenses related to the closure of one distribution center and the opening of a new facility near Dallas, Texas. The reduction in operating expenses was driven by efforts to reduce expenditures throughout all levels of the organization, according to AutoZone.
Additionally, the second quarter contained a one-time tax benefit adjustment of $15.3 million. Excluding these credits, earnings per share for the quarter increased 24 percent to $1.29 versus the year-ago quarter.
The company’s gross per store inventory levels (the reported balance sheet inventory, which is total inventory less supplier owned Pay On Scan inventory) as of February 12, were $450 thousand versus $443 thousand last year. Net inventory, defined as gross inventory less accounts payable, increased on a per store level to $86 thousand from $74 thousand last year. The company said increase in inventory levels is attributable to the company’s efforts to invest in “having the right part at the right price to further enhance our industry-leading brand in the eyes of our customers.”
Based upon recent SEC clarification, the company is reviewing its accounting for leases and related leasehold improvements. While the impact on fiscal 2005 is estimated to be less than $1 million (net of tax), the company said it expects to record a one-time charge for the cumulative non-cash adjustment in the second quarter. The charge, which is not reflected in the attached results, is currently estimated to be in the range of $15 million to $25 million (net of tax).
For more information about AutoZone, go to: www.autozone.com.
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