MEMPHIS, Tenn. AutoZone has reported net sales of $2.3 billion for its third quarter (12 weeks) ended May 10, 2014, an increase of 6.2 percent from the third quarter of fiscal 2013 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 4 percent for the quarter.
Net income for the quarter increased $19.6 million, or 7.4 percent, over the same period last year to $285.2 million, while diluted earnings per share increased 16.4 percent to $8.46 per share from $7.27 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52 percent
(versus 51.8 percent for last year’s quarter). AutoZone said the improvement in gross margin was attributable to higher merchandise margins 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 31.5 percent (versus 31.1 percent last year). The increase in operating expenses, as a percentage of sales, was primarily due to higher store payroll (14 bps) and annualizing the benefit recorded last year for the net gain on disposal of certain assets (18 bps).
Under its share repurchase program, AutoZone repurchased 795 thousand shares of its common stock for $420 million during the third quarter, at an average price of $529 per share. Year to date, the company has repurchased 1.877 million shares of its common stock for $912 million, at an average price of $486 per share. At the end of the third quarter, the company had $307 million remaining under its current share repurchase authorization.
"We are pleased to report our 31st consecutive quarter of double-digit earnings per share growth," said Bill Rhodes, chairman, president and CEO. "AutoZoners across the company are dedicated to providing superior service to our customers and that dedication is evidenced in our consistently strong performance. For the third quarter, overall our sales performance was generally consistent with the second quarter. While failure related categories were particularly strong in the second quarter, as expected, the deferrable maintenance categories rebounded in the third quarter and we expect that trend to continue through the summer. Our inventory availability test initiatives continue to show promise although we still have significant testing to complete before we determine our long-term approach. As we have routinely stated, we will remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively."
During the quarter ended May 10, 2014, AutoZone opened 30 new stores in the U.S., and seven new stores in Mexico. As of May 10, 2014, the company had 4,901 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 374 stores in Mexico, and four stores in Brazil for a total count of 5,279.