PHOENIX — CSK Auto Corp. has reported its financial results for the third quarter of fiscal 2004.
Net sales for the 13 weeks, which ended Oct. 31, were $401.5 million, compared to $409.8 million for the 13 weeks ended Nov. 2, 2003 — the third quarter of fiscal 2003. Same store sales decreased 3.2 percent in the third quarter of fiscal 2004 as compared to the third quarter of fiscal 2003.
Gross profit was $190.9 million, or 47.5 percent of net sales in the third quarter, compared to $192.2 million, or 46.9 percent of net sales in the third quarter of fiscal 2003. Gross profit, as a percent to sales, increased over the third quarter of fiscal 2003 due to lower product acquisition costs on selected items, improvements in our balance of sales through enhanced category management and continued reduction in store inventory shrinkage as a result of improved store procedures and enhanced inventory control systems.
Operating profit for the third quarter of fiscal 2004 was $31.5 million compared to $36.9 million for the third quarter of fiscal 2003. The company said the decrease in operating profit relates primarily to lower sales, slightly higher advertising expenditures and benefit-related expenses.
Interest expense for the third quarter of fiscal 2004 declined by $4.6 million to $7.8 million from $12.4 million in the third quarter of fiscal 2003 due to lower interest expense achieved as a result of our refinancing completed in January 2004.
Net income for the third quarter of fiscal 2004 was $14.4 million, or 32 cents per diluted share, compared to net income of $15.0 million, or 33 cents per diluted share, for the third quarter of fiscal 2003. Net income for the third quarter of fiscal 2003 was negatively impacted by $0.2 million of costs related to a secondary stock offering.
Maynard Jenkins, chairman and CEO of CSK Auto Corp, said since the beginning of the second quarter, the company has experienced lower than expected sales. “Our financial performance for the third quarter, although consistent with our prior guidance, continued to be adversely impacted by a difficult sales environment,” said Jenkins. “We believe our sales have been negatively impacted by higher gas prices and general economic conditions. Although we are not satisfied with our current sales performance, our gross margin rate continued to improve due to lower product acquisition costs and improved store inventory shrinkage results.
“Additionally, we generated in excess of $73 million in operating cash flow for the first three quarters of the year. We are focused on our long-term objectives of maximizing the productivity within our existing stores, debt reduction and acceleration of our new store growth, which will allow us to further leverage our fixed expenses. We remain positive about the strength and growth potential of the retail automotive aftermarket industry.”
Net sales for the 39 weeks, which ended on Oct. 31, were $1,207.6 million, compared to $1,205.7 million for the 39 weeks ended Nov. 2, 2003. Same store sales were flat as compared to the 39 weeks of fiscal 2003.
Gross profit was $570.8 million, or 47.3 percent of net sales, in the 39 weeks of fiscal 2004, as compared to $560.9 million, or 46.5 percent of net sales, in the 39 weeks of fiscal 2003. The improvement in gross margin rates year over year has resulted from lower product acquisition costs on selected items, improvements in our balance of sales through enhanced category management, and reduced store inventory shrinkage as a result of improved store procedures and enhanced inventory control systems.
Operating profit for the 39 weeks of fiscal 2004 totaled $91.3 million, or 7.6 percent of net sales, compared to $98.3 million, or 8.2 percent of net sales, for the 39 weeks of fiscal 2003. The decrease in operating profit is primarily the result of higher advertising expenditures and payroll and benefit-related expenses.
Interest expense for the 39 weeks of fiscal 2004 decreased to $23.7 million from $39.6 million in the 39 weeks of fiscal 2003 due primarily to lower interest expense achieved as a result of our refinancing completed in January 2004.
Net income for the 39 weeks of fiscal 2004 was $41.2 million, or 89 cents per diluted share, compared to net income of $33.4 million, or 73 cents per diluted share, for the 39 weeks of fiscal 2003. Net income for the 39 weeks of fiscal 2003 was negatively impacted by $4.3 million of costs related to debt retirement and $0.2 million of costs associated with a secondary stock offering.
Based on third quarter sales performance and the strong 7.5 percent same store sales increase in the fourth quarter of fiscal 2003, the company said it expects same store sales to decline between 1.5 percent and 3.5 percent during the fourth quarter. Assuming these results, the company expects fourth quarter net income of between $9.5 million and $12.0 million, or approximately $0.21 to $0.26 per diluted share, and full-year net income of between $50.7 million to $53.2 million, or $1.11 to $1.16 per diluted share (assuming approximately 46 million diluted shares outstanding), excluding any costs associated with the planned redemption this month of the approximately $15 million remaining balance of our 12 percent Senior Notes. CSK also now expects free cash flow (a non-GAAP measure, defined and described further below) for fiscal 2004 of approximately $70 million.
For more information about CSK, visit: www.cskauto.com.
_______________________________________
Click here to view the rest of today’s headlines.
