AutoZone reported net sales of $2.5 billion for its first quarter (12 weeks) ended November 19, 2016, an increase of 3.4% from the first quarter of fiscal 2016 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 1.6% for the quarter.
Net income for the quarter increased 7.8% over the same period last year to $278.1 million, while diluted earnings per share increased 13.0% to $9.36 per share from $8.29 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.7% (versus 52.5% for the same period last year). The improvement in gross margin was attributable to lower acquisition costs, partially offset by higher supply chain costs associated with current year inventory initiatives (-14 bps). Operating expenses, as a percentage of sales, were 34.1% (versus 34.2% the same period last year). Operating expenses, as a percentage of sales, were relatively flat to last year as favorability across several areas was offset by higher domestic store payroll (-9 bps).
Under its share repurchase program, AutoZone repurchased 478 thousand shares of its common stock for $363 million during the first quarter, at an average price of $759 per share. At the end of the first quarter, the Company had $783 million remaining under its current share repurchase authorization.
The Company’s inventory increased 7.3% over the same period last year, driven by new stores and increased product placement. Inventory per location was $647 thousand versus $624 thousand last year and $625 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $67 thousand versus negative $66 thousand last year and negative $80 thousand last quarter.
“I would like to thank our entire organization for delivering another quarter of very solid results. We are pleased to report our forty-first consecutive quarter of double digit earnings per share growth. We remain committed to providing superior customer service and trustworthy advice. For the quarter, we reached record first quarter sales and earnings per share while opening 21 new locations and 35 Commercial programs. We also continued with the rollout of our inventory availability initiatives, including expanding our multi-deliveries per week to 161 net additional stores. We will continue with our deliberately-paced multiple delivery rollouts in 2017, and we will continue to open more Mega Hub locations. We have opened our second distribution center in Mexico, and we are in the process of building two new domestic distribution centers. We believe these initiatives will allow us to continue to meet our customers’ needs across all selling channels. As we continue to invest capital in all our businesses, we remain committed to our disciplined approach of increasing operating earnings and utilizing our capital effectively,” said Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended November 19, 2016, AutoZone opened 16 new stores and relocated two stores in the U.S., and opened five new stores in Mexico. As of November 19, 2016, the Company had 5,313 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 488 stores in Mexico, 26 IMC branches, and eight stores in Brazil for a total count of 5,835.
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