AutoZone Inc. today reported net sales of $2.6 billion for its first quarter (12 weeks) ended November 18, 2017, an increase of 4.9% from the first quarter of fiscal 2017 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.3% for the quarter.
Net income for the quarter increased 1.0% over the same period last year to $281.0 million, while diluted earnings per share increased 6.8% to $10.00 per share from $9.36 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.8% (versus 52.7% for the same period last year). Gross margin was effectively flat for the quarter, with higher merchandise margins being offset by higher inventory shrink results (-11 bps). Operating expenses, as a percentage of sales, were 34.6% (versus 34.1% the same period last year). Operating expenses, as a percentage of sales, were higher than last year primarily due to hurricane-related expenses incurred during the quarter (-35 bps) and deleverage on occupancy costs (-19 bps).
Under its share repurchase program, AutoZone repurchased 597 thousand shares of its common stock for $353 million during the first quarter, at an average price of $590 per share. At the end of the first quarter, the company had $471 million remaining under its current share repurchase authorization.
The company’s inventory increased 6.3% over the same period last year, driven by new stores and increased product placement. Inventory per location was $663 thousand versus $647 thousand last year and $644 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $52 thousand versus negative $67 thousand last year and negative $48 thousand last quarter.
“I would like to thank and congratulate our entire organization for delivering solid sales and earnings results this past quarter. Our business strengthened during the first quarter of our new year with improved same store sales results including an acceleration in our domestic Commercial sales. This quarter included unprecedented impacts to our operations from natural disasters. Our AutoZoners, in the affected areas, not only had to work hard to get their personal lives back in order but they also worked tirelessly to reopen our stores very quickly to service our customers who were in need. The after-effects of these disasters aided our sales by an estimated 50 to 60 bps for the quarter and the total losses from these storms were $9 million resulting in a net negative impact to EPS of approximately $.07. We were encouraged with the improvement in performance in our first quarter and are pleased with the progress we are making on our various initiatives. We believe these initiatives will allow us to continue to meet our customers’ needs across all channels. As we continue to invest capital in our business, 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 18, 2017, AutoZone opened 16 new stores, relocated one store, and closed one store in the U.S., and opened five new stores in Mexico. As of November 18, 2017, the company had 5,480 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 529 stores in Mexico, 26 IMC branches, and 14 stores in Brazil for a total count of 6,049.
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