AutoZone 1st Quarter Same Store Sales Increase 1.6%; EPS Increases 13.0% to $9.36

MEMPHIS, Tenn., Dec. 06, 2016 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today 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.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each AutoZone store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.  Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, and public sector accounts.  IMC branches carry an extensive line of original equipment quality import replacement parts.  AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories, and non-automotive products through www.autozone.com, and accessories, performance and replacement parts through www.autoanything.com, and our commercial customers can make purchases through www.autozonepro.com and www.imcparts.net.  AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, December 6, 2016, beginning at 10:00 a.m. (EST) to discuss its first quarter results.  Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking “Investor Relations,” “Conference Calls.”  The call will also be available by dialing (210) 839-8923.  A replay of the call and slides will be available on AutoZone’s website.  In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, December 13, 2016, at 11:59 p.m. (EST).

This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”).  These non-GAAP measures include adjustments to reflect return on invested capital, adjusted debt, adjusted debt to EBITDAR, and cash flow before share repurchases.  The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Company’s comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP.  Management targets the Company’s capital structure in order to maintain its investment grade credit ratings and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables.  The Company believes this is important information for the management of its debt levels and share repurchases.  We have included a reconciliation of this additional information to the most comparable GAAP measures in the accompanying reconciliation tables.

Certain statements contained in this press release are forward-looking statements.  Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; the compromising of the confidentiality, availability or integrity of information, including cyber security attacks; and changes in laws or regulations. Certain of these risks are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of the Annual Report on Form 10-K for the year ended August 27, 2016, and these Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual results; developments and business decisions may differ from those contemplated by such forward-looking statements, and events described above and in the “Risk Factors” could materially and adversely affect our business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may materially differ from anticipated results.