AutoZone Reports Stronger-than-Expected Earnings

   By Lisa Beilfuss 
 

AutoZone Inc. said Tuesday that profit in its latest quarter rose 8.4%, as sales and inventory grew and as the company continued to repurchase shares.

"We continued to diligently work on our inventory availability initiatives," and the "expanded hard parts inventory we have deployed throughout our chain over the last year continues to be a contributor to our sales success," said Chief Executive Bill Rhodes.

The Memphis-based auto-parts retailer's sales rose 6.5%, even while new car sales remain strong as the economy improves and still-low interest rates along with cheaper gasoline spur demand for new vehicles.

Auto-part sales increased 6.5% to $2.4 billion. Domestic commercial sales, meanwhile, rose 11% to $452 million.

Inventory per store rose to $629,000 from $594,000 a store, while overall inventory grew 10.7% because of increased product placement, new stores and last year's acquisition of parts distributor Interamerican Motor Corporation.

Sales at stores open at least a year rose 2.3%. During the quarter, AutoZone opened 27 new shops in the U.S., seven in Mexico and two in Brazil, bringing its tally to about 5,500 total stores.

In all for the May quarter, AutoZone reported a profit of $309.1 million, or $9.57 a share, up from $285.2 million, or $8.46 a share, a year earlier.

Revenue rose to $2.5 billion from $2.3 billion.

Analysts expected $9.52 in earnings per share and revenue of $2.5 billion, according to Thomson Reuters.

Gross margin improved to 52.3% from 52%. The company said the margin expansion was due to higher merchandise margins, partially offset by the impact of the IMC purchase last September.

During the quarter, AutoZone bought back 763,000 shares for $515 million, more than what the company repurchased in the first half of its business year.

Write to Lisa Beilfuss at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires