AutoZone Results Top Expectations

AutoZone Inc. said profit in its latest quarter rose a better-than-expected 7.4% as sales grew and the company made strides to improve inventory.

For the Memphis, Tenn., replacement-part retailer, sales at stores open at least a year rose 4.5%. During the period, AutoZone opened 72 new stores, bringing its tally to 5,141 shops.

The company has worked on inventory availability initiatives, including the opening of mega hub locations, and on Tuesday Chief Executive Bill Rhodes said the testing of those initiatives has concluded. AutoZone will begin implementing its new supply chain strategy and complete it in a few years, Mr. Rhodes said.

In the latest period, inventory per store increased 4.8% from a year earlier, while overall inventory jumped 9% because of increased product placement, new stores and last year's acquisition of import-parts distributor Interamerican Motor Corporation.

Despite higher costs stemming from infrastructure investments, AutoZone's gross margin edged up modestly to 52.5% from 52.3% a year earlier. Deutsche Bank analyst Mike Baker noted this week that the company's margins had been down in four of the last six quarters leading up to the most recent period, as the company has invested in needed infrastructure improvements around delivery frequency and parts coverage.

In all, the company reported a profit of $401.1 million, or $12.75 a share, up from $373.7 million, or $11.28 a share, a year earlier. Revenue grew 7.9% to $3.29 billion.

Analysts projected $12.69 in per-share profit of $3.25 billion in sales, according to Thomson Reuters.

Shares in the company, up about 18% this year, were inactive premarket.

Write to Lisa Beilfuss at [e-mail]

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(END) Dow Jones Newswires

September 22, 2015 08:05 ET (12:05 GMT)

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