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VOL. 127 | NO. 96 | Wednesday, May 16, 2012

Analysts Expect Big Quarter for AutoZone

By Andy Meek

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Wall Street is looking for Memphis-based AutoZone Inc., the nation’s leading auto parts retailer, to report an 18 percent jump in earnings per share when the company releases details of its fiscal-year third-quarter performance next week.

Analysts project Memphis-based AutoZone Inc. to see another quarter of double-digit growth when it reports its fiscal-year third-quarter earnings Tuesday, May 22.

(Daily News File Photo: Lance Murphey)

The earnings announcement will come the same week AutoZone is represented at the International Council of Shopping Centers’ 2012 RECon – The Global Real Estate Convention at the Las Vegas Convention Center, where AutoZone will be an exhibitor. More than 30,000 attendees are expected to converge on the conference, May 20 through May 23, which is the world’s largest gathering of retail real estate professionals.

AutoZone, of course, has plenty of real estate of its own. The company has 4,580 stores in 48 U.S. states, plus the District of Columbia and Puerto Rico. Its stores typically range from 6,500 square feet to 8,000 square feet and are placed in what the company describes as “high-impact” locations.

At the conference, representatives of AutoZone’s store development department will be on hand “to review real estate sites supporting the company’s aggressive store growth plan,” the company said.

So, AutoZone might get a double jolt that week, since the company looks like it might be talking about growth in its physical footprint in tandem with what analysts expect will be another strong quarter.

Analysts covering the stock of the company are forecasting earnings per share of $6.26 when the company reports earnings Tuesday, May 22. That’s the consensus estimate among 18 analysts, and it’s about 18 percent higher than the $5.29 figure AutoZone notched during the same quarter in 2011.

What’s more, six analysts who follow the company have revised their forecast to the upside within the last 30 days.

“AutoZone’s … results continue to highlight many of our long-held investment themes for the company,” wrote Dan Wewer, a Raymond James analyst who covers AutoZone, in a recent commentary for clients.

He said those themes “include consistent 20 percent (earnings per share) growth, strong same-store sales driven by increased market share gains (and) gross margin expansion, prudent inventory management, an aggressive share buyback program and rising capital efficiency.”

Among some elements of the company’s performance Wewer noted, he said the unusually mild weather during the previous quarter significantly altered AutoZone’s sales mix.

“Sales of failure-related parts dependent upon extreme weather (i.e., batteries, belts, hoses) were lower year-on-year,” he noted. “However, with the same token, sales of maintenance and discretionary categories increased.”

Also, Wewer said, “AutoZone continues to return excess cash to shareholders (a constant focus for the company since 1998) via an aggressive share repurchase program – we estimate AutoZone generated $48.5 million of free cash flow during (the second quarter) and repurchased 501,000 shares of its common stock for $172 million at an average price of $354 per share.”

In unrelated news, the company last month announced its leading suppliers of the year during the AutoZone Vendor Summit 2012 that was held in Memphis.

The company recognized GRI Engineering Development LLC and Bosch Brake Components as Vendors of the Year.

AutoZone also recognized a group of suppliers with the company’s Extra Miler Award. Those companies were Lucas Oil Products, Inc., Marklan Group, Inc., Spectra Premium Industries, Tenneco, Inc., Gabriel Ride Control LLC and East Penn Manufacturing.

Two people, Jack Vollbrecht of Remy International Inc. and Michael Klein of IDQ USA, were recognized as Extra Milers for their commitment to the automotive aftermarket government relations efforts.

The WITTDTJR (What It Takes To Do The Job Right) Award is given to suppliers as recognition for taking the initiative to make sure AutoZoners and AutoZone customers have the right parts and necessary information to complete their jobs.

That award was given a string of companies: Meguiar’s Inc., Import Products Co. Inc., Cequent Consumer Products Inc., Accessories Marketing Inc., General Cable Industries Inc. and Qualis Automotive, LLC.

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