VOL. 128 | NO. 227 | Wednesday, November 20, 2013
AutoZone Caps Milestone 2013 With Record Results
By Andy Meek
Memphis-based AutoZone continues on a record pace, including the stock price that has hit several 52-week highs recently.
(Daily News File/Brandon Dill)
Not only is AutoZone Inc. an earnings machine, but the company continues to generate results other public companies might have reason to envy.
This year has brought many new high-flying results. Through the end of AutoZone’s fiscal 2013, for example, the company has seen double-digit earnings per share growth each quarter for the last seven years.
The stock price of the Memphis-based company, the largest auto parts retailer in the U.S., also has hit several 52-week highs recently, one of the most recent coming on Nov. 15. AutoZone’s stock price at press time also was up almost 30 percent year to date.
Throughout this year, the company itself has continued to grow – opening new stores at a steady clip – but despite that growth and the investment it necessitates, the company also has continued to drive its top and bottom lines higher.
During AutoZone’s fiscal 2013, the company opened 153 new stores, sales topped $9 billion, up 6.3 percent from the prior year and net income for the year was $1 billion.
AutoZone chairman, president and CEO Bill Rhodes said the company spent this year making major “investments and enhancements” to its technology to allow AutoZone to better capture data about customer shopping patterns across all platforms. The company, Rhodes told analysts, needs to get better at toggling between the in-store and online experiences to meet customer needs.
The company’s executives repeatedly stress during earnings presentations that they’re working to position the company to be able to thrive no matter the economic climate – in good times and bad.
Ahead of AutoZone’s annual meeting Dec. 18, meanwhile, it’s worth remembering the company’s execution isn’t always perfect.
“While 2013 was a solid earnings year for our company, flat same-store sales for the year was disappointing,” Rhodes told analysts during the company’s fiscal fourth quarter earnings presentation. “There were many factors that influenced our sales performance in 2013, but the bottom line is, we didn't meet our goals or aspiration, and that’s on us.”
Same-store sales are an important retail industry metric, because it ignores growth that comes from opening new stores. Instead, that metric focuses on how stores open for at least a year are doing.
AutoZone has cited a variety of factors throughout the year as having affected sales intermittently. Warmer-than-usual winter weather at the beginning of the year meant less wear and tear on car parts, contributing to fewer visits from customers to AutoZone stores to buy replacement parts.
This year also saw political wrangling in Washington result in a delay in sending out income tax refunds – money held up from arriving in consumers’ pockets that might otherwise have been spent more quickly at retailers like AutoZone.
Rhodes said topping $9 billion in sales in 2013 was a milestone for the company, as was crossing $2 billion in EBITDA – an acronym that stands for earnings before interest, taxes, depreciation and amortization.
This month, AutoZone came in at the top spot in a new global study by Blueocean Market Intelligence, a research and analytics firm, which measured the business impact of major retailers’ social media efforts. AutoZone was No. 1 on the “2013 Social Media Effectiveness Index for Retailers,” beating out companies like Wal-Mart and Amazon.com.
On the horizon, meanwhile, Chicago-based investment research firm Morningstar Inc. notes that AutoZone’s rivals are increasingly trying to copy AutoZone’s best practices, in an attempt to eat away at the differentiation AutoZone can provide to customers.
Among other question marks the company will continue to face is the prospect that customers might continue to keep a tight lid on expenses.
Still, the market for AutoZone’s products is stronger than ever. Research firm R.L. Polk recently noted that the average age of cars Americans are driving has hit a record high of 11.4 years, with older cars, of course, tending to require more replacement parts to go inside them.