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VOL. 132 | NO. 241 | Wednesday, December 6, 2017

AutoZone Posts Positive Q1 2018 Results

By Andy Meek

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A few weeks ahead of its annual meeting here set for Dec. 20, Memphis-based auto parts retailer AutoZone Inc. has kicked off its fiscal 2018 with better-than-expected earnings for the first three months of the year.

AutoZone weathered a tough fiscal first quarter, which included several natural disasters, to report strong numbers Tuesday, Dec. 5, that included net sales up 4.9 percent over the year-ago period. (Daily News File/Lance Murphey)

The company reported net sales of $2.6 billion for the 12-week period ended Nov. 18, up 4.9 percent from the year-ago period. AutoZone posted net income for the quarter of $281 million, up 1 percent over the same period last year, and the company boosted its earnings per share 6.8 percent to $10 per share.

That’s up from $9.36 per share in the year-ago quarter.

In another positive development, AutoZone’s domestic same-store sales were up 2.3 percent during the quarter. That metric counts sales at stores open for at least a year, which sets aside the impact from store closings and openings.

The improvements were enough to send AutoZone shares up 6 percent in premarket trading Tuesday, Dec. 5. The news was a break from the recent past for AutoZone, shares of which mid-morning Dec. 5 were still down about 8 percent in 2017 year-to-date.

AutoZone’s results for the quarter came during an extraordinary period of time that started out with Hurricane Harvey and finished with five natural disasters across North America, from hurricanes to wildfires in the western U.S.

And AutoZone, according to chairman, president and CEO Bill Rhodes, incurred loss and property damage in each one.

Moreover, the company has 43 stores in Puerto Rico, with several still unable to open due to damage from Hurricane Maria.

Despite those obstacles, Rhodes told analysts “our business strengthened during the first quarter of our new year.

“As we continue to invest capital in our business, we remain committed to our disciplined approach of increasing operating earnings and utilizing our capital effectively.”

Among areas of investment that are continuing to produce results, Rhodes said the company’s “buy online, pickup in store” initiative is growing fast. During the quarter, AutoZone also opened 16 new stores, relocated one store, closed one store in the U.S., and opened five new stores in Mexico.

As of Nov. 18, the company had a total count of 6,049 stores.

AutoZone also bought back 597,000 shares of its common stock for $353 million during the quarter. At the end of the first quarter, the company had $471 million remaining under its current share repurchase authorization.

A Barron’s headline that followed AutoZone’s earnings release described the company as “Back in the Fast Lane.” A recent Raymond James analyst report also noted that 2018 may bring an improvement over AutoZone’s less-than-stellar performance in 2017, explaining that industry revenues don’t tend to stay weak two years in a row.

That’s because auto parts replacement is often something that can only be temporarily deferred. And Rhodes himself even reiterated that theme during the company’s presentation to analysts Tuesday, telling them, “We operate in an industry driven by inelastic demand.”

Just as the need for consumers to put gas in their car doesn’t fluctuate just because of a change in the price at the pump, Rhodes said the reality for AutoZone customers is that if a part breaks, “our customers need to fix it to get to work and get on with their lives.”

PROPERTY SALES 55 321 3,398
MORTGAGES 27 179 2,279
BANKRUPTCIES 32 162 1,904