AutoZone Inc. has reported its twenty-fifth consecutive quarter of double digit earnings per share growth.
While this past quarter's sales results were lower than planned, net sales were $2.0 billion for its first quarter (12 weeks) ended November 17, 2012, an increase of 3.5% from the first quarter of fiscal 2012 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 0.2% for the quarter.
Net income for the quarter increased $12.3 million, or 6.4%, over the same period last year to $203.5 million, while diluted earnings per share increased 15.7% to $5.41 per share from $4.68 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 51.8% (versus 51.1% for last year's quarter). The improvement in gross margin was primarily attributable to an improvement in merchandise margins (53 bps) driven by lower acquisition costs and lower shrink expense. Operating expenses, as a percentage of sales, were 33.6% (versus 33.4% last year). The increase in operating expenses, as a percentage of sales, was negatively impacted by higher store payroll (34 bps), partially offset by lower advertising expense.
Under its share repurchase program, AutoZone repurchased 855 thousand shares of its common stock for $317 million during the first quarter, at an average price of $371 per share. At the end of the first quarter, the Company had $788 million remaining under its current share repurchase authorization. Driven by improved earnings and a declining equity base, return on capital reached 33.0% at quarter end.
The Company's inventory increased 6.8% over the same period last year, driven primarily by new store openings. Inventory per store was $537 thousand versus $524 thousand last year and $525 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, was flat, relative to last year, on a per store basis, at negative $64 thousand per store.
Additionally, AutoZone announced that it has entered into a definitive agreement to purchase the assets and select liabilities of AutoAnything, an online retailer of specialized automotive products.
"I would like to thank our entire organization for the solid performance delivered this past quarter. We are pleased to report our twenty-fifth consecutive quarter of double digit earnings per share growth. While this past quarter's sales results were lower than planned, they were not surprising to us. Regional sales discrepancies continued to challenge our results however we began to see improvements in our more challenged regions late in the quarter. We believe the initiatives we have in place are correct for delivering solid financial results, as we remain excited about our opportunities for the remainder of fiscal 2013. Our financial success will continue to be driven by the tremendous contributions of our more than 70,000 dedicated AutoZoners, and it is their dedication that will continue to differentiate us from our competition.
Also, we look forward to formally welcoming the AutoAnything team to AutoZone. The company's culture and leadership is an outstanding fit with our Company as we look forward to growing our e-Commerce initiatives for many years to come. I want to reiterate we remain committed to delivering exceptional, 'WOW!' customer service while growing through our Retail, Commercial, International, ALLDATA, and e-Commerce initiatives. We will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended November 17, 2012, AutoZone opened 19 new stores, and closed one store in the U.S., opened 4 new stores in Mexico, and opened its first store in Brazil. As of November 17, 2012, the Company had 4,703 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 325 stores in Mexico, and one store in Brazil for a total count of 5,029.