AutoZone, Inc. has reported net sales of $2.1 billion for its first quarter (12 weeks) ended November 23, 2013, an increase of 5.1% from the first quarter of fiscal 2013 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 0.9% for the quarter.
Net income for the quarter increased $14.6 million, or 7.2%, over the same period last year to $218.1 million, while diluted earnings per share increased 16.2% to $6.29 per share from $5.41 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 51.9% (versus 51.8% for last year’s quarter). The improvement in gross margin was attributable to lower acquisition costs that were offset primarily by the inclusion of the recent acquisition of AutoAnything (37 bps). Operating expenses, as a percentage of sales, were 33.5% (versus 33.6% last year). The decrease in operating expenses, as a percentage of sales, was primarily due to a shift in the timing of advertising expenditures.
Under its share repurchase program, AutoZone repurchased 678 thousand shares of its common stock for $292 million during the first quarter, at an average price of $430 per share. At the end of the first quarter, the Company had $177 million remaining under its current share repurchase authorization.
The Company’s inventory increased 9.1% over the same period last year, driven by a combination of increased product placement in stores and new store openings. Inventory per store was $566 thousand versus $537 thousand last year and $550 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis was a negative $88 thousand versus negative $64 thousand last year.
“Our organization has been very focused this past quarter on several strategic fronts. We are currently deploying updated and expanded inventory assortments across our domestic stores based on our recently enhanced models. In our Commercial business, we opened over 100 new commercial programs in the quarter; significantly higher than the openings we had this time last year. Additionally, we rolled out an exciting, new version of our electronic parts catalog, and we grew sales across our digital commerce businesses. Finally, we are continuing to test other initiatives to enhance inventory availability. While these tests remain in early stages, we are learning a great deal, and we are optimistic that we will identify further opportunities to deploy inventory in a fiscally prudent manner. We remain committed to 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 23, 2013, AutoZone opened seven new stores in the U.S., one new store in Mexico, and one store in Brazil. As of November 23, 2013, the Company had 4,843 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 363 stores in Mexico, and four stores in Brazil for a total count of 5,210.