U.S. News: AutoZone Reports Sales Up in Quarter, Commercial Business Up 30%

U.S. Auto parts retailer AutoZone, Inc. has reported that sales are up 4% in its first quarter, with same store sales up 4.5%. It also reported a 30% increase in its commercial business, reflecting an increased focus on sales to professional installers.
Reporting sales of $1.219 billion U.S. for its first fiscal quarter (12 weeks) ended November 23, 2002, an increase of 4% from fiscal 2002. Excluding the sales of the TruckPro subsidiary which was sold in December, 2001, sales increased 7%.
Same store sales, or sales for domestic auto parts stores open at least one year, increased 4.5% during the quarter. Gross margin for the quarter improved by more than one percentage point, while operating expenses, as a percent of sales, declined by more than one percentage point, resulting in a 15.5% operating margin. Net income for the quarter increased 25% to $105 million, while diluted earnings per share increased 37% to $1.04 from $0.76 reported in the year-ago quarter. Return on invested capital for the trailing twelve months increased to 20.6%.
“We are very pleased with our continuing strong performance through the first quarter, even as we anniversary our strong improvements in the prior year,” said Steve Odland, chairman, president and chief executive officer. “We are very encouraged by the 30% sales increase in our AZ Commercial business reflecting our commercial customers’ positive response to our high level of service and extensive product offering.
“Our continued focus on controlling costs through relentless expense discipline continues to drive shareholder value. Operating expenses as a percent of sales declined to 29.6% in the first quarter. This rate is the lowest first quarter rate achieved since 1995. The strong, growing cash flow provided by our business, when combined with our high hurdle rates for new investments, should continue to drive improved return on invested capital and shareholder value.”
During the quarter, AutoZone opened 31 new stores, replaced one store and closed one store in the U.S. and opened one new store in Mexico. As of November 23, 2002, AutoZone operates 3,098 stores in the U.S. and 40 stores in Mexico.