On May 21, 2024, AutoZone Inc (AZO, Financial) released its 8-K filing for the third quarter of fiscal 2024, showcasing a mixed performance. The company reported earnings per share (EPS) of $36.69, exceeding the analyst estimate of $36.20. However, the reported revenue of $4.2 billion fell short of the estimated $4.3 billion.
Company Overview
AutoZone Inc (AZO, Financial) operates as a leading retailer of aftermarket automotive parts in the United States. The firm operates over 6,300 stores domestically, serving both the do-it-yourself and commercial (do-it-for-me) end markets. Through its vast store footprint and distribution network, AutoZone manages a wide array of stock-keeping units applicable to numerous vehicle makes and models, providing its consumers with ample product availability. The firm drives traffic by providing superior and convenient customer service as AutoZone's team of knowledgeable staff assists consumers with diagnosing a vehicle's problem, selecting the necessary part for replacement, and in some instances, installation. The company also operates internationally, with over 750 stores in Mexico and 100 in Brazil.
Performance and Challenges
AutoZone Inc (AZO, Financial) reported net sales of $4.2 billion for its third quarter, marking a 3.5% increase from the same period last year. Same store sales for the total company increased by 0.9%, with domestic same store sales remaining flat and international same store sales growing by 18.1%. The company's gross profit margin improved to 53.5%, up by 102 basis points from the previous year, driven by higher merchandise margins and a favorable non-cash LIFO adjustment.
Despite these gains, the company faced challenges such as higher operating expenses, which rose to 32.2% of sales from 31.5% last year, primarily due to increased store payroll costs. Additionally, domestic sales were negatively impacted by the timing of tax refunds and cooler than usual weather conditions.
Financial Achievements
AutoZone Inc (AZO, Financial) achieved a notable increase in operating profit, which rose by 4.9% to $900.2 million. Net income for the quarter was $651.7 million, slightly up from $647.7 million in the same period last year. The company also reported a 7.5% increase in diluted EPS to $36.69.
Under its share repurchase program, AutoZone repurchased 242 thousand shares of its common stock at an average price of $3,036 per share, totaling $734.7 million. The company had $1.4 billion remaining under its current share repurchase authorization at the end of the third quarter.
Key Financial Metrics
| Metric | Q3 FY2024 | Q3 FY2023 |
|---|---|---|
| Net Sales | $4,235,485 | $4,090,541 |
| Gross Profit | $2,265,522 | $2,146,126 |
| Operating Profit | $900,181 | $858,481 |
| Net Income | $651,726 | $647,723 |
| Diluted EPS | $36.69 | $34.12 |
Analysis
AutoZone Inc (AZO, Financial) demonstrated resilience in its third quarter, with a solid increase in EPS and operating profit despite facing headwinds in domestic sales. The company's ability to maintain a strong gross profit margin and effectively manage its share repurchase program highlights its commitment to delivering shareholder value. However, the flat domestic same store sales and rising operating expenses indicate areas that require attention as the company moves forward.
Overall, AutoZone Inc (AZO, Financial) continues to show strength in its international operations and maintains a robust financial position, positioning itself well for future growth and profitability in the competitive retail automotive parts industry.
Explore the complete 8-K earnings release (here) from AutoZone Inc for further details.
