AutoZone Beats, Profits Up 24% - Analyst Blog
06 Dezembro 2011 - 11:37AM
Zacks
AutoZone Inc. (AZO) recorded a 24% rise in
profit to $4.68 per share in the first quarter of its fiscal 2012
ended November 19, 2011 from $3.77 per share in the year-ago
quarter, beating the Zacks Consensus Estimate of $4.45 per share.
In absolute terms, profit increased 11% to $191.1 million from
$172.1 million a year ago.
The increase in profit was driven by a 7.4% rise in net sales to
$1.92 billion, which surpassed the Zacks Consensus Estimate of
$1.90 billion. Domestic same-store sales (for stores open at least
one year), increased 4.6% during the quarter compared with 9.5% a
year ago.
Gross margin was 51.1% versus 50.7% in the first quarter of
fiscal 2011. The higher gross margin was attributable to lower
distribution costs due to an increase in sales, lower shrink
expense and modestly higher merchandise margins.
Operating margin increased to 17.7% compared with 17.1% in the
prior-year quarter, driven by an improvement in operating expenses
(as a percentage of sales) to 33.4% from 33.6% a year ago based on
lower incentive compensation, favorable legal expense and leverage
from higher sales volumes, which was partially offset by higher
self insurance costs.
Store Openings and Inventory
During the quarter, AutoZone opened 17 stores in the U.S. and 2
stores in Mexico. As of November 19, 2011, the company had 4,551
stores in 48 states, the District of Columbia and Puerto Rico in
the U.S. and 281 stores in Mexico, implying a total store count of
4,832.
The company’s inventory escalated 7.2% to $2.53 billion, driven
by new stores and continued strategic investments in parts
assortment. Inventory per store inched up 3% to $524 thousand from
$508 thousand last year.
Share Repurchase
Under the current share repurchase program, AutoZone repurchased
954 thousand shares of its common stock for $310 million during the
quarter, reflecting an average price of $325. At the end of the
quarter, the company had $659 million worth of stock remaining
under its existing share repurchase authorization.
Financial Position
AutoZone had cash and cash equivalents of $96.7 million as of
November 19, 2011, down from $98.0 million as of November 20, 2010.
Total debt amounted to $3.35 billion as of November 19, 2011
compared with $2.88 billion as of November 20, 2010. The company
had a stockholder deficit of $1.35 billion as of November 19, 2011,
up from the year ago level of $817.2 million.
In the quarter, AutoZone had a net cash flow of $303.0 million
before share repurchases and changes in debt, which was down from
the year-ago level of $330.2 million.
Our Take
AutoZone is focused on expansion of its Hub store, acceleration
of store maintenance and strengthening of its commercial sales
force. Its aggressive share repurchase policy, supported by a
strong cash flow, is also worth mentioning.
However, AutoZone relies heavily on its private label brands,
which could hinder its business should they falter. Vendor
consolidation and appreciation in gas prices coupled with fierce
competition from O’Reilly Automotive Inc. (ORLY)
and Advance Auto Parts Inc. (AAP) are primary
headwinds for the company.
However, depending on the improving near-term outlook, the
company retains a Zacks #2 Rank on its stock, which translates into
a Buy rating for the short-term (1 to 3 months).
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
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