AutoZone Expands in Canada - Analyst Blog
16 Dezembro 2011 - 8:15AM
Zacks
ALLDATA LLC, an operating unit of AutoZone Inc.
(AZO), recently announced its plan to expand in Canada to provide
quality services to its increasing customer base in the region and
its nearby locations. The company will operate in Canada under the
name ALLDATA Canada Services Ltd.
Previously, ALLDATA products were sold through a third party
distributor in Canada. As a result, the company was unable to gauge
the prevailing market scenario and failed to enhance its marketing
efforts and tap potential customers. With the new subsidiary, the
company seeks to capitalize on the growing opportunities and will
likely have a huge scope of creating brand awareness across the
country, thus driving profitability going forward.
AutoZone is one of the nation’s leading specialty retailers of
automotive replacement parts and accessories, operating in the
Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) commercial and
other customer markets. Sales in DIY retail represent about 85% of
the company’s revenue, DIFM commercial sales accounts for 10% while
the remaining 5% comes from other sales.
AutoZone sells the ALLDATA brand automotive diagnostic and
repair software, online as well as on DVD, which offers
comprehensive factory-correct repair information to DIY customers
and offers ALLDATA repair subscription. The company also sells
in-house brands of automotive batteries such as Duralast, Duralast
Gold and Valuecraft, manufactured by the U.S. automotive parts
producer Johnson Controls.
During the most recent quarter, AutoZone posted a profit of
$7.18 per share versus $5.66 per share in the year-ago quarter. Net
sales grew 8.1% to $2.64 billion and domestic same-store sales
(sales for stores open at least one year) rose 4.5% during the
quarter.
AutoZone currently focuses on expanding 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 note worthy.
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, which translates into a Buy rating
over the short term (1 to 3 months).
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
AUTOZONE INC (AZO): Free Stock Analysis Report
O REILLY AUTO (ORLY): Free Stock Analysis Report
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