01—Abstract
Summary
Summary of the 10-K filed November 16, 2001. Cited figures are marked; the original filing is the authoritative source.
AutoZone, Inc. (AZO) filed its Form 10-K for fiscal year ended August 25, 2001, on November 16, 2001.
The company describes itself as the nation's leading specialty retailer of automotive parts and accessories, serving mainly do-it-yourself (DIY) customers, with 3,019 U.S. stores and 21 in Mexico at year-end. It also operates a commercial sales program that services 1,638 stores and has opened 39 hub stores, and it owns the ALLDATA diagnostic and repair information subsidiary. Store growth has slowed sharply: management says it does not plan to continue the historic pace of roughly 16%a annual store count growth, and new store openings fell to 107 in fiscal 2001 from 952 in fiscal 1998.
Future sales growth will therefore depend more on same-store sales gains and commercial and international expansion. The filing's financial statements, MD&A, and market data are incorporated by reference from the Annual Report to Stockholders (Exhibit 19.1), so this 10-K body does not include detailed income or balance sheet figures. Key information for investors is the non-financial disclosure: about 44,600 employees, a store base with 1,238 leased and 1,781 owned stores, and a stated everyday low price strategy.
The market value of non-affiliate shares was about $4.03 billionb as of October 15, 2001, with 107.8 million shares outstanding. Management changes are notable, with Steve Odland recently named CEO and the CFO, Robert Hunt, announcing his retirement. The main legal risk is the Coalition for a Level Playing Field lawsuit, which alleges Robinson-Patman Act violations and seeks roughly $1 billion in damages including trebling.
A court overruled a substantial portion of the defendants' motion to dismiss on October 23, 2001. Management believes the suit is without merit. The company also faces risks from vendor and competitor consolidation, its limited international experience, and war or terrorism disrupting imports and transportation.
02—Key points
Key Highlights
- Largest U.S. specialty retailer of automotive parts and accessories, with 3,019 domestic stores and 21 in Mexico at August 25, 2001, mostly serving DIY customers
- Store growth is slowing: only 107 new stores opened in fiscal 2001 versus 952 in fiscal 1998, and management does not plan to keep the historic ~16% annual store count growth rate
- Commercial sales program operates from 1,638 stores, with 39 hub stores supporting commercial customers, which is a key growth lever against jobbers and warehouse distributors
- Approximately 44,600 employees, including about 29,000 full-time, with 90% working in stores or direct field supervision
- Market value of non-affiliate shares was about $4.03 billion as of October 15, 2001, with 107.8 million shares outstanding; the stock trades on the NYSE
- Major litigation: the Coalition for a Level Playing Field suit seeks roughly $1 billion in damages under the Robinson-Patman Act; a court overruled much of the defendants' motion to dismiss on October 23, 2001, and management calls the suit without merit
- Management transition: Steve Odland became Chairman and CEO in January 2001 and President in May 2001, and CFO Robert Hunt announced his retirement upon appointment of a successor
03—Questions
Frequently Asked Questions
Why does this 10-K contain little detailed financial data?
The filing incorporates its financial statements, selected financial data, MD&A, and quarterly summary by reference from the Annual Report to Stockholders (Exhibit 19.1). Investors need that annual report to see revenue, earnings, margins, and balance sheet figures.
Is AutoZone still expanding its store base rapidly?
Growth is slowing. The company opened 107 new domestic stores in fiscal 2001, far below the 952 opened in fiscal 1998, and it states it does not plan to continue the historic growth pace. Future sales increases will depend more on same-store sales and on commercial and international growth.
What is the biggest legal risk to the company?
The Coalition for a Level Playing Field lawsuit, filed in February 2000 by aftermarket warehouse distributors and jobbers, seeks about $1 billion in trebled damages and an injunction limiting new store openings. A court overruled a substantial part of the defendants' motion to dismiss on October 23, 2001. Management believes the suit is without merit and will defend it vigorously.
What growth strategies does AutoZone rely on besides domestic stores?
The company is building its commercial sales program, which serves local repair garages and dealers and is run from 1,638 stores plus 39 hub stores. It also operates ALLDATA, a diagnostic and repair information business, and a small Mexico operation with 21 stores, although management notes it has limited experience operating outside the U.S.
What risks could affect AutoZone's sales and supply?
Key risks include slowing DIY demand in a weak economy, difficulty hiring and retaining qualified employees at current wage rates, vendor consolidation that could raise merchandise costs, and competitor mergers that could intensify pressure. War or terrorism could also disrupt imports and commercial transportation.
04—Continue