10-KPeriod: FY2007

AUTOZONE INC Annual Report, Year Ended Aug 25, 2007

Filed October 22, 2007For Securities:AZO

Summary

AutoZone, Inc. (AZO) filed its 2007 10-K on October 22, 2007, for the fiscal year ending August 25, 2007. The report highlights AutoZone's position as a leading specialty retailer and distributor of automotive replacement parts and accessories, primarily serving the "do-it-yourself" (DIY) market. The company operated 4,056 stores across the U.S., Puerto Rico, and Mexico, offering a wide range of parts, maintenance items, and accessories. Financially, AutoZone reported net sales of $6.17 billion, a 3.7% increase year-over-year, driven by store expansion. Despite a slight decrease in domestic commercial sales, retail sales and international growth contributed positively. Gross profit margin improved to 49.7% due to category management and supply chain efficiencies. The company continued its aggressive share repurchase program, increasing the authorization and repurchasing approximately 6.0 million shares in fiscal 2007. AutoZone's strategy emphasizes superior customer service, value pricing with proprietary brands, and convenient store locations. The company also operates a significant commercial sales program. The report details risks including competition, employee retention, demand fluctuations, and economic conditions.

Key Highlights

  • 1AutoZone operates 4,056 stores across the U.S., Puerto Rico, and Mexico, demonstrating significant geographic reach.
  • 2Net sales reached $6.17 billion for fiscal year 2007, representing a 3.7% increase driven by store expansion.
  • 3Gross profit margin improved to 49.7% of net sales, attributed to category management and supply chain efficiencies.
  • 4The company continued its substantial share repurchase program, with an increased authorization to $5.9 billion and repurchasing $761.9 million in fiscal year 2007.
  • 5AutoZone emphasizes a customer-centric strategy focused on superior service, value, and advice from its AutoZoners.
  • 6The commercial sales program serves local, regional, and national repair garages, dealers, and service stations.
  • 7Same-store sales showed modest growth of 0.1% domestically, indicating steady performance in existing locations.

Frequently Asked Questions

AutoZone's primary business is operating as a specialty retailer and distributor of automotive replacement parts and accessories. The company primarily targets the "do-it-yourself" (DIY) market, but also has a significant commercial sales program serving professional repair shops and dealers.

In fiscal year 2007, AutoZone reported net sales of $6.17 billion, a 3.7% increase over the prior year. Net income was $595.7 million, and diluted earnings per share were $8.53, an increase from $7.50 in fiscal year 2006. The company also saw an improvement in its gross profit margin to 49.7%.

AutoZone's growth strategy is driven by opening new stores, expanding its commercial sales program, and improving same-store sales through enhanced customer service and product selection. For shareholder returns, the company actively pursues a significant stock repurchase program, repurchasing substantial amounts of its own shares.

Key risks identified include the ability to maintain historic growth rates in sales and store openings, dependence on qualified employees, fluctuations in product demand influenced by economic conditions, gas prices, and vehicle age, intense competition from various retailers and repair shops, and potential impacts from vendor consolidation and global events like terrorism or war.