10-KPeriod: FY2008

AUTOZONE INC Annual Report, Year Ended Aug 30, 2008

Filed October 27, 2008For Securities:AZO

Summary

AutoZone Inc. (AZO) reported a solid performance for the fiscal year ended August 29, 2008, with record earnings of $642 million and a 5.7% increase in net sales to $6.52 billion. This growth was primarily driven by the opening of new stores and a slight increase in same-store sales. The company saw growth in both its retail and commercial segments, with commercial sales increasing by 6.8% and retail sales by 4.5%. Despite a challenging macroeconomic environment including rising gas prices and economic uncertainty impacting consumer spending, AutoZone believes it is well-positioned due to the increasing number of older vehicles on the road, which typically require more maintenance. Key strategic initiatives during the year focused on enhancing the customer experience through training, refining merchandise assortment and pricing strategies, and expanding the commercial sales program. The company also continued its aggressive share repurchase program, demonstrating a commitment to returning capital to shareholders. AutoZone's financial health appears robust, supported by strong operating cash flows and a significant share repurchase authorization.

Financial Highlights

30 data points
Beta

Revenue

$6.52B

50.1% Gross Margin

Net Income

$641.61M

9.8% Net Margin

EPS (Diluted)

$10.04

Cash & Equivalents

$242.46M

Free Cash Flow

$677.51M

Financial Statements
Beta
Revenue$6.52B
Cost of Revenue$3.25B
Gross Profit$3.27B
Operating Expenses$2.14B
Operating Income$1.12B
Interest Expense$121.84M
Net Income$641.61M
EPS (Basic)$10.14
EPS (Diluted)$10.04
Shares Outstanding (Basic)63.30M
Shares Outstanding (Diluted)63.88M

Key Highlights

  • 1Achieved record earnings of $642 million for fiscal year 2008.
  • 2Reported net sales of $6.52 billion, a 5.7% increase year-over-year.
  • 3Expanded store count to 4,240 locations (4,092 domestic, 148 Mexico).
  • 4Experienced growth in both retail (4.5%) and commercial (6.8%) sales segments.
  • 5Maintained a strong focus on customer service and product knowledge through employee training.
  • 6Continued aggressive share repurchase program, with $6.3 billion repurchased by the end of fiscal 2008.
  • 7Well-positioned to benefit from the increasing number of older vehicles on the road, a key driver for aftermarket parts demand.

Frequently Asked Questions

Sales growth in fiscal year 2008 was primarily driven by the increase in the number of open stores, a 1.9% contribution from the 53rd week, and a 0.4% increase in domestic same-store sales. The company also saw healthy growth in both its retail and commercial sales segments.

AutoZone is focusing on communicating its value proposition to customers by highlighting product categories that improve gas mileage and help customers save money through vehicle maintenance. They believe their extensive product offerings and customer service are well-suited to current economic conditions, particularly given the increasing number of older vehicles requiring more repairs.

AutoZone has a long-standing and aggressive share repurchase program. As of August 30, 2008, the company had repurchased a total of 106.1 million shares at an aggregate cost of $6.3 billion since the program began in 1998, and the repurchase authorization was increased to $6.9 billion in September 2008. The company currently does not pay a cash dividend.

AutoZone states that no single class of product accounts for more than 10% of total sales and no single supplier accounted for more than 10% of total purchases in fiscal 2008. They generally have few long-term contracts and believe they have good relationships with suppliers, with alternative sources of supply available for most products. Merchandise is primarily distributed through their own fleet and third-party trucking firms via distribution centers.