What are the key economic factors influencing AutoZone's performance in fiscal year 2009?

AutoZone's performance in fiscal year 2009 was influenced by several key economic factors. The company noted that the increasing number of vehicles aged seven years and older on the road, a trend driven by consumers keeping vehicles longer due to economic uncertainty, positively impacted demand for replacement parts. Additionally, fluctuating gas prices, particularly the significant decrease experienced during the year, were seen as a factor increasing consumer spending capacity for vehicle maintenance. The challenging macro-economic environment, including credit crisis and higher unemployment, was also noted as contributing to sales growth by encouraging DIY (Do-It-Yourself) repairs.

How is AutoZone managing its capital and shareholder returns?

AutoZone continued its aggressive share repurchase program in fiscal year 2009, buying back $1.3 billion worth of its common stock. This program, which has an increased authorization to $7.9 billion, aims to return value to shareholders. The company also focuses on reinvesting in its business through new store development and enhancements to existing infrastructure and IT systems. AutoZone does not currently pay a cash dividend.

What are the primary risks AutoZone faces as outlined in the filing?

AutoZone highlighted several key risks. These include the potential adverse impact of continued deterioration in global credit markets and macroeconomic factors on its financial condition and operations. The company also faces risks related to its ability to sustain its sales growth rate, dependence on qualified employees, potential slowdown in product demand due to various factors (e.g., vehicle miles driven, age of vehicles, gas prices, economic conditions), intense competition, challenges in expanding its commercial auto parts business, and the potential negative impact of war, terrorism, or rising energy prices. A significant risk mentioned is the substantial influence of its largest stockholder, ESL Investments, Inc.

Can you provide insight into AutoZone's inventory management and supplier relationships?

AutoZone manages its inventory primarily through its distribution centers and hub stores, aiming for timely replenishment. The company states that no single supplier accounted for more than 10% of its total purchases in fiscal 2009 and that it generally has few long-term contracts, believing it has good relationships with its suppliers. Alternative sources of supply are generally available at similar costs. The company also benefits from vendor allowances, with about 90% recorded as a reduction of inventory costs.

AZO 10-K FY2009 Annual Report — Revenue, Net Income, EPS

Summary

AutoZone Inc. (AZO) reported strong performance for the fiscal year ended August 29, 2009, characterized by record earnings and notable sales growth, even amidst challenging macroeconomic conditions. The company successfully navigated the economic downturn by leveraging factors such as an increasing number of older vehicles on the road and fluctuating gas prices, which historically correlate with demand for automotive replacement parts. AutoZone's strategic focus on enhancing its commercial sales program, improving hub store utilization, and investing in store maintenance and IT infrastructure contributed to its positive results. Financially, AutoZone demonstrated resilience with a 4.5% increase in net sales ($6.817 billion) compared to the prior year, or 6.6% excluding the impact of a 53rd week in the prior fiscal year. Diluted earnings per share saw a significant increase of 16.8% to $11.73, reflecting effective cost management and the benefits of its share repurchase program. The company maintained a strong gross profit margin of 50.1% and managed operating expenses effectively, although it saw an increase in interest expense due to higher average borrowing levels.

Financial Highlights

50 data points

Beta

Revenue

$6.82B

0.5% Gross Margin

Net Income

$657.05M

0.1% Net Margin

EPS (Diluted)

$11.73

Total Assets

$5.32B

Cash & Equivalents

$92.71M

Free Cash Flow

$651.56M

Financial Statements

Beta

Revenue	$6.82B
Cost of Revenue	$3.40B
Gross Profit	$3.42B
SG&A Expenses	$2.24B
Operating Expenses	$2.24B
Operating Income	$1.18B
Interest Expense	$147.50M
Net Income	$657.05M
EPS (Basic)	$11.89
EPS (Diluted)	$11.73
Shares Outstanding (Basic)	55.28M
Shares Outstanding (Diluted)	55.99M

Key Highlights

1Record earnings of $657 million for fiscal year 2009.
2Net sales increased by 4.5% to $6.817 billion.
3Domestic same-store sales increased by 4.4%, indicating robust customer demand.
4Successfully expanded store count, ending with 4,417 total stores (4,229 domestic, 188 in Mexico).
5Diluted Earnings Per Share (EPS) grew significantly by 16.8% to $11.73.
6Continued strong share repurchase program, buying back $1.3 billion in fiscal 2009.
7Commercial sales program showed growth (4.3% increase excluding 53rd week), indicating successful expansion in this segment.

AUTOZONE INC Annual Report, Year Ended Aug 29, 2009

Summary

Financial Highlights

Key Highlights

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