10-KPeriod: FY2016

AUTOZONE INC Annual Report, Year Ended Aug 27, 2016

Filed October 24, 2016For Securities:AZO

Summary

AutoZone, Inc. (AZO) in its 2016 10-K filing, highlights a strong fiscal year ending August 27, 2016, marked by record net income and solid sales growth. The company, a leading retailer and distributor of automotive replacement parts and accessories, continued its expansion with a growing store count in the US, Mexico, and Brazil. Key to their strategy is a focus on superior customer service, a wide product selection, and competitive pricing, supported by private label brands. The company also noted the positive impact of lower gas prices on consumer disposable income and the ongoing trend of vehicle aging, which typically drives demand for parts and maintenance. Financially, AutoZone demonstrated robust performance with increasing net sales and net income. The company actively engaged in share repurchases, returning value to shareholders. Despite a competitive landscape and various economic risks, AutoZone emphasized its strategic initiatives to enhance inventory availability and supply chain efficiency. The company's financial health appears strong, supported by solid operating cash flow and available credit facilities, positioning it to fund future growth and investments.

Financial Highlights

50 data points
Beta

Revenue

$10.64B

52.7% Gross Margin

Net Income

$1.24B

11.7% Net Margin

EPS (Diluted)

$40.70

Total Assets

$8.60B

Cash & Equivalents

$189.73M

Free Cash Flow

$1.15B

Financial Statements
Beta
Revenue$10.64B
Cost of Revenue$5.03B
Gross Profit$5.61B
SG&A Expenses$3.55B
Operating Income$2.06B
Interest Expense$150.96M
Net Income$1.24B
EPS (Basic)$41.52
EPS (Diluted)$40.70
Shares Outstanding (Basic)29.89M
Shares Outstanding (Diluted)30.49M

Key Highlights

  • 1Record net income of $1.241 billion for the fiscal year ended August 27, 2016.
  • 2Net sales increased by 4.4% to $10.636 billion, driven by same-store sales growth and new store openings.
  • 3Continued expansion with 5,814 total locations across the US, Mexico, and Brazil.
  • 4Strong focus on customer service, with AutoZoners trained to provide trustworthy advice and support.
  • 5Active share repurchase program, with $1.452 billion repurchased in fiscal year 2016.
  • 6Positive impact observed from lower gas prices, potentially increasing consumer disposable income.
  • 7Strategic initiatives to improve inventory availability and expand product assortments in stores and through the supply chain were highlighted.

Frequently Asked Questions

AutoZone's revenue growth in fiscal year 2016 was driven by a combination of factors, including a 2.4% increase in domestic same-store sales, net sales from new domestic store openings totaling $177.0 million, and a 7.1% increase in domestic commercial sales. Lower gas prices also contributed positively by potentially increasing consumer disposable income.

AutoZone continued its expansion strategy, opening 205 new locations in fiscal year 2016, bringing the total to 5,814. To enhance product availability, the company implemented strategic tests and rolled out initiatives like increased delivery frequency from distribution centers to stores and expanding product assortments in select 'mega hub' stores. These efforts aim to improve in-stock positions and customer satisfaction.

AutoZone identifies several key risks, including potential slowdowns in product demand due to economic conditions, rising energy prices, or technological advances. Intense competition from various retailers and online sellers is another significant risk. The company also faces risks related to sustaining its historical growth rate, potential consolidation among competitors, challenges in growing its commercial auto parts business, and macroeconomic and geopolitical factors that could affect operations and financial results. Additionally, the company highlighted risks associated with hiring and retaining qualified employees and protecting customer data.

AutoZone returns value to shareholders primarily through its significant share repurchase program. In fiscal year 2016, the company repurchased approximately $1.45 billion worth of its common stock. The company currently does not pay a dividend on its common stock.