10-KPeriod: FY2017

AUTOZONE INC Annual Report, Year Ended Aug 26, 2017

Filed October 25, 2017For Securities:AZO

Summary

AutoZone, Inc. (AZO) reported strong performance for the fiscal year ending August 26, 2017, with record net income of $1.281 billion, a 3.2% increase over the prior year, and total sales growth of 2.4% to $10.889 billion. The company benefited from growth in both its retail and commercial sales segments, driven by initiatives aimed at improving customer service and expanding commercial reach. Despite macroeconomic factors like fluctuating gas prices and increasing wage pressures, AutoZone demonstrated resilience by effectively managing its product assortment and supply chain. The company continued its strategic store expansion, ending the fiscal year with 6,029 locations across the U.S., Mexico, and Brazil. AutoZone's commitment to its commercial sales program remains a key growth driver, with dedicated sales teams and an expanded product offering through its hub and mega hub stores. Significant investments in supply chain infrastructure and technology underscore the company's focus on operational efficiency and customer satisfaction. Furthermore, AutoZone continued its substantial share repurchase program, returning capital to shareholders and underscoring its financial strength and confidence in its business model.

Financial Highlights

50 data points
Beta

Revenue

$10.89B

52.7% Gross Margin

Net Income

$1.28B

11.8% Net Margin

EPS (Diluted)

$44.07

Total Assets

$9.26B

Cash & Equivalents

$293.27M

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$10.89B
Cost of Revenue$5.15B
Gross Profit$5.74B
SG&A Expenses$3.66B
Operating Income$2.08B
Interest Expense$159.33M
Net Income$1.28B
EPS (Basic)$45.05
EPS (Diluted)$44.07
Shares Outstanding (Basic)28.43M
Shares Outstanding (Diluted)29.07M

Key Highlights

  • 1Record net income of $1.281 billion, a 3.2% increase year-over-year.
  • 2Total sales increased by 2.4% to $10.889 billion, driven by growth in both retail and commercial segments.
  • 3Expanded store footprint to 6,029 locations across the U.S., Mexico, and Brazil.
  • 4Domestic commercial sales grew by 5.7%, indicating continued success in the B2B market.
  • 5Gross profit margin remained stable at 52.7%, with improvements in merchandise margins offsetting higher supply chain costs.
  • 6Operating expenses as a percentage of sales slightly increased to 33.6% due to occupancy costs and higher wage pressures.
  • 7Continued robust share repurchase program, demonstrating commitment to returning capital to shareholders.

Frequently Asked Questions

AutoZone's sales growth in fiscal year 2017 was driven by a combination of factors including net sales from new domestic AutoZone stores, a modest increase in domestic same-store sales (0.5%), and significant growth in domestic commercial sales (5.7%). The company also saw overall sales growth from its international operations in Mexico and Brazil.

AutoZone acknowledged rising wage pressures and fluctuating gas prices as key macroeconomic factors. The company's strategy to mitigate these impacts includes adjusting its advertising message, optimizing store staffing, and refining its product assortment. Investments in supply chain efficiency and a focus on core product availability also helped to maintain competitive offerings.

AutoZone's commercial sales program is a key growth engine. The company offers commercial credit and prompt delivery to repair garages, dealers, and other businesses. This segment is supported by dedicated sales teams and an expanded product range available through its hub and mega hub store network, aimed at professional technicians.

AutoZone is focused on increasing inventory availability and improving its supply chain. Initiatives include testing increased delivery frequency to domestic stores and expanding product assortments in 'mega hub' stores. While these initiatives involve ongoing testing and adjustments, the goal is to enhance product availability and operational efficiency.