AUTOZONE INC Quarterly Report for Q3 Ended May 10, 2014

Summary

AutoZone Inc. (AZO) reported strong financial results for the twelve weeks ended May 10, 2014. Net sales increased by 6.2% to $2.342 billion, driven by a 4.0% increase in domestic same-store sales and growth in new stores and commercial programs. Diluted earnings per share (EPS) saw a significant rise of 16.4% to $8.46, up from $7.27 in the prior year's comparable period. This performance reflects effective management strategies in a challenging economic environment, focusing on product assortment, inventory, and pricing. The company demonstrated improved profitability with gross profit increasing to 52.0% of net sales, attributed to higher merchandise margins and lower shrink expense. Despite an increase in operating expenses as a percentage of sales, primarily due to higher store payroll, net income grew by $19.6 million to $285.2 million for the quarter. AutoZone continues to execute its strategic initiatives, including significant investment in its commercial sales program and new store development, while actively managing its capital structure through robust share repurchase programs.

Key Highlights

• 1Net sales increased by 6.2% to $2.34 billion for the twelve weeks ended May 10, 2014.
• 2Domestic same-store sales grew by 4.0%, indicating healthy in-store performance.
• 3Diluted earnings per share (EPS) increased by 16.4% to $8.46, demonstrating improved profitability.
• 4Gross profit margin improved slightly to 52.0% of net sales, driven by higher merchandise margins and lower shrink.
• 5Operating expenses increased as a percentage of sales, primarily due to higher store payroll and the annualization of a prior year asset disposal gain.
• 6Net interest expense decreased due to lower borrowing rates, despite an increase in overall debt.
• 7The company repurchased $911.5 million of its common stock during the thirty-six week period, reflecting a commitment to returning capital to shareholders.

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