Summary
AutoZone Inc. (AZO) reported its fiscal third-quarter results for the period ending May 9, 2020. Net sales saw a slight decrease of 0.1% to $2.78 billion, impacted by a 1.0% decline in domestic same-store sales, a consequence of the ongoing COVID-19 pandemic. Operating profit declined by 10.2% to $491.7 million, and net income decreased by 15.5% to $342.9 million compared to the prior year. Despite the challenging retail environment exacerbated by COVID-19, AutoZone demonstrated resilience by keeping most stores operational and adapting to new customer service models. The company also proactively strengthened its financial position by issuing new senior notes and securing a revolving credit facility. While the quarter's results were affected by increased operating expenses related to COVID-19 safety measures and benefits for employees, the longer-term trend for the thirty-six weeks ended May 9, 2020, showed a 2.7% increase in net sales and a slight improvement in diluted earnings per share, highlighting the essential nature of automotive parts and accessories. Investors should monitor the company's ability to manage operating expenses and adapt to evolving consumer behavior in the post-pandemic landscape.
Financial Highlights
45 data points| Revenue | $2.78B |
| Cost of Revenue | $1.29B |
| Gross Profit | $1.49B |
| SG&A Expenses | $998.98M |
| Operating Income | $491.67M |
| Net Income | $342.90M |
| EPS (Basic) | $14.66 |
| EPS (Diluted) | $14.39 |
| Shares Outstanding (Basic) | 23.39M |
| Shares Outstanding (Diluted) | 23.83M |
Key Highlights
- 1Net sales for the twelve weeks ended May 9, 2020, decreased by 0.1% to $2.779 billion compared to the prior year, largely due to a 1.0% decrease in domestic same-store sales, influenced by the COVID-19 pandemic.
- 2Operating profit decreased by 10.2% to $491.7 million for the quarter, while net income fell by 15.5% to $342.9 million, reflecting increased operating expenses, including approximately $75 million related to COVID-19.
- 3Diluted earnings per share for the quarter decreased by 10.0% to $14.39, down from $15.99 in the comparable prior year period.
- 4For the first thirty-six weeks of fiscal 2020, net sales increased by 2.7% to $8.086 billion, and diluted earnings per share saw a slight increase of 0.4% to $41.08.
- 5The company issued $1.25 billion in Senior Notes and secured a $750 million revolving credit facility in March and April 2020, respectively, to enhance liquidity and financial flexibility.
- 6AutoZone repurchased $930.9 million of its common stock during the first thirty-six weeks of fiscal 2020, though repurchases were temporarily ceased in the latter part of the quarter to conserve liquidity due to COVID-19 uncertainty.
- 7The average age of vehicles on the road continues to increase, exceeding 11 years, which is a long-term positive factor for demand in the automotive aftermarket industry.