01—Abstract
Summary
Summary of the 8-K filed September 24, 2024. Cited figures are marked; the original filing is the authoritative source.
AutoZone (AZO) reported fourth-quarter fiscal 2024 results on September 24, 2024, covering a 17-week quarter ended August 31, 2024.
Net sales rose 9.0% to $6.2 billiona, but excluding the extra week, adjusted sales grew 2.6%. Total company same store sales increased just 1.3% on a constant currency 16-week basis, with domestic same store sales essentially flat at 0.2%. Diluted EPS rose 11.0% to $51.58 on a GAAP basis, though the extra week contributed about $3.47 of that figure, so adjusted diluted EPS was $48.11 (up roughly 3.6% versus $46.46 last year).
Gross margin fell 21 basis points to 52.5%, mainly due to the absence of a $30 millionb LIFO benefit from the prior year, and operating expense deleverage reflected higher store payroll. For the full fiscal 2024 year (53 weeks), sales reached $18.5 billion, up 5.9%, and diluted EPS rose 13.0% to $149.55. On an adjusted 52-week basis, sales grew about 3.8% and diluted EPS was $146.14.
Management described the domestic business as challenged by consumer deferrals of discretionary purchases, while international operations grew roughly 10% on a constant currency basis and commercial sales showed acceleration. The company repurchased $3.2 billionc of stock during the year and ended with $2.2 billion remaining under its authorization. Total debt rose to $9.0 billion and the stockholders' deficit widened, reflecting AutoZone's long-running leveraged buyback strategy.
Investors should weigh the strong headline growth against the weak underlying domestic comparable sales and margin pressure. The 53rd week flatters reported numbers, so the adjusted figures give a more accurate view of momentum. The filing is a press release furnished under Item 2.02 and does not include forward guidance in the excerpt provided.
02—Key points
Key Highlights
- Reported Q4 net sales of $6.2 billion, up 9.0%; adjusted for the extra 17th week, sales grew 2.6%.
- Domestic same store sales rose only 0.2% in Q4 (16-week basis), while international same store sales grew 9.9% on a constant currency basis.
- GAAP diluted EPS increased 11.0% to $51.58; excluding the extra week, adjusted diluted EPS was $48.11, about 3.6% higher year over year.
- Gross margin declined 21 basis points to 52.5%, driven by a 53 basis point non-cash LIFO impact from the absence of a prior-year benefit.
- Fiscal 2024 sales reached $18.5 billion (up 5.9%) and diluted EPS rose 13.0% to $149.55 on a 53-week basis.
- AutoZone repurchased $3.2 billion of stock in fiscal 2024 and had $2.2 billion remaining under its authorization; total debt climbed to $9.0 billion.
- Management cited domestic consumer deferrals of discretionary purchases as a headwind, while commercial sales accelerated and the company opened 117 net new stores in Q4.
03—Questions
Frequently Asked Questions
How much of the reported growth came from the extra week in fiscal 2024?
The extra 17th week added about $365.9 million in net sales and roughly $60.7 million in net income in Q4, or about $3.47 of diluted EPS. Excluding it, Q4 sales grew 2.6% and adjusted diluted EPS was $48.11, versus $46.46 last year. For the full year, adjusted sales grew about 3.8% and adjusted diluted EPS was $146.14.
Why are domestic same store sales so weak?
Management attributed the weakness to consumers deferring discretionary merchandise purchases. Domestic same store sales were up just 0.2% in Q4 and 0.4% for the 52-week period, far below the 3.4% prior-year figure. Commercial sales showed some acceleration, which management highlighted as a positive sign.
What is driving margin pressure?
Gross margin fell 21 basis points to 52.5% in Q4, mostly because a LIFO benefit of $30 million in the prior year did not recur, creating a 53 basis point non-cash headwind. Operating expenses rose to 31.6% of sales from 31.2%, mainly due to higher store payroll as a percentage of sales.
How is AutoZone managing its capital structure and shareholder returns?
AutoZone repurchased $3.2 billion of stock in fiscal 2024 at an average price of about $2,759 per share, with $2.2 billion left under its authorization. Total debt rose to $9.0 billion from $7.7 billion, and the stockholders' deficit grew to $4.7 billion. Adjusted debt to EBITDAR was 2.5x, which management says supports its investment grade ratings.
Where is AutoZone growing its store footprint?
AutoZone opened 117 net new stores in Q4 (68 in the U.S., 31 in Mexico, and 18 in Brazil) and 213 for the fiscal year, bringing its total to 7,353 stores. International operations, which grew about 10% on a constant currency basis, are a key growth driver management expects to continue.
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