We are always glad when our customers receive good news in our industry! This article was published in the Daily Memphian.
AutoZone Inc. delivered “historically significant performances” as it continued double-digit growth in sales and earnings in the quarter ended Nov. 21, the Memphis-based auto parts retailer announced Tuesday, Dec. 8.
Earnings of $18.61 a share, up 30% from $14.30 a year ago, beat Wall Street consensus estimates by as much as $17.72 a share, on net sales of $3.15 billion, a 12.9% increase.
The numbers showed continuing strong demand for do-it-yourself car care as the COVID-19 pandemic wore on, although results came down from a record-setting pace in the summer quarter.
In recognition of COVID-19’s impact on employees and their families, AutoZone announced it had extended a paid time off program into 2021, providing eligible employees with an extra week of time off on top of two weeks in 2020.
It also resumed share repurchases to bolster share prices after temporarily pausing the buyback program after the pandemic hit.
The company, which operates 5,924 stores in the U.S., 621 in Mexico and 45 in Brazil, opened 39 stores in the U.S. and two in Brazil during the quarter.
It said domestic same-store sales were up 12.3% in the quarter. Historically, same-store sales have grown about 2%-3% a quarter in recent years.
“As the COVID-19 global pandemic continues, our primary focus has been and continues to be the health, wellness and safety of our customers and AutoZoners,” chairman, president and chief executive officer Bill Rhodes said in a release.
“Last week, we shared with all eligible AutoZoners that we have again made some significant benefit changes to encourage personal responsibility. Most notably, we will offer another week of ‘emergency time-off,’ and we will allow an extended carryover of paid time off for much of the new calendar year,” Rhodes said.
“Combined, these enhanced benefits will cost roughly $50 million in our second quarter, but as I told our team last week, it’s an investment in them and the well-being of our customers and their fellow AutoZoners,” Rhodes added.
AutoZone has about 100,000 employees including about 2,500 in the Memphis area, split between stores, the Downtown corporate headquarters (store support center) and an e-commerce fulfillment center.
AutoZone added an emergency time off benefit of up to 80 hours for eligible full-timers in April so employees could deal with family challenges related to COVID. The time was available to be used by the end of 2020. It was later expanded to cover store managers and distribution center advisers.
AutoZone said gross profit as a percentage of sales was 53.1%, down slightly from the previous year because of one-time pandemic-related charges, increased loyalty program participation and a shift in product mix. Operating expenses were also down as a percentage of sales, primarily due to higher sales volumes.
Operating profit increased 23% to $615.2 million, while net income rose 26.3% to $442.4 million.
“Our team, particularly those in our stores and distribution centers, have not only provided exceptional service to our customers, but they have also delivered very impressive results again,” Rhodes said.
“Together, as 1Team, we delivered double digit same store sales growth, EBIT (earnings before interest and taxes) growth over 20% and earnings per share growth of 30%, all historically significant performances,” Rhodes said.
“And, both our domestic Retail and Commercial sales grew more than 10 percent and our market share growth in both sectors is growing substantially more than industry growth rates,” Rhodes said.
AutoZone’s commercial sales program provides commercial credit and parts delivery from stores to repair garages, dealers, service stations and public sector accounts.
Government stimulus efforts and consumer behavior changes related to the pandemic played a part in the quarter’s results, along with the company’s execution in improving inventory availability through an expanded network of hubs and mega-hubs, Rhodes said.
AutoZone bought back 584,379 shares of common stock for $678.3 million at an average price of $1,161 a share. On Nov. 21, it had $117.6 million remaining under a current share repurchase authorization.