AutoZone posts 2Q19 earnings beat

AutoZone reported net income of $294.6mn in 2Q19 (+1.8% YoY), while earnings were $11.49/share vs $10.38/share in 2Q18. Refinitiv consensus analysts were expecting EPS of $9.93. Net sales rose 1.6% YoY to $2.45bn, in-line with consensus expectations and vs $2.41bn in 2Q18. Same-store sales at the car-parts retailer rose 2.6% vs an expected 2.1% YoY.

According to the company, earnings benefited from tax reform in the current and prior-year quarter with CEO Bill Rhodes noting that “Every year, our second quarter’s financial results are challenging as it is our seasonally lowest sales quarter and weather impacts can drive significant variability in sales,.” However Rhodes said in the statement that the company was pleased to report a “solid performance in DIY, while our Commercial business growth rate accelerated for the fourth consecutive quarter.”

AutoZone repurchased $350mn, or 422,000 shares, during the quarter, at an average price of $830/ share. There is $635mn remaining under the company’s current repurchase programme.

There were 20 new stores opened in the US, 1 in Mexico and 2 in Brazil, bringing the current total to 6,241 stores. The firm said it will continue to invest in “omni-channel and other technology”, stating that “online sales are small — less than 5% of total sales — but still important, and we will continue to invest,”.

With AutoZone having only 3% of the market share in the commercial sector (and c. 15% for retail), Rhodes said the commercial side of the business will continue to be a focus “since a lot of growth opportunity remains.”

While Rhodes called tariffs “a hot topic of late” he said that they did not see a material impact in 2018 from tariffs.



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