AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.9 billion for its first quarter (12 weeks) ended November 19, 2011, an increase of 7.4% from the first quarter of fiscal 2011 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 4.6% for the quarter.
For the quarter, gross profit, as a percentage of sales, was 51.1% (versus 50.7% for last year's quarter). The improvement in gross margin was attributable to lower distribution costs on higher sales (23 bps), lower shrink expense (18 bps) and slightly higher merchandise margins. Operating expenses, as a percentage of sales, were 33.4% (versus 33.6% last year). The improvement in operating expenses, as a percentage of sales, was due to lower incentive compensation (33 bps), favorable legal expense (32 bps) and leverage from higher sales volumes. This leverage was partially offset by higher self insurance costs (51 bps).
Under its share repurchase program, AutoZone repurchased 954 thousand shares of its common stock for $310 million during the first quarter, at an average price of $325 per share. At quarter end, the Company had $659 million remaining under its current share repurchase authorization.
The Company's inventory increased 7.2% over the same period last year, driven by new stores and continued strategic investments in parts assortment. Inventory per store was $524 thousand versus $508 thousand last year, an increase of 3.0%.
"After three years of impressive financial performance, we are pleased to begin fiscal 2012 with strong quarterly results. This past quarter marked our twelfth consecutive quarter of 20% growth in earnings per share and our twenty-first consecutive quarter of double digit growth. Our 4.6% same store sales and 22.6% growth in Commercial sales are both testaments to our organization's efforts to continually improve and further validation of our strategies. We continue to execute on our '1Team Driving our Future' operating theme for 2012. Our financial success continues to be the direct result of the tremendous contributions of our more than 65,000 dedicated AutoZoners, and I am convinced it is their dedication to helping our customers that differentiates us from our competition and drives our successes. We remain focused on our disciplined approach of growing operating earnings while efficiently utilizing our capital," said Bill Rhodes, Chairman, President and Chief Executive Officer.
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