AutoZone 4th Quarter Same Store Sales Increase 3.0%; 4th Quarter EPS of $22.59; Annual Sales of $11.9 Billion

MEMPHIS, Tenn., Sept. 24, 2019 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $4.0 billion for its fourth quarter (17 weeks) ended August 31, 2019, an increase of 12.1% from the fourth quarter of fiscal 2018 (16 weeks). Excluding sales from the additional week included in this year’s quarter, adjusted sales were up 5.4%. Domestic same store sales, or sales for stores open at least one year, increased 3.0% for the quarter. Same store sales are computed on a 16-week basis.

Net income for the quarter increased $164.9 million, or 41.2% over the same period last year to $565.2 million, while diluted earnings per share increased 50.4% to $22.59 per share from $15.02 per share in the year-ago quarter. Operating profit increased 32.1% to $780.8 million. Excluding the additional week in the fourth quarter of 2019 and the pension plan termination costs which occurred in the fourth quarter of 2018, adjusted net income for the quarter increased 6.1% over the previous year’s quarter to $524.3 million, while adjusted diluted earnings per share increased 13.0% to $20.95 per share. Adjusted operating profit increased 0.5% to $725.0 million.

For the quarter, gross profit, as a percentage of sales, was 53.4% (versus 53.6% the same period last year). The decrease in gross margin was attributable to lower merchandise margins driven primarily by a shift in mix. Operating expenses, as a percentage of sales, were 33.8% (versus 37.0% the same period last year), with leverage primarily due to last year’s pension plan termination charge of $130.3 million (366 bps) and the additional week of sales, partially offset by increased domestic store payroll (58 bps).

For the fiscal year ended August 31, 2019, sales were $11.9 billion, an increase of 5.7% from the prior year, while domestic same store sales were up 3.0% for the year. Same store sales are computed on a 52-week basis. Gross profit, as a percentage of sales, was 53.7% (versus 53.2% the same period last year). The increase in gross margin was primarily attributable to the impact of the sale of two businesses completed in the prior year (37 basis points). Operating expenses, as a percentage of sales, were 35.0% (versus 37.1% the same period last year) primarily due to last year’s impairment charges of $193.2 million related to the sale of two businesses and pension plan termination charges of $130.3 million, partially offset by increased domestic store payroll (66 bps) in 2019. For fiscal 2019, net income increased 20.9% to $1.6 billion and diluted earnings per share for the year increased 30.1% to $63.43 from $48.77. Net income and diluted earnings per share benefitted from an additional week of sales in the current year and the prior year’s impairment and pension termination charges. Return on invested capital finished the year at 35.7%, while full year cash flow before share repurchases and changes in debt was $1.759 billion.

Under its share repurchase program, AutoZone repurchased 634 thousand shares of its common stock for $692 million during the fourth quarter, at an average price of $1,091 per share. For the fiscal year, the Company repurchased 2.2 million shares of its common stock for $2.005 billion, at an average price of $919 per share. At year end, the Company had $476.8 million remaining under its current share repurchase authorization. 

The Company’s inventory increased 9.5% over the same period last year, driven by increased product placement and new stores. Inventory per store was $674 thousand versus $636 thousand last year and $688 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $85 thousand versus negative $75 thousand last year and negative $58 thousand last quarter.

“I would like to congratulate and thank our entire organization for the solid performance they delivered in our fourth quarter and fiscal year. Our customer service and trustworthy advice are what continue to differentiate us across our industry, and our AutoZoners’ passion to deliver superior service has allowed us to consistently deliver strong financial results. For the year, we delivered several impressive accomplishments which include a record $11.9 billion in total sales, three percent same store sales growth, domestic Commercial sales grew by 13.4% (on a 52-week basis), the opening of 209 stores globally and 152 additional domestic Commercial programs, and repurchasing a record $2 billion of our common stock. I am especially proud to say our organization delivered on the major initiatives we set for ourselves at the beginning of the year: we invested in incremental wages for our most tenured hourly store AutoZoners’ and we accelerated our investment in information technology with specific emphasis on expanding our Omnichannel initiatives, which contributed to us gaining market share across our industry. We also improved our return on invested capital from the prior year of 32.1% to 35.7%. As we start a new fiscal year, we promise to remain committed to delivering exceptional customer service while growing our Retail, Commercial, and International businesses. We will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended August 31, 2019, AutoZone opened 86 new stores in the U.S., 28 stores in Mexico and 10 stores in Brazil. As of August 31, 2019, the Company had 5,772 stores in 50 states in the U.S., the District of Columbia, Puerto Rico and Saint Thomas, 604 stores in Mexico and 35 stores in Brazil for a total count of 6,411.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the Americas. Each AutoZone store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com and our commercial customers can make purchases through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, September 24, 2019, beginning at 10:00 a.m. (EDT) to discuss its fourth quarter results. Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozone.com by clicking “Investor Relations,” located at the bottom of the page. The call will also be available by dialing (210) 839-8923. A replay of the call and slides will be available on AutoZone’s website. In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, October 8, 2019, at 11:59 p.m. (EDT).

This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP measures include adjusted results for adjustments to exclude the additional week in the current year’s fourth quarter, pension termination charges in the fourth quarter of 2018, return on invested capital, adjusted debt, adjusted debt to EBITDAR and cash flow before share repurchases. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Company’s comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP. Management targets the Company’s capital structure in order to maintain its investment grade credit ratings and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables. The Company believes this is important information for the management of its debt levels and share repurchases. We have included a reconciliation of this additional information to the most comparable GAAP measures in the accompanying reconciliation tables.

Certain statements contained in this press release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: product demand; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; war and the prospect of war, including terrorist activity; inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damages to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; impact of tariffs; anticipated impact of new accounting standards; and business interruptions. Certain of these risks are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of this Annual Report on Form 10-K for the year ended August 25, 2018, and these Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements, and events described above and in the “Risk Factors” could materially and adversely affect our business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may materially differ from anticipated results.

Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com
Media: David McKinney at (901) 495-7951, david.mckinney@autozone.com