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AutoZone 4th Quarter Same Store Sales Increase 6.7%; EPS Increases 27.7% to $5.66; Jim Shea, EVP Merchandising, Marketing and Supply Chain Announces Retirement

MEMPHIS, Tenn., Sep 21, 2010 (GlobeNewswire via COMTEX) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.4 billion for its fourth quarter (16 weeks) ended August 28, 2010, an increase of 9.5% from the fourth quarter of fiscal 2009 (16 weeks). Domestic same store sales, or sales for stores open at least one year, increased 6.7% for the quarter.

Net income for the quarter increased $32.8 million, or 13.9%, over the same period last year to $268.9 million, while diluted earnings per share increased 27.7% to $5.66 per share from $4.43 per share in the year-ago quarter.

For the quarter, gross profit, as a percentage of sales, was 50.5% (versus 50.3% for last year's quarter). The improvement in gross margin was primarily attributable to leveraging distribution costs due to higher sales and operating efficiencies (26 basis points). Operating expenses, as a percentage of sales, were 31.2% (versus 31.6% last year). The reduction in operating expenses, as a percentage of sales, reflected leverage of store operating expenses due to higher sales, partially offset by increased legal costs (18 basis points), higher pension expense (16 basis points), and our continued investment in our hub store initiative (14 basis points).

For the fiscal year ended August 28, 2010, sales were $7.4 billion, an increase of 8.0% from the prior year, while domestic same store sales were up 5.4%. Operating profit increased 12.2% on an operating margin of 17.9%. For fiscal 2010, net income increased 12.4% to $738 million, while diluted earnings per share for the period increased 27.6% to $14.97 from $11.73.

Under its share repurchase program, AutoZone repurchased 2.8 million shares of its common stock for $565 million during the fourth quarter, at an average price of $199 per share. For the fiscal year, the Company repurchased 6.4 million shares of its common stock for $1.1 billion, at an average price of $176 per share. At the fiscal year end, the Company had $185 million remaining under its current share repurchase authorization.

The Company's inventory increased 4.4% over the same period last year, driven by new store openings. Inventory per store was $498 thousand versus $500 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, improved on a per store basis to a negative $28 thousand from a positive $20 thousand last year. The Company achieved a quarter ending accounts payable to inventory ratio of 106%, up from 96% last year.

"Our performance during the fourth quarter represents a strong conclusion to a very good year for AutoZone. For the year, we set several new all-time records for our company: EBIT margin 17.9%, accounts payable to inventory ratio of 106%, operating cash flow in excess of $1 billion, and ROIC of 27.6%. While the macro environment for our industry was certainly favorable, our team's commitment to our culture, constant refinements to our offerings, and high level of execution led to our second consecutive year of strong financial performance. I would like to thank and congratulate our 60,000+ AutoZoners across North America for their impressive performance," said Bill Rhodes, Chairman, President and Chief Executive Officer.

Jim Shea, Executive Vice President, Merchandising, Marketing, and Supply Chain will be retiring at the end of October 2010. "I would like to thank Jim for his many contributions to our organization over the last six years. While we will certainly miss Jim and his contributions, he has developed strong leaders who are well prepared to lead this organization to continued success well into the future," said Rhodes.

During the quarter ended August 28, 2010, AutoZone opened 80 new stores and replaced one store in the U.S. and opened 26 new stores in Mexico. As of August 28, 2010, the Company had 4,389 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 238 stores in Mexico.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each 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. On the web, AutoZone sells diagnostic and repair information, and auto and light truck parts through www.autozone.com, and as part of our commercial sales program, through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, September 21, 2010, 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.autozoneinc.com by clicking "Investor Relations," "Conference Calls." 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, September 28, 2010 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 return on invested capital, adjusted debt, and adjusted debt/EBITDAR. 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 are forward-looking statements. Forward-looking statements typically use words such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" 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: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 29, 2009, 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.

  AutoZone's 4th Quarter Highlights - Fiscal 2010

  Condensed Consolidated Statements
   of Operations
  4th Quarter
  (in thousands, except
   per share data)

                                GAAP Results
                         --------------------------
                           16 Weeks      16 Weeks
                            Ended         Ended

                          August 28,    August 29,
                             2010          2009
                         ------------  ------------

  Net sales               $ 2,445,159   $ 2,232,494

  Cost of sales             1,210,196     1,109,441
                         ------------  ------------
  Gross profit              1,234,963     1,123,053
  Operating, SG&A
   expenses                   762,223       705,457
                         ------------  ------------
  Operating profit
   (EBIT)                     472,740       417,596

  Interest expense, net        49,427        47,762
                         ------------  ------------
  Income before taxes         423,313       369,834

  Income taxes                154,380       133,708
                         ------------  ------------

  Net income                $ 268,933     $ 236,126
                         ============  ============
  Net income per share:
   Basic                       $ 5.77        $ 4.49
   Diluted                     $ 5.66        $ 4.43
  Weighted average
   shares outstanding:
   Basic                       46,640        52,546
   Diluted                     47,543        53,323

  Fiscal Year 2010
  (in thousands, except
   per share data)              GAAP Results
                         --------------------------
                           52 Weeks      52 Weeks
                            Ended         Ended

                          August 28,    August 29,
                             2010          2009
                         ------------  ------------

  Net sales               $ 7,362,618   $ 6,816,824

  Cost of sales             3,650,874     3,400,375
                         ------------  ------------
  Gross profit              3,711,744     3,416,449
  Operating, SG&A
   expenses                 2,392,330     2,240,387
                         ------------  ------------
  Operating profit
   (EBIT)                   1,319,414     1,176,062

  Interest expense, net       158,909       142,316
                         ------------  ------------
  Income before taxes       1,160,505     1,033,746

  Income taxes                422,194       376,697
                         ------------  ------------

  Net income                $ 738,311     $ 657,049
                         ============  ============
  Net income per share:
   Basic                      $ 15.23       $ 11.89
   Diluted                    $ 14.97       $ 11.73
  Weighted Average Shares
   outstanding:
   Basic                       48,488        55,282
   Diluted                     49,304        55,992

  Selected Balance Sheet Information
  (in thousands)

                          August 28,    August 29,
                             2010          2009
                         ------------  ------------

  Cash and cash
   equivalents               $ 98,280      $ 92,706
  Merchandise
   inventories              2,304,579     2,207,497
  Current assets            2,611,821     2,561,730
  Property and
   equipment, net           2,519,946     2,354,357
  Total assets              5,571,594     5,318,405
  Accounts payable          2,433,050     2,118,746
  Current liabilities*      3,063,960     2,706,752
  Total debt*               2,908,486     2,726,900
  Stockholders' equity
   (deficit)                (738,765)     (433,074)
  Working capital           (452,139)     (145,022)

  * Current liabilities and Total debt both include
   short-term borrowings of $26,186.


  Adjusted Debt / EBITDAR
   (Trailing 4 Qtrs)
  -----------------------------
  (in thousands, except
   adjusted debt to EBITDAR
   ratio)

                                  August 28,    August 29,
                                     2010          2009
                                 ------------  ------------
  Net income                        $ 738,311     $ 657,049
  Add: Interest                       158,909       142,316

    Taxes                             422,194       376,697
                                 ------------  ------------
  EBIT                              1,319,414     1,176,062

  Add: Depreciation                   192,084       180,433
      Rent expense                    195,632       181,308

      Option expense                   19,120        19,135
                                 ------------  ------------
  EBITDAR                         $ 1,726,250   $ 1,556,938

  Debt                            $ 2,908,486   $ 2,726,900
  Capital lease obligations            88,280        54,764

  Add: rent x 6                     1,173,792     1,087,848
                                 ------------  ------------

  Adjusted debt                   $ 4,170,558   $ 3,869,512
                                 ============  ============

  Adjusted debt to EBITDAR                2.4           2.5

  Selected Cash Flow
   Information
  (in thousands)
                                   16 Weeks      16 Weeks     52 Weeks     52 Weeks
                                    Ended         Ended         Ended       Ended

                                  August 28,    August 29,   August 28,   August 29,
                                     2010          2009         2010         2009
                                 ------------  ------------  ----------  ------------

  Depreciation                       $ 62,165      $ 57,160   $ 192,084     $ 180,433


  Capital spending                  $ 135,334     $ 112,160   $ 315,400     $ 272,247
  -----------------------------  ------------  ------------  ----------  ------------

  Cash flow before share
   repurchases:
  Net increase / (decrease) in
   cash and cash equivalents          $ 2,518     $ (1,581)     $ 5,574   $ (149,755)
  Subtract increase in debt           209,986       321,000     181,586       476,900

  Add back share repurchases          565,386       587,396   1,123,655     1,300,002
                                 ------------  ------------  ----------  ------------
  Cash flow before share
   repurchases and changes in
   debt                             $ 357,918     $ 264,815   $ 947,643     $ 673,347
                                 ============  ============  ==========  ============

  Other Selected Financial
   Information
  (in thousands, except ROIC)

                                  August 28,    August 29,
                                     2010          2009
                                 ------------  ------------

  Cumulative share repurchases
   ($ since fiscal 1998)          $ 8,714,572   $ 7,590,917
  Remaining share authorization
   ($)                              $ 185,428     $ 309,083

  Cumulative share repurchases
   (shares since fiscal 1998)         121,745       115,370
                                 ------------  ------------
  Shares outstanding, end of
   quarter                             45,107        50,801

                                      Trailing 5 Points

                                  August 28,    August 29,
                                     2010          2009
                                 ------------  ------------
  Net income                        $ 738,311     $ 657,049
  Adjustments:
   Interest expense                   158,909       142,316
   Rent expense                       195,632       181,308

   Tax effect*                      (128,983)     (117,929)
                                 ------------  ------------
  After-tax return                    963,869       862,744

  Average debt**                    2,769,617     2,468,351
  Average equity**                  (507,885)      (75,162)
  Add: Rent x 6                     1,173,792     1,087,848
  Average capital lease
   obligations**                       62,220        58,901
                                 ------------  ------------

  Pre-tax invested capital        $ 3,497,744   $ 3,539,938
                                 ============  ============


  Return on Invested Capital
   (ROIC)                               27.6%         24.4%
  -----------------------------  ------------  ------------

  * Effective tax rate over trailing four quarters ended
   August 28, 2010
  and August 29, 2009 is 36.4% and 36.4%, respectively.
  ** All averages are computed based on trailing 5 quarter
   balances.


  AutoZone's 4th Quarter Fiscal 2010
  Selected Operating Highlights


  Store Count & Square Footage
  -----------------------------

                                   16 Weeks      16 Weeks     52 Weeks      52 Weeks
                                    Ended         Ended         Ended        Ended

                                  August 28,    August 29,    August 28,   August 29,
                                     2010          2009         2010          2009
                                 ------------  ------------  -----------  ------------
  Domestic stores:
   Store count:
   Stores opened                           80            58          163           140
   Stores closed                           --             1            3             3
   Replacement stores                       1             3            3             9
   Total domestic stores                4,389         4,229        4,389         4,229

   Stores with commercial
    programs                            2,424         2,303        2,424         2,303

   Square footage (in
    thousands):                        28,294        27,193       28,294        27,193

  Mexico stores:
   Stores opened                           26            20           50            40
   Total stores in Mexico                 238           188          238           188

  Total stores chainwide                4,627         4,417        4,627         4,417

   Square footage (in
    thousands):                        30,027        28,550       30,027        28,550
   Square footage per store             6,490         6,464        6,490         6,464


  Sales Statistics
  -----------------------------
  ($ in thousands, except sales per average
   square foot and percentages)

                                   16 Weeks      16 Weeks     52 Weeks      52 Weeks
                                    Ended         Ended         Ended        Ended

  Total Auto Parts (Domestic      August 28,    August 29,    August 28,   August 29,
   and Mexico)                       2010          2009         2010          2009
                                 ------------  ------------  -----------  ------------
   Total auto parts sales         $ 2,397,465   $ 2,186,682  $ 7,213,753   $ 6,671,939
    % Increase vs. LY                    9.6%          1.0%         8.1%          4.5%
    % Increase vs. LY (excl
     53rd week)                                        7.1%                       6.6%

   Sales per average store              $ 524         $ 499      $ 1,595       $ 1,541
   Sales per average square
    foot                                 $ 81          $ 77        $ 246         $ 239

  Domestic Commercial
   Total domestic commercial
    sales                           $ 301,814     $ 251,052    $ 879,982     $ 773,047
    % Increase vs. LY                   20.2%          0.3%        13.8%          2.6%
    % Increase vs. LY (excl
     53rd week)                                        5.7%                       4.3%

  All Other (ALLDATA and
   E-Commerce)
   All other sales                   $ 47,693      $ 45,812    $ 148,865     $ 144,884
    % Increase vs. LY                    4.1%        (0.1%)         2.7%          4.2%
    % Increase vs. LY (excl
     53rd week)                                        6.1%                       6.3%

                                   16 Weeks      16 Weeks     52 Weeks      52 Weeks
                                    Ended         Ended         Ended        Ended

                                  August 28,    August 29,    August 28,   August 29,
                                     2010          2009         2010          2009
                                 ------------  ------------  -----------  ------------
   Domestic same store sales             6.7%          5.4%         5.4%          4.4%



  Inventory Statistics (Total
   Stores)
  -----------------------------
                                    as of         as of

                                  August 28,    August 29,
                                     2010          2009
                                 ------------  ------------
   Accounts payable/inventory          105.6%         96.0%

   ($ in thousands)
   Inventory                      $ 2,304,579   $ 2,207,497
   Inventory per store                  $ 498         $ 500
   Net inventory (net of
    payables)                     $ (128,471)      $ 88,751
   Net inventory / per store           $ (28)          $ 20

                                      Trailing 5 Points

                                  August 28,    August 29,
                                     2010          2009
                                 ------------  ------------
   Inventory turns                      1.6 x         1.5 x

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: AutoZone, Inc.

CONTACT:  AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(866) 966-3017
ray.pohlman@autozone.com
© 2007 AutoZone, Inc. All rights reserved.