AutoZone Inc, the largest US auto parts retail chain, on Tuesday posted a 1.7 rise in quarterly earnings as gross margins improved under tough industry conditions, and its shares rose as much as 4.6 percent.
Sales at existing stores were down in AutoZone's fourth quarter, but sales to retail customers rose and came out better than many had expected given soaring gasoline prices and some gloomy commentary from competitors in recent weeks.
"AutoZone puts up some consistent numbers," BB&T Capital Markets analyst Tony Cristello said. "They were not talking about further deterioration and were focused on the business at hand."
AutoZone does not comment much on trends directly, but their tone probably is positive for the rest of the US auto parts retail chains as well, Cristello said. Net income for the fourth quarter rose to $217.2 million, or $3.23 per share, from $213.5 million, or $2.92 per share, a year earlier.
The result fell 2 cents short of the analysts' average forecast of $3.25 per share, according to Reuters Estimates, but Goldman Sachs analyst Matthew Fassler said in a note that the "nominal shortfall" amounted to a rounding error given the relatively small number of outstanding shares.
AutoZone, whose largest shareholder is hedge fund manager Edward Lampert, has been buying back stock consistently and had an average diluted share count of about 67.3 million shares. Credit Suisse analyst Gary Balter said in a note that the results were largely in line and sales at existing stores were good in a tough environment.
Sales in the quarter ended August 25 rose 3.3 percent to a little over $2 billion, shy of the $2.03 billion analysts had expected. Domestic sales at stores open at least a year, a key retail measure known as same-store sales, slipped 0.2 percent for the quarter. That was below the 1.3 percent increase for Advance Auto Parts Inc , the No 2 US retail chain, for the second quarter ended July 14.
Retail sales in the quarter rose 2.7 percent while commercial sales increased 0.5 percent. Memphis, Tennessee-based AutoZone had 3,933 stores in the United States and Puerto Rico, and another 123 in Mexico at the end of the quarter. AutoZone shares were up $4.35, or 4.0 percent, at $112.97 in afternoon trade on the New York Stock Exchange after climbing as high as $113.60 during the session.