AutoZone Whiffs Big on Q3 Earnings

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AutoZone Inc. (NYSE: AZO) shares hit a 52-week low in Tuesday’s session after the company reported its fiscal third-quarter financial results. The auto parts retail chain said that it had $11.44 in earnings per share (EPS) and $2.62 billion in revenue, compared with consensus estimate from Thomson Reuters that called for $12.00 in EPS and revenue of $2.71 billion. In the same period of last year, AutoZone posted EPS of $10.77 and $2.59 billion in revenue.

Domestic same-store sales declined by 0.8% for the quarter.

During this quarter, the company opened 35 new stores and relocated two stores in the United States, and it opened eight new stores in Mexico. At the end of the quarter, AutoZone had 5,381 stores in the United States, 499 in Mexico and nine branches in Brazil.

Under its share repurchase program, AutoZone bought $284 million worth of common stock during the quarter. There is $1.051 billion remaining under its current share repurchase authorization.

On the books, AutoZone cash and cash equivalents totaled $227.14 million at the end of the quarter, up from $213.38 million in the same period from last year.

Bill Rhodes, board chair, president and chief executive, commented:

I would like to thank all AutoZoners across the organization for their dedication to serving our customers throughout a very challenging spring sales season.  Our sales performance for the first five weeks of our quarter was significantly below our expectations, challenged by the well-publicized timing delays in IRS tax refunds.  The last seven weeks of sales demonstrated improvement, but not enough to make up for our soft start.  While this quarter’s results were below our expectations, our AutoZoners’ ongoing commitment to providing customers with Trustworthy Advice has us well positioned for the summer ahead.  Notwithstanding macro headwinds, including increasing wage pressures, we are confident in our long term positive fundamentals for sales growth, and we remain committed to driving shareholder value.

Shares of AutoZone were last seen down more than 8% at $604.94 on Tuesday, with a consensus analyst price target of $841.91 and a 52-week trading range of $597.50 to $819.54.