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AutoZone Reports 3rd-Quarter Results

On May 26 before the market opened, AutoZone (NYSE:AZO) released its results for the fiscal 2020 third-quarter ended May 9. The company's earnings and revenue exceeded expectations.

Key metrics

The American retailer of aftermarket automotive parts and accessories posted diluted earnings of $14.39 per share in the third quarter, down 10% year-over-year. Revenue of $2.78 billion was down 0.1% but surpassed analysts' projections of $2.65 billion.


CEO Bill Rhodes had the following to say:


"During the third quarter, we experienced the most extreme fluctuations in sales, both negative and positive, in the Company's more than 40 year history. Because of this extreme volatility and uncertainty around the continued effects of the virus and government and consumer responses, it is difficult for us to forecast short-term results with any degree of confidence. But our team has proven yet again that we can flex our business quickly in this dynamic environment, and we significantly enhanced our liquidity as previously announced."



He added that the company would focus on its strategic initiatives of "delivering great service, further penetrating the Commercial market, enhancing inventory assortments, improving local market expanded parts availability and leveraging technology to improve efficiencies" in the remainder of the year.

Gross profit remained flat at $1.49 billion in the reported quarter. Operating expenses climbed to 35.9% of sales compared to 33.9% of sales in the year-ago quarter, due primarily to coronavirus-related costs of roughly $75 million.

Comps

Comparable store sales in the U.S. for the quarter were down 1%, which was less than the forecasted drop of 6.3%. Same-store sales surged mid-single digits in the first four weeks of the quarter thanks to strong performance in the retail and commercial segments.

Store count

At the end of the quarter, AutoZone launched 21 new stores in the U.S. and two in Mexico. No new stores were opened in Brazil. The company did not permanently shut down any stores. As of May 9, the company had a total of 6,484 stores, with 5,836 in the U.S., 610 in Mexico and 38 in Brazil.

Financials

AutoZone had cash and cash equivalents of $509.12 million and total debt of $5.41 billion at quarter's end.

The company bought back 156,000 shares for $166.1 million during the fiscal third quarter. The average price per share was $1,064. The company has now temporarily halted its stock buyback program in order to preserve liquidity.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.