AutoZone Surpasses 4th-Quarter Earnings and Revenue Expectations
- By Mayank Marwah
On Sept. 22 before the market opened, AutoZone (NYSE:AZO) released its results for its fiscal 2020 fourth quarter, which ended Aug. 29. The company's earnings and revenue exceeded expectations thanks to rising demand for auto parts.
Key metrics
The American retailer of aftermarket automotive parts and accessories posted diluted earnings per share of $30.93 in the fourth quarter, up 36.9% year-over-year. Analysts had predicted EPS of $24.69. Revenue of $4.5 billion was up 14% and surpassed analysts' projections of $4.07 billion.
CEO Bill Rhodes had the following to say:
"During the quarter, our same store sales growth was very consistent, generally increasing twenty-one to twenty-seven percent per week. During the last four weeks of the quarter, following the expiration of the enhanced unemployment benefits provided by the Federal Government, our same store sales increased 16.5%. As we begin fiscal 2021, there continues to be significant uncertainty but our team has proven that they are nimble and quickly able to adapt to this ever changing environment and provide exceptional service to our customers."
Gross profit, as a percentage of sales, dropped from 53.4% reported last year to 53.1% this year owing to lower merchandise margins, which was highly driven by shift in mix. Operating expenses decreased to 30.7% of sales compared to 33.8% of sales in the year-ago quarter as a result of leverage from higher sales volume.
Comps
Comparable store sales in the U.S. for the quarter were up 21.8%, which was more than the forecasted growth of 9.3%. Same-store sales surged 16.5% in the last 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 49 new stores in the U.S., 11 in Mexico and five in Brazil. The company did not permanently shut down any stores. As of Aug. 29, the company had a total of 6,549 stores, with 5,885 in the U.S., 621 in Mexico and 43 in Brazil.
Financials
AutoZone had cash and cash equivalents of $1.75 billion and total debt of $5.51 billion at quarter's end.
During fiscal fourth quarter, the company did not buy back any shares in an effort to preserve liquidity. The company bought back 826,000 shares for $930.9 million during the fiscal year. The average price per share was $1,127. The company is authorized to buy back shares worth $796 million under the stock buyback program.
Guidance
Looking ahead, the company expects its overall results to improve given the growing demand for used vehicles in preference to new vehicles. The company also announced that it would add 20,000 new jobs to cope with retail as well as commercial demand for auto parts.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
What Investors Should Know About Herman Miller's 1st-Quarter Results
Shares Rise as FedEx's 1st-Quarter Results Surpass Projections
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on GuruFocus.
