Earnings Highlights and Review: AutoZone's Revenue Improved 1.0%; EPS Grew 6.2%
Research Desk Line-up: Advance Auto Parts Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 12, 2017 / Pro-Trader Daily publishes post-earnings coverage on AutoZone, Inc. (NYSE: AZO) following the Company's announcement of its financial results for the third quarter fiscal 2017 (Q3 FY17) on May 23, 2017. The Memphis, Tennessee-based Company posted y-o-y gain in revenue and earnings, but came in below analysts' forecasts. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Auto Parts Stores industry. Pro-TD has currently selected Advance Auto Parts, Inc. (NYSE: AAP) for due-diligence and potential coverage as the Company announced on May 24, 2017, its financial results for Q1 FY17 which ended on April 22, 2017. Register for a free membership today, and be among the early birds that get access to our report on Advance Auto Parts when we publish it.
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Earnings Reviewed
In Q3 FY17, AutoZone reported net sales of $2.62 billion, up 1.0% compared to net sales of $2.59 billion in Q3 FY16. The Company's revenue numbers lagged behind market expectations of $2.71 billion.
In Q3 FY17, AutoZone's Domestic commercial sales were $498.58 million, up 3.6% compared to $481.44 million in Q3 FY16. For the 12 weeks ended on May 06, 2017, the Company's Domestic store sales fell 0.8% compared to growth of 2.0% in domestic store sales for the prior year's same quarter.
For Q3 FY17, AutoZone posted gross profit of $1.38 billion, or 52.6% of sales, compared to gross profit of $1.37 billion, or 52.8% of sales, in the prior year's corresponding period. During the reported quarter, the decrease in the Company's gross margin was attributable to higher supply chain costs associated with the current year's inventory initiatives and higher inventory shrink results, slightly offset by lower acquisition costs.
The leading auto parts retailer reported net income of $331.7 million which increased 1.3% in Q3 FY17, while diluted earnings per share increased 6.2% to $11.44 per share compared to net income of $327.52 million, or $10.77 per earning share, in Q3 FY16. In August 2016, the Company adopted a new accounting standard, related to stock option exercises, which resulted in a gain of $0.32 per share. Excluding this adjustment EPS would have grown by 3.2% on a y-o-y basis. AutoZone's earnings came in below expectations of $11.99 per share.
Operating Metrics
In the reported quarter, AutoZone's operating expenses were $848.85 million, or 32.4% as a percentage of sales, compared to operating expenses of $834.08 million, or 32.2% as a percentage of sales, in Q3 FY16. The Company's operating expenses for Q3 FY17, as a percentage of sales, were higher on a y-o-y basis majorly from fixed cost deleverage.
For Q3 FY17, AutoZone's inventory increased 7.3% on a y-o-y basis to $3.86 billion, driven by new stores and raised product placement compared to $3.60 billion in the prior year's same period. The Company's inventory per location was $653, 000 for the reported quarter compared to $629,000 in Q3 FY16. During the Q3 FY17, Company's net inventory after deducting net account payables, on a per location basis was -$47,000 compared to -$69,000 on a per location basis in the previous year.
Segment Performance
During Q3 FY17, AutoZone's stores including Domestic, Mexico, and Brazil segments reported sales per average store of $424,000 compared to $434,000 in Q3 FY16. The Company's Auto parts segment's sales for Q3 FY17 totaled $2.53 billion, which is up 1.1% compared to $2.50 billion in the previous year's same quarter. During the quarter ended on May 06, 2017, AutoZone opened 35 new stores and relocated 2 stores in the US, and in Mexico, the Company opened 8 new stores during the reported quarter.
Cash Flow & Balance sheet
As of May 06, 2017, AutoZone had cash and cash equivalents balance of $227.14 million compared to $213.38 million at the end of May 07, 2016.
Share Repurchase & Dividend
During Q3 FY17, AutoZone repurchased $396,000 shares of its common stock for $284 million, at an average price of $716 per share. At the end of the reported quarter, the Company had $1.05 billion remaining under its current share repurchase authorization compared to $765.09 million at the end of period on May 07, 2016.
Stock Performance
At the close of trading session on Friday, June 09, 2017, AutoZone's stock price rose 1.24% to end the day at $606.36. A total volume of 537.97 thousand shares were exchanged during the session, which was above the 3-month average volume of 458.90 thousand shares. The Company's shares are trading at a PE ratio of 14.01. At Friday's closing price, the stock's net capitalization stands at $17.45 billion.
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