AutoZone, Inc.
CEO : Mr. Philip B. Daniele III
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q4 | 9.0% YoY | 6.1% | 10.8% | 2024-12-10 |
Jamere Jackson says,
Sales Performance and Growth Initiatives
- Total sales for Q1 2025 were $4.3 billion, representing a growth of 2.1% compared to the previous year.
- Domestic same-store sales increased by 0.3%, while international comparable sales rose 13.7% on a constant currency basis.
- Domestic DIFM (Do It For Me) sales increased by 3.2% to $1.1 billion, with commercial sales making up 30% of domestic auto parts sales and 26% of total company sales.
- Opened 37 net new commercial programs, totaling 5,935 programs, with 92% of domestic stores offering the commercial program.
- Expanded mega-hubs to 111 locations, contributing significantly to sales growth and aiming for nearly 300 mega-hubs at full buildout.
International Market Expansion
- Opened six new stores in Mexico, reaching a total of 800 stores, and five new stores in Brazil, totaling 132 stores.
- International same-store sales growth was 13.7% on a constant currency basis and 1% on a reported basis.
- Plans to accelerate the pace of store openings in international markets.
Financial Performance and Foreign Exchange Impact
- EBIT for the quarter was $841 million, a decrease of 0.9%, affected by a $17 million negative impact from foreign exchange rates.
- EPS decreased by 0.1% to $32.52, with a $0.68 per share drag from unfavorable FX rates.
- Net income for the quarter was $565 million, down 4.8% year-over-year.
- Interest expense increased by 18% from the previous year, driven by higher debt levels and borrowing rates.
| FX Impact | Q1 2025 | Full Year 2025 (Potential) |
|---|---|---|
| Revenue | $58 million | $355 million |
| EBIT | $17 million | $120 million |
| EPS | $0.68 | $4.90 |
Operational Efficiency and Investment
- Gross margin for the quarter was 53%, increasing by 16 basis points.
- SG&A expenses increased by 4.5% year-over-year, with investment focused on IT and CapEx to support growth initiatives.
- Inventory per store increased by 5.4%, with overall inventory up 8.7% due to new store growth and inventory placement.
- AutoZone’s liquidity position remains strong, with a leverage ratio of 2.5 times EBITDAR.
Capital Allocation and Shareholder Returns
- Repurchased $505 million of stock in Q1 2025, with $1.7 billion remaining under share buyback authorization.
- Generated $565 million in free cash flow for the quarter, maintaining a strong cash flow generation capability.
- Committed to a disciplined capital allocation strategy, focusing on investing in growth while returning cash to shareholders.
Phil Daniele says,
Q1 2025 Financial Performance
- Total sales grew by 2.1%.
- Earnings per share (EPS) experienced a slight decrease of 0.1%.
- Total company same-store sales increased by 1.8%.
- Domestic same-store sales saw a modest growth of 0.3%, while domestic commercial sales grew by 3.2%, and 9% over a two-year stack period.
Impact of Foreign Exchange Rates
- International same-store sales were up 13.7% on a constant currency basis, but unadjusted sales growth was just 1% due to a 1,300 basis points currency headwind.
- The stronger U.S. dollar negatively impacted reported sales, operating profit, and EPS.
- Jamere Jackson will provide more details on the foreign currency impact and outlook for Q2 and the remaining fiscal year.
Domestic DIY and Commercial Sales Analysis
- Domestic DIY sales showed slight improvement with a comp sales decline of 0.4%.
- Discretionary merchandise categories, accounting for 17% of the mix, continue to underperform.
- DIY transaction count decreased by 1.8%.
- Commercial sales increased by 3.2% this quarter, though affected by hurricanes and regional underperformance.
Regional and Weather Influences
- DIY sales underperformed in the Northeast, Mid-Atlantic, and Rust Belt regions by 1.8% compared to 0.1% in the rest of the domestic markets.
- Weather events, particularly hurricanes, had limited impact on overall sales.
Growth and Expansion Strategies
- 23 net new domestic stores were opened in Q1, with plans for continued expansion focused on Hubs and Mega-Hubs.
- International growth is highlighted by the opening of 11 new stores in Mexico and Brazil, reaching a total of 932 international locations with plans to open around 100 more in FY ’25.
- A total of $1 billion in CapEx investment is planned for strategic growth, including store growth and technology enhancements.
Q & A sessions,
Financial Performance Overview
- Total sales grew by 2.1% despite difficult macroeconomic conditions.
- Earnings per share (EPS) experienced a slight decrease of 0.1%.
- Domestic same-store sales showed a minor growth of 0.3%.
- Domestic commercial sales increased by 3.2%, marking a 9% growth on a two-year stack basis.
- International same-store sales grew by 13.7% on a constant currency basis, but faced a currency headwind of 1,300 basis points.
Strategic Initiatives and Priorities
- The focus for fiscal year 2025 will be on growing the domestic commercial market share and continuing international momentum.
- Investment in new hub and mega-hub stores is prioritized, with plans to have over 285 domestic hubs or mega-hubs.
- Efforts are underway to optimize distribution centers and direct import facilities to enhance customer experience.
- International store growth is being ramped up, with a target to open around 100 new stores.
- The company is investing over $1 billion in CapEx for strategic growth initiatives.
Operational Challenges and Market Conditions
- Hurricanes negatively impacted sales in certain regions in Q1, particularly in the Northeast, Mid-Atlantic, and Rust Belt markets.
- Underperformance observed in domestic DIY segments, notably in discretionary merchandise categories.
- Domestic DIY sales showed a minor decline of 0.4% in comparison to the previous quarter.
- Commercial business saw pressure from lack of inflation, contributing a negative 0.7% to average ticket.
International Business Expansion
- Opened 11 new international stores in Mexico and Brazil, totaling 932 international stores.
- International expansion is set to increase, with the current international store base making up 13% of total stores.
- Same-store sales in international markets were nearly 14% on a constant currency basis.
- Impact of stronger U.S. dollar was significant, affecting reported sales, operating profit, and EPS.
Future Outlook and Expectations
- The company anticipates modest improvement in both DIY and commercial sales trends for Q2.
- Continued investment in inventory and customer service initiatives is expected to support long-term growth.
- AutoZone is optimistic about capturing additional market share and enhancing customer service quality.
- The company remains focused on meeting store opening goals and timelines to maximize growth potential.
No bad stock 