Autozone reports resilient first-quarter results amid domestic challenges

AutoZone, Inc., the leading retailer and distributor of automotive replacement parts in the Americas, announced its first-quarter fiscal 2025 results, showcasing steady growth despite ongoing challenges. For the 12 weeks ending November 23, 2024, AutoZone reported net sales of $4.3 billion, reflecting a 2.1% year-over-year increase. Same-store sales, a critical metric for retail performance, rose by 1.8% on a constant currency basis, with domestic stores experiencing a modest 0.3% uptick.

The company’s gross profit margin improved slightly to 53.0%, driven by higher merchandise margins. However, operating profit saw a minor decline of 0.9% year-over-year, settling at $841.1 million. Net income for the quarter was $564.9 million, compared to $593.5 million in the previous year, resulting in diluted earnings per share of $32.52, marginally down from $32.55.

CEO Phil Daniele expressed optimism about the company’s performance, attributing the gains to improved DIY sales trends and robust international growth. International same-store sales surged nearly 14% in constant currency, a stark contrast to domestic results. Daniele highlighted that investments in customer service and market expansion remain pivotal for sustained growth.

The company repurchased 160,000 shares of its stock during the quarter, investing $505.2 million as part of its share repurchase programme. Since its inception, AutoZone has repurchased 155 million shares, demonstrating a commitment to delivering shareholder value. At the quarter’s end, AutoZone had $1.7 billion remaining under its current repurchase authorisation.

Inventory management also reflected positive adjustments. Inventory levels rose by 8.7% compared to the previous year, with net inventory per store improving to negative $166,000, a significant recovery from negative $197,000 a year earlier.

AutoZone’s international strategy remains a key growth driver, as evidenced by the opening of 34 new stores during the quarter—23 in the U.S., six in Mexico, and five in Brazil. The total store count now stands at 7,387, including 800 locations in Mexico and 132 in Brazil. This marks a continuation of the company’s strategy to penetrate emerging markets and expand its footprint.

While currency fluctuations presented a challenge, the company remains bullish about its prospects. In particular, its commercial sales programmes, contributing 3.2% growth in domestic sales, indicate resilience in the professional repair market.

Experts note that AutoZone’s disciplined approach to financial management and its strategic focus on long-term value creation set the stage for continued stability. The company’s emphasis on enhancing operating cash flow while maintaining investment-grade credit ratings has fortified its position in a competitive retail landscape.

AutoZone’s management has reiterated its commitment to shareholder returns and market leadership. As the fiscal year progresses, the company expects to capitalise on trends favouring automotive maintenance and repair, driven by aging vehicles and evolving consumer preferences.

The company hosted an investor call on December 10, 2024, to discuss its results further, providing stakeholders with insights into future strategies and initiatives.