On February 27, 2024, AutoZone Inc (AZO, Financial) released its earnings for the second quarter of fiscal year 2024, showcasing a robust performance with a notable increase in net sales and earnings per share. The company's 8-K filing details the financial results for the 12 weeks ended February 10, 2024, indicating a 4.6% rise in net sales to $3.9 billion compared to the same quarter in the previous fiscal year.
AutoZone operates as a leading retailer of aftermarket automotive parts in the United States, with over 6,300 domestic stores and a significant presence in Mexico and Brazil. The company's expansive store footprint and distribution network cater to a diverse customer base, offering a wide range of stock-keeping units for various vehicle makes and models. AutoZone's commitment to superior customer service is evident in its knowledgeable staff who assist customers with vehicle diagnostics, part selection, and installation.
The company's gross profit margin improved to 53.9%, a 160 basis point increase from the prior year, primarily due to higher merchandise margins and favorable supply chain costs. However, operating expenses as a percentage of sales slightly increased to 34.6%, mainly due to investments in domestic store payroll and technology initiatives. Despite this, AutoZone's operating profit surged by 10.9% to $743.2 million.
Net income for the quarter grew by 8.1% to $515.0 million, and diluted earnings per share saw a significant rise of 17.2% to $28.89. The company's share repurchase program remained active, with 84 thousand shares bought back at an average price of $2,676 per share, totaling an investment of $223.8 million.
During the quarter, AutoZone opened 19 new stores and closed three in the U.S., and expanded its international presence with six new stores in Mexico and four in Brazil. The total store count now stands at 7,191. Inventory levels increased by 4.2% over the same period last year, driven by new store growth. The net inventory on a per store basis was negative $164 thousand, compared to negative $227 thousand the previous year.
Phil Daniele, President and Chief Executive Officer of AutoZone, expressed gratitude towards the AutoZoners for their dedication to delivering superior customer service, which contributed to the company's solid quarterly performance. He also highlighted the success of the international business and the company's commitment to prudent capital investment for future growth.
The company's financial achievements are particularly important in the Retail - Cyclical industry, where competition is fierce and margins are often tight. AutoZone's ability to improve its gross profit margin while expanding its store footprint and managing inventory effectively demonstrates a strong operational strategy that is likely to appeal to value investors.
AutoZone's performance this quarter reflects its resilience in a challenging retail environment and its strategic focus on growth and efficiency. With a solid increase in net sales, an improved gross profit margin, and a disciplined approach to capital allocation, AutoZone continues to strengthen its position as a leader in the automotive aftermarket industry.
For more detailed financial information and analysis, investors are encouraged to review the full earnings report and listen to the webcast of the earnings call available on AutoZone's website.
Explore the complete 8-K earnings release (here) from AutoZone Inc for further details.
