AutoZone Inc. (AZO) reported a 15.6% rise in earnings per share (adjusted for 1 extra week last year) to $11.28 for the fourth quarter of fiscal 2014 (ended Aug 30, 2014) from $9.76 in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $11.23. Net income (adjusted) went up 7.5% to $373.7 million from $347.8 million in the year-ago quarter.
Quarterly revenues (adjusted) increased 4.5% year over year to $3 billion, missing the Zacks Consensus Estimate of $3.06 billion. Domestic same-store sales (sales for stores open at least for one year) increased 2.1% in the quarter.
Gross profit (adjusted) increased to $1.6 billion (or 52.3% of sales) from $1.51 billion (or 51.8% of sales) in the year-ago quarter. The year-over-year growth in margins was due to reduced shrink expense and acquisition costs, partially offset by higher supply chain costs.
Operating profit (adjusted) improved to $630.2 million from $596.4 million in the fourth quarter of fiscal 2013. Operating expenses as a percentage of sales increased to 31.6% from 31.3% a year ago.
Fiscal 2014 Results
AutoZone reported a 16.3% rise in earnings per share (adjusted) to $31.57 for fiscal 2014 from $27.15 in the prior year. Earnings surpassed the Zacks Consensus Estimate of $31.54. Net income (adjusted) went up 7.7% to $1.1 billion from $993.1 million in fiscal 2013.
Annual revenue (adjusted) increased 5.6% year over year to $9.48 billion but missed the Zacks Consensus Estimate of $9.49 billion.
Store Opening and Inventory
AutoZone opened 83 stores in the U.S., 28 stores in Mexico and 1 store in Brazil during the quarter. As of Aug 30, 2014, the company had 4,984 stores in 49 states in the U.S., the District of Columbia and Puerto Rico, 402 stores in Mexico and 5 stores in Brazil.
AutoZone’s inventory grew 9.8% year over year in the quarter, driven by store openings and higher product placement. Inventory per store increased to $582,000 from $550,000 in the corresponding quarter last year.
Share Repurchase
In the reported quarter, AutoZone repurchased 356,000 shares for $188 million, reflecting an average price of $528 per share. In fiscal 2014, the company bought back 2.23 million shares for $1.1 billion, at an average price of $492 per share. The company had shares worth $869 million remaining for repurchase at the end of the fourth quarter.
Financial Details
AutoZone had cash and cash equivalents of $124.5 million as of Aug 30, 2014, down from $142.2 million as of Aug 31, 2013. Total debt amounted to $4.3 billion as of Aug 30, 2014, compared with $4.2 billion as of Aug 31, 2013. The company had a stockholder deficit of $1.6 billion as of Aug 30, 2014, down from $1.7 billion as of Aug 31, 2013.
During fiscal 2014, AutoZone generated net cash flow of $924.7 million before share repurchases and changes in debt against $1 billion in fiscal 2013. Capital spending increased to $438.1 million from $414.5 million in fiscal 2013.
Currently, AutoZone holds a Zacks Rank #4 (Sell). Better-ranked auto stocks worth considering in the same sector include Tesla Motors, Inc. (TSLA), Nissan Motor Co. Ltd. (NSANY) and Tata Motors Limited (TTM). All these stocks have a Zacks Rank #1 (Strong Buy).
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