AutoZone Inc., the leading retailer and distributor of automotive replacement parts and accessories in the Americas, reported a 5.8% increase in net sales for the quarter ended May 6, 2023, compared to the prior-year period. This growth was driven by net sales from new stores and a 1.9% increase in domestic same-store sales. The company’s robust performance was also supported by a 6.3% increase in domestic commercial sales, which represent approximately 30.7% of its domestic auto parts sales.
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Operating profit for the quarter increased by 9.3%
Operating profit for the quarter increased by 9.3% to $858.5 million, compared to $785.7 million in the prior-year period. Net income for the quarter also increased by 9.3%, amounting to $647.7 million compared to $592.6 million in the same period the year before. Diluted earnings per share rose by 17.5% from $29.03 to $34.12 per share.
These impressive results include a $17.0 million non-cash LIFO benefit for the quarter ended May 6, 2023. Excluding this non-cash LIFO benefit, adjusted operating profit for the quarter increased by 7.1%, adjusted net income also increased by 7.1% and adjusted diluted earnings per share increased by 15.2% compared to the prior year period.
AutoZone’s business performance is influenced by various factors
AutoZone’s business performance is influenced by various factors within the economy that affect both consumers and the industry. These factors include inflation, fuel costs, wage rates, supply chain disruptions, freight and transportation costs, hiring, and other economic conditions. Although the company cannot predict the duration or impact of these trends on its business, it has shown resilience in navigating through these challenges.
During the third quarter of fiscal 2023, failure and maintenance-related categories made up the largest portion of AutoZone’s sales mix at approximately 85% of total sales, consistent with the comparable prior-year period. Failure-related categories continue to be the largest portion of the sales mix, but the company did not experience any significant shifts in category sales mix compared to the previous year. AutoZone’s sales mix can be affected by short-term weather patterns, but the long-term impact of weather on its sales mix is not significant.
Two key statistics that closely correlate with AutoZone’s long-term market growth
Two key statistics that closely correlate with AutoZone’s long-term market growth are miles driven and the number of seven-year-old or older vehicles on the road. The average age of light vehicles on the road has exceeded 11 years since 2012 and, as of January 1, 2023, stood at 12.5 years. Additionally, between the beginning of the fiscal year and March 2023, miles driven in the U.S. increased by 0.8% compared to the same period in the prior year.
For the twelve weeks ended May 6, 2023, compared with the twelve weeks ended May 7, 2022, net sales increased by $225.3 million
For the twelve weeks ended May 6, 2023, compared with the twelve weeks ended May 7, 2022, net sales increased by $225.3 million to $4.1 billion, marking a 5.8% growth. Total auto parts sales grew by 5.8%, primarily driven by net sales of $71.8 million from new stores and a 1.9% increase in domestic same-store sales. Domestic commercial sales also increased by $66.2 million to $1.1 billion, marking a 6.3% growth over the comparable prior-year period.
Over fiscal 2023, AutoZone plans to increase its investment in its business
Over fiscal 2023, AutoZone plans to increase its investment in its business compared to fiscal 2022. These investments will primarily be directed towards new stores and supply chain initiatives, including expanded hub and mega hubs and new distribution centers. With its strong liquidity position and continued investment in growth initiatives, AutoZone is well-positioned to maintain its leading position in the automotive replacement parts industry.
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