AutoZone 1Q Profit Up But Misses Analysts Revenue Estimates

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AutoZone, Inc. (NYSE:AZO) profit increased by 6.4 percent to $ 203 million, while its diluted earnings per share climbed by 15.7 percent to $5.41 per share during the first quarter that ended November 17.

AutoZone 1Q Profit Up But Misses Analysts Revenue Estimates

During the same period last year, the company posted $191.1 million profit, or $4.68 diluted earnings per share.

The company’s revenue also increased by 3.5 percent to $2 billion, but it missed the $2.02 billion consensus estimate of Wall Street analysts, according to data compiled by Thomson Reuters I/B/E/S.

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According to AutoZone, Inc. (NYSE:AZO), its domestic same store sales increased by 0.2 percent during the quarter. The company’s gross profit was 51.8 percent, higher than its 51.1 percent gross profit during the same period last year.

AutoZone, Inc. (NYSE:AZO) said its strong financial performance was due to its improvement in merchandise margins, which was driven by lower acquisition costs and expense reduction.

The Tennessee-based retailer and distributor of automotive parts and accessories said it repurchased 855 thousand shares of its common stock, with an estimated market value of $317 million during the period.

According to the company, its return on capital was 33 percent by the end of the quarter, due to its improved earnings and declining equity base. AutoZone’s inventory per store was up by 6.8 percent from $524,000 last year to the current $537,000.

In a statement, Bill Rhodes, chairman, president, and CEO of AutoZone said, “We are pleased to report our twenty-fifth consecutive quarter of double-digit earnings per share growth. While this past quarter’s sales results were lower than planned, they were not surprising to us. Regional sales discrepancies continued to challenge our results. However, we began to see improvements in our more challenged regions late in the quarter. We believe the initiatives we have in place are correct for delivering solid financial results, as we remain excited about our opportunities for the remainder of fiscal 2013.”

The company also announced its definitive agreement to buy AutoAnything, an online retailer of specialized automotive parts. The company also opened 19 new stores by the end of the quarter.

According to analysts at Barclays PLC (LON:BARC) (NYSE:BCS) Equity Research, the earnings result of the company is inline with their expectation, but weather continues to impact its results. They also view AutoZone’s acquisition of AutoAnything as a positive move to extend its customer base , and to boost its e-commerce capabilities.

On the other hand, analysts at Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) Equity Research said AutoZone’s commercial sales were below their estimate, but the company still managed to lift its total sales growth by 1.5 percent. According to them, the company’s share buyback would support its growth.

Hedge fund manager Edward Lampert of RBS Partners has been continuously selling shares of the company.

The shares of AutoZone, Inc. (NYSE:AZO) are down by more than 3 percent to $366.06 per share during the afternoon trading on Tuesday.