AutoZone, Inc. Q2 Profit & Sales Both Miss As Inventory Rises

Written by StockNews.com

AutoZone, Inc. (NYSE: AZO) early Tuesday [Feb 28, 2017 | 7:15am] posted worse than expected fiscal second quarter earnings results, as both profit and revenue failed to reach analysts’ estimates.

The Memphis-based auto parts retailer reported Q2 EPS of $8.08 per share, which was $0.11 worse than the Wall Street consensus estimate of $8.19.

Revenues rose 1.4% from last year to $2.29 billion, also falling short of analysts’ $2.34 billion view.

AutoZone also noted that domestic same-store sales were flat in the fourth quarter. Same-store sales are considered a key indicator of a retailer’s health, since they only measure the year-over-year performance of locations open at least 12 months.

A potential negative point coming from today’s report was a significant uptick in inventory. AZO said its inventory jumped 8.7% from the year-ago period, citing new store openings and increased product placement. However, inventory per location was $665 thousand, up from $633 thousand last year, and up from the $647 thousand sequentially from Q3.

The company commented via press release:

“I would like to thank all AutoZoners across the organization for their tremendous efforts during what ultimately turned out to be a challenging quarter. Our sales performance in the last three weeks of our quarter was significantly challenged by well-publicized timing delays in IRS tax refunds, which negatively impacted our profitability for the quarter. While this quarter’s results were below our expectations, our AutoZoners’ ongoing commitment to providing customers with Trustworthy Advice will allow us to continue to succeed for years to come. Our objective remains to continue to provide great service to our customers and deliver strong, consistent performance for our shareholders as we remain committed to our approach of increasing operating earnings and utilizing our capital effectively,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

...Year-to-date, AZO has declined -6.20%, versus a +6.08% rise in the benchmark S&P 500 index during the same period.

AZO currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #31 of 47 stocks in the Auto Parts category.