Memphis-based AutoZone reports 6.4 percent jump in 1Q earnings as sales slow, buys online auto products retailer

AutoZone (AZO) bested analysts’ estimates when it announced Q1 results on Dec. 4. From left, Ricky Travis, AutoZone employee, assists customer Walter Carson with injector cleaner at the store at 2385 N. Cleveland in Memphis. (Photo by Mike Maple)

By James Dowd

Memphis Commercial Appeal

Posted December 4, 2012 at 6:24 a.m., updated December 4, 2012 at 5:04 p.m.

Memphis-based AutoZone reported another quarter of strong earnings on Tuesday, but one tempered by sluggish sales growth.

The nation’s largest auto parts retailer reported net income of $203.5 million, or $5.41 per share, for its fiscal first quarter, which ended Nov. 17. That represented an increase of 6.4 percent from year-earlier net income of $191.1 million, or $4.68, per share. Earnings beat analysts’ expectations of $5.39 per share.

But a relatively mild winter earlier this year meant less wear and tear on vehicles and thus fewer trips to auto parts stores for do-it-yourselfers. Net sales were $2 billion in the quarter — up 3.5 percent over the prior year, but short of analysts’ expectations of $2.02 billion.

Domestic same-store sales, a key measure of retailer performance, were up 0.2 percent.

The sales performance was in line with expectations, said Barclays Capital analyst Alan Rifkin.

“It was a crazy winter last year and now six to nine months later we’re experiencing continued effects of that moderate weather on industry leaders like AutoZone,” Rifkin said. “Right now things are a little slow, but we’re still great admirers of AutoZone and consider it a top pick. Ultimately it will prevail.”

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