AutoZone Results Impacted by Consumer Discretionary Spending Woes

Auto parts retailer AutoZone (AZO) posted worse-than-expected quarterly results Tuesday as costs rose and the company faced a decline in American customers’ discretionary spending. However, it got a boost from store expansion.

AutoZone reported fourth-quarter earnings per share (EPS) of $51.58, below the $53.49 average estimate of analysts surveyed by Visible Alpha. Revenue was up 9.0% year-over-year to $6.21 billion, slightly below forecasts. Same-store sales increased 0.7%, with international same-store sales jumping 4.9% and domestic same-store sales edging 0.2% higher.

Gross profit as a percentage of sales fell 21 basis points (bps) to 52.5%. Gross margin was dragged down by a 53-bps slide in a non-cash last in, first out (LIFO) impact. Operating and selling, general, and administration (SG&A) expenses climbed 10.4% to $1.96 billion.

‘Deferrals Across Our Discretionary Merchandise Categories’

Chief Executive Officer (CEO) Phil Daniele said in the U.S., AutoZone’s “business continues to be challenged by deferrals across our discretionary merchandise categories.”

AutoZone added 117 news stores, with 68 in the U.S., 31 in Mexico, and 18 in Brazil. The company also repurchased 244,000 shares at an average price of $2,915 for a total investment of $710.6 million.

Shares of AutoZone declined about 1% in volatile trading soon before noon ET Tuesday. They are up about 16% year-to-date.