AZO 2009 Q2 Earnings - by BetterTrades

Reporting before the opening bell on Tuesday, the nation's leading retailer of automotive parts and accessories, AutoZone Inc. (AZO) made it known that the company's profit for the 2Q advanced as more car owners increased their spending on fixing up their used vehicles rather than purchasing a new or used vehicle.

For the recent period, AutoZone recorded profits of $115.9M, or $2.03 per share, in contrast to last year's 2Q profit of $10.6.7M, or $1.67 per share, an increase in earnings of more than 8.6%.

As the country continues to shy away from big-ticket purchases, such as automobiles, that trend has benefited the auto parts industry tremendously as more owners choose to maintain their vehicles for longer periods. The company also benefited from lower gas prices, as consumers began to drive more because of lower prices, thus encouraging more spending on maintenance and repairs.

Total revenues during the quarter advanced as well, increasing from $1.34B during the 2Q last year to $1.45B this year, a jump in sales of more than 8%. Same store sales, those that occur in stores open at least one year, increased 6% domestically.

On average, analysts were expecting the auto parts retailer to post a quarterly profit of $1.84 per share on overall revenues of $1.38B.

As a percentage of sales, the company's gross profit was 49.7%, slightly below the previous year's 2Q tally of 49.9%, as there was a slight increase in expenses for the quarter. Speaking of costs, AutoZone's operating expenses, as a percentage of sales, declined year-over-year, from 35.2% to 34.9%, as higher sales volumes and lower promotion costs contributed to the decrease.

Bill Rhodes, Chairman, President and CEO, announced after the earnings release, "We are pleased to report our tenth consecutive quarter of double digit earnings per share growth. During these challenging economic times, we believe our merchandise and service offerings provide a compelling shopping experience for both our do-it-yourself and professional customers."

He went on to add, "At the end of the second quarter, our balance sheet was in excellent condition, and we remain committed to our disciplined approach of growing operating earnings while utilizing our capital effectively.'' And finally, "We remain committed to growing our business through a relentless focus on customer service, continual refinement of our product offerings and ongoing improvements to grow our commercial sales, all while managing our expenses appropriately."

For the fist two quarters of the fiscal year, AutoZone has been able to post net income of $247.2M, or $4.26 per share, up just over 3% from last year's earnings during the same period of $239.2M, or $3.70 per share. Overall sales thus far have totaled $2.93B, up 5% from $2.79B in the prior year's corresponding period.

For the past three months, the auto parts retailer continued to expand their operations, opening 20 new stores throughout the continental U.S., while closing one store. Across the border, AutoZone opened eight new stores in Mexico bringing the total number up to 158 stores.

Lastly, during the period that ended February 14, AutoZone repurchased more than 2.8 million shares of outstanding common stock totaling $375M at an average price of $133 per share.

Over the past year, shares of AutoZone (AZO) have traded in a range between $84.66 and $148.50 per share. Upon news of a solid earnings release, shares of AZO surged during Tuesday's trading session, adding nearly 8%, or $10.91, to trade at $150.94. During the morning session, shares jumped as high as $157.49, establishing a new 52-week high.

By BetterTrades