AutoZone's stock falls after a rare profit miss, as U.S. sales come up short

By Tomi Kilgore

Same-store sales in the U.S. barely rise amid deferrals in discretionary-merchandise categories

Shares of AutoZone Inc. were being driven lower Tuesday, after the auto-parts retailer reported fiscal fourth-quarter earnings and sales that rose, but not enough to meet expectations, as U.S. results continued to underperform.

"Domestically, our business continues to be challenged by deferrals across our discretionary merchandise categories, but we were pleased to see accelerating commercial sales performance," said Chief Executive Phil Daniele.

The stock (AZO) slumped 3.4% in morning trading, and was headed for the lowest close in two months. It has shed 7.4% so far in September, which puts it on track for the worst monthly performance since it tumbled 10.4% in May 2023.

The company said net income for the quarter to Aug. 31 increased to $902.2 million, or $51.58 a share, from $864.8 million, or $46.46 a share, in the same period a year ago.

That was below the FactSet consensus for earnings per share of $53.60, and marked the first EPS miss in at least five years, based on available FactSet data.

Net sales grew 9% to $6.205 billion, below the FactSet consensus of $6.228 billion, to mark the second-straight miss.

And same-store sales, or sales of stores open at least one year, rose 0.7% to miss the FactSet consensus of 1.2% growth for a third-straight quarter.

Domestic same-store sales edged up just 0.2%, well below expectations of a 1.3% rise, while international sales growth of 4.9% was less than expectations of a 9.3% increase.

Gross margin slipped to 52.5% from 52.7%.

The value of inventories at the end of the quarter was $6.16 billion, up 6.8% from a year ago, due primarily to new store growth. The company opened a total of 117 new stores during the quarter, including 68 new stores in the U.S.

Separately, the company said it spent $710.6 million to repurchase 244,000 shares during the quarter, and has spent a total of $3.2 billion on repurchases during the full fiscal year. AutoZone had $2.2 billion remaining in its current repurchase program.

The stock has gained 14% year to date, while the S&P 500 index has advanced 19.9%.

-Tomi Kilgore

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09-24-24 0944ET

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