CHICAGO – AutoZone Inc. (AZO) Chief Executive Steve Odland (search) has resigned to lead Office Depot Inc. (ODP), and same-store sales at the auto parts retailer have been disappointing at the start of its latest quarter, the company said on Monday as its shares fell 10 percent.
AutoZone, whose shares dropped to a three-month low as the top percentage loser on the New York Stock Exchange (search), named company veteran William Rhodes president and chief executive and founder J.R. Hyde interim non-executive chairman.
"I think (the stock decline is) a knee-jerk reaction to the news, which at first blush looks scary, but on further analysis probably is not that significant," Morningstar analyst Phil Guziec said.
The chief executive's departure, and weak comparable store sales at the start of the latest quarter, were surprises and investors may be overly cutious about AutoZone, which has a relatively low investment rate in its stores, he said.
AutoZone said sales at stores open at least one year, or same-store sales, fell a disappointing 7 percent in the first four weeks of its fiscal third quarter that ends on May 7 because of high gas prices and cooler than normal conditions in the United States.
AutoZone has said that unseasonably cool weather and high gas prices hurt same-store sales in past quarters as well.
The weak sales may not be AutoZone-specific; rather they may indicate that sales have been slow in the same period for some other auto parts retailers also, Cid Wilson, director of research at Monarch Research, said in a note.
Odland was chairman, chief executive and president of Memphis, Tenn.-based AutoZone, the largest U.S. retail auto parts chain. Rhodes was executive vice president of store operations and commercial for AutoZone, which has nearly 3,500 stores, mainly in the United States.
The changes are unlikely to lead to a different strategy for AutoZone, Wilson said.
The naming of Odland as chief executive ends a five month search for Delray Beach, Fla.-based Office Depot the No. 2 U.S. office supply chain. Office Depot's previous CEO quit last October amid flagging sales growth.
Shares of AutoZone were down $9.91, or 10.12 percent, at $88.35 Monday on the NYSE.