AutoZone Inc. (AZO), the largest U.S. auto parts retailer, on Wednesday said quarterly earnings rose less than 1 percent as high gas prices made customers choose between paying for fuel or preventive maintenance.

Sales at U.S. stores open at least one year fell at AutoZone, but analysts said they expect better results in 2005.

Net income rose to $122.5 million, or $1.52 per share, for its fiscal first quarter ended Nov. 20, from $121.7 million, or $1.35 per share, a year earlier, the company said.

AutoZone, which does not perform repairs or install parts, repurchased 400,000 shares for $30 million in the quarter.

Analysts on average expected Memphis, Tenn.-based AutoZone to earn $1.45 per share with revenue of nearly $1.32 billion, according to Reuters Estimates.

"They beat the street, but comp-store sales were down 3 percent so it does look like they lost market share in the quarter to Advance Auto Parts and O'Reilly Automotive (which reported better same-store sales in the summer and fall)," said Cid Wilson, director of research for Monarch Research, which does not own shares or do investment banking with AutoZone.

However, pent-up demand for auto parts will return at some point and it would be hard to believe that AutoZone would not participate in a rebound with Advance Auto (AAP), O'Reilly (ORLY) and Pep Boys-Manny, Moe & Jack (PBY), he said.

"We believe the industry will improve in spring and summer next year ... because at some point all of this delayed maintenance is going to come back and comparisons get easier for everyone," Wilson said.

Total sales rose 0.3 percent to $1.29 billion in the quarter from a year earlier. U.S. retail sales were essentially flat at $1.08 billion for the quarter, while U.S. commercial sales fell about 2 percent to $163.6 million.

High gas prices pose a challenge to AutoZone customers, who tend to be low end consumers who fix their own cars because they cannot afford to pay someone else to do the work, Chief Executive Steve Odland told analysts in a conference call.

"Our greatest hope is that gas prices moderate and come down and we can launch a great spring season and get this thing going again, but if there is not cash in the low-end consumer pocket ... then it is going to be difficult," Odland said.

The sector has had two quarters of shocks from gas prices, but has had a very stable long-term growth overall, he said.

Shares of AutoZone were down 13 cents at $84.54 on the New York Stock Exchange (search).