CHICAGO – AutoZone Inc. (AZO), the largest U.S. auto parts retailer, on Tuesday said quarterly earnings fell 6.7 percent after disruptions from the Gulf Coast hurricanes and spending on staff training and store improvements.
Net income dropped to $114.4 million, or $1.48 per share, in the fiscal first quarter ended November 19, from $122.5 million, or $1.52 per share, a year earlier.
Excluding $2.8 million of hurricane expenses and $3.7 million of stock-based compensation expenses, earnings were $1.54 per share, it said. Analysts on average expected Memphis, Tenn.-based AutoZone to earn $1.55 per share, according to Reuters Estimates.
Net sales rose 4 percent to $1.34 billion. U.S. retail sales rose 4 percent to $1.13 billion, while sales to repair businesses fell 2 percent to $160.4 million.
Sales at U.S. stores open at least one year, a key retail gauge commonly called same-store sales, rose 1 percent.
The results were roughly in line with forecasts and reflect AutoZone's efforts to clean up the look of its stores and make it easier for customers to find items, said Cid Wilson, director of equity research at Kevin Dann & Partners.
"They are still very behind (rivals) Advance Auto and O'Reilly, but that their same-store sales are back in positive territory, it seems like they are back on the right track," Wilson said in a research note to clients.
AutoZone said more than 125 stores in Louisiana, Mississippi and Texas were hurt in some form by the hurricanes and 13 locations remain closed. The company had 3,612 stores in the United States and 84 stores in Mexico at the end of the quarter.
Over the past year, AutoZone has said high gasoline prices have posed a challenge for its customers, who typically buy its parts to perform routine maintenance on their cars because they cannot afford to pay someone else to do the work.
AutoZone's modest same-store sales increase follows a 10 percent rise at retail chains Advance Auto Parts Inc. (AAP) and a 6 percent rise at O'Reilly Automotive Inc. (ORLY) in their most recent quarters.
Even excluding hurricane-related charges and stock-based compensation adjustments, operating expenses as a percentage of sales rose due to short-term expenditures and longer-term efforts such as expanding hours and improving presentation within the stores, AutoZone said.
Shares of AutoZone were trading at $87.00 on Tuesday on the Inet electronic brokerage after closing Monday at $86.95 on the New York Stock Exchange.
Through Monday, AutoZone stock had declined about 8 percent since the end of August, while the S&P 1500 Automotive Retail Sub-Industry index was essentially flat.