AutoZone, Inc (NYSE:AZO), a major retailer and distributor of automotive parts and accessories, reported commendable results for the third quarter of 2024. Despite facing the adverse effects of a delayed tax refund period and colder weather that impacted sales, the company achieved a 3.5% increase in total sales, exceeding $4.2 billion.* This growth reflects resilience and strategic planning to maintain its market position and support future expansion.
Key financial metrics and business highlights
AutoZone's financial results for the third quarter of fiscal 2024 highlight several important metrics. As mentioned in the introduction, the impressive 3.5% increase in total sales recorded was primarily driven by solid results in retail and commercial operations, with same-store sales up 9.3% on a constant currency basis. Despite a 1% decline in domestic same-store sales, international same-store sales grew strongly by 18.1%.*
The company's gross margin improved to 53.5%, reflecting an increase of 102 basis points, while operating expenses increased 6%, with EBIT up 4.9% to $900 million. The firm's net income increased slightly to US$652 million and diluted earnings per share rose 7.5% to US$36.69.* It also expanded its distribution network with the opening of 20 new programs and two new mega-centers. In addition, AutoZone repurchased $735 million of its stock and plans to invest $1.1 billion in capital expenditures this fiscal year.
AutoZone's stock performance over the past five years
Strategic focus and growth initiatives
AutoZone remains focused on strengthening its domestic commercial business and optimizing its supply chain to support future growth. It is also committed to improving the quality of spare parts, expanding its product range and leveraging technology to improve customer experience and operational efficiency. But AutoZone is particularly excited about the potential of its more than 200 mega-centers when fully built out, which should significantly strengthen its distribution capabilities and customer reach.
Challenges and market conditions
Despite the positive results, AutoZone faced some challenges during the quarter. The company experienced adverse weather conditions that impacted sales, particularly in the first four weeks and the last eight weeks of the quarter. In addition, average weekly sales per program declined 2.4% year-over-year. AutoZone also continues to encounter difficulties in finding suitable locations to open new stores, which could impact future expansion plans.
Company Outlook and investor considerations
AutoZone did not provide specific projections for the future, but expressed optimism regarding future sales improvement. Its strategic growth planning and focus on increasing its value proposition put it in a good position for sustained growth. Investors should consider its solid financial performance, strategic focus on expansion, and potential market challenges when evaluating its long-term investment prospects.
Conclusion
AutoZone's Q3 2024 results underscore its resilience and strategic execution in a challenging market environment. With a strong financial foundation, ongoing growth initiatives and a focus on operational excellence, AutoZone represents an attractive investment opportunity for those looking to capitalize on the automotive industry. As the company confidently navigates market dynamics and continues to expand its footprint, investors can expect AutoZone to maintain its position as a leading player in the industry.
* Past performance is no guarantee of future results
