DOW JONES NEWSWIRES
AutoZone Inc.'s (AZO) fiscal second-quarter net income rose
8.6%, handily beating Wall Street's expectations, as sales were
lifted by a wave of cost-conscious customers repairing cars.
While the recession has put Detroit auto makers on life support,
auto-parts companies are holding up as cash-strapped consumers
patch up their old cars rather than buy new ones. As auto
dealerships close, the replacement companies are expected to
receive even more business.
For the quarter ended Feb. 14, the nation's largest auto-parts
retailer reported net income of $115.9 million, or $2.03 a share,
up from $106.7 million, or $1.67 a share, a year earlier.
Net sales rose 8.1% to $1.45 billion, while U.S. same-store
sales rose 6%.
Analysts surveyed by Thomson Reuters were expecting earnings,
excluding items, of $1.85 a share on revenue of $1.38 billion.
Gross margin fell to 49.7% from 49.9%, reflecting rising theft,
partially offset by lower distribution costs. Operating costs as a
percentage of sales, though, dropped by 0.3 percentage point amid
the sales increase and lower promotion costs.
When gas prices were at record levels, even the most
cost-conscious consumers were postponing all but the most necessary
car repairs, pressuring parts-retailers' profits. As gas prices
dropped, however, parts retailers started to see gains. Two weeks
ago, AutoZone's key rival, Advance Auto Parts Inc. (AAP), reported
a 30% drop in net income on an inventory write-down, but projected
double-digit commercial same-store sales growth in 2009.
Shares of AutoZone closed Monday at $140.03 and were inactive
premarket. The stock is up 19% the past year, including a
two-thirds increase since hitting a two-year low in November.
-By Mike Barris, Dow Jones Newswires; 2019-938-5658;
mike.barris@dowjones.com