AutoZone Inc.'s (AZO) fiscal third-quarter profit rose a
better-than-expected 9.5%, helped by strong sales of auto parts to
cost-conscious home mechanics and commercial repair centers.
AutoZone shares rose 2.5% premarket to $166.95. The stock
through Tuesday is up 17% on the year.
While the recession has put Detroit auto makers on life support,
auto-parts companies are holding up as cost-conscious consumers fix
old vehicles instead of buying new ones. The closing of hundreds of
dealerships by Chrysler LLC and General Motors Corp. (GM) is
expected to drive even more business to replacement-parts companies
and auto repair garages.
For the quarter ended May 9, the nation's largest auto-parts
retailer reported a profit of $173.7 million, or $3.13 a share, up
from $158.6 million, or $2.51 a share, a year earlier. Net sales
rose 9.3% to $1.66 billion, with U.S. same-store sales up 7.4%.
Analysts surveyed by Thomson Reuters were expecting earnings of
$2.89 a share on revenue of $1.61 billion.
Gross margin was flat at 50.2%, as benefits from lower fuel
costs were offset by promotions.
When gasoline prices were at record levels, consumers were
postponing all but the most necessary car repairs, pressuring
parts-retailers' profits. But the tumble in gasoline prices since
mid-2008 and broader economic weakness has helped send customers
back to those stores. Last week, AutoZone's biggest rival, Advance
Auto Parts Inc. (AAP), reported a bigger-than-expected 14% earnings
jump.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com