AutoZone (NYSE: NYSE:AZO) reported strong fourth-quarter fiscal earnings with a 7.4% increase in total sales and a 12.9% rise in earnings per share. The company also revealed plans for further expansion in its commercial business and a leadership transition during an earnings call led by CEO Bill Rhodes.
Key takeaways from the call include:
- AutoZone's domestic average weekly sales per store are 33% higher than in 2019.
- The company experienced a performance gap between the Northeast and Midwest regions compared to the rest of the country due to milder winter weather.
- AutoZone's key priorities for the new fiscal year include focusing on the supply chain, growing its Mexican and Brazilian businesses, and continuing to invest in technology improvements.
- The company plans to open 500 new stores in the next five years, with a focus on growing its domestic commercial business.
- AutoZone is undergoing a leadership transition, with Phil Danielle taking over as CEO and Bill Rhodes remaining as Executive Chairman.
AutoZone reported a 1.7% increase in domestic same-store sales in the quarter, with growth in both retail and commercial sectors. The company opened 156 net new commercial programs in the quarter and now has commercial programs in over 90% of its domestic stores. Despite a decline in commercial sales growth in the second half of the fiscal year, the company expects to see continued growth in commercial sales in FY24.
The company reported total sales of $5.7 billion for the fourth quarter, up 6.4% from last year. The average ticket in the quarter was up 2%, the weakest increase since FY 2000. Commercial ticket growth also showed a significant deceleration compared to the previous year, with growth at 2% compared to 11% in Q4 last year.
AutoZone reported $15 million in LIFO credits in Q1, with plans to rebuild their unrecorded LIFO reserve. Operating expenses were up 7.6% due to investments in IT and payroll. EBIT for the quarter was $1.2 billion, up 10.8% YoY, driven by same-store sales growth and gross margin improvements. The company generated $701 million in free cash flow in Q4 and plans to return cash to shareholders.
The company announced a leadership transition plan, with the current CEO stepping down but remaining as Executive Chairman in January. The next phase of its senior leadership team includes Phil Danielle as CEO, Jamere Jackson leading finance and store development, and Tom Newbern serving as Chief Operating Officer. The company also announced the promotion of Bill Hackney to Executive Vice President of Merchandising, Marketing, and Supply Chain. Three long-term leaders will retire at the end of the year.
AutoZone executives acknowledged the need for improved execution and stated their commitment to flawless execution. They expressed optimism about improving performance and discussed their international markets in Mexico and Brazil, noting growth opportunities and the need to address losses in Brazil. The company plans to continue store expansion, with a goal of opening 500 stores per year.
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