Online acquisition overshadows soft sales at Autozone
AutoZone said it acquired online automotive retailer AutoAnything.com in conjunction with the release of first quarter earnings Tuesday morning.
Sales at the nation’s largest retailer of automotive products increased 3.5% to $2 billion and same store sales increased 0.2% during the quarter ended November 17. Net income during the period rose 6.4% to $203.5 million while earnings per share increased 15.7% to $5.41 from $4.68, inline with analysts’ estimates. The company’s share repurchase program enabled it to grow earnings per share faster than total net income as the company spent $317 million to repurchase 855,000 shares at an average price of $371 a share. AutoZone ended the quarter with a total of 5,029 stores consisting of 4,703 stores in the U.S. stores, 325 in Mexico and its first unit in Brazil.
The sales were lower than the company expected, but AutoZone chairman, president and CEO Bill Rhodes characterized the company’s performance as solid, noting it was the 25th consecutive quarter of double digit profit growth.
"While this past quarter's sales results were lower than planned, they were not surprising to us. Regional sales discrepancies continued to challenge our results, however we began to see improvements in our more challenged regions late in the quarter," Rhodes said. "We believe the initiatives we have in place are correct for delivering solid financial results, as we remain excited about our opportunities for the remainder of fiscal 2013."
Share repurchase activity may have helped AutoZone overcome soft sales trend to nail analysts’ profit target, but the more noteworthy development was the acquisition of online retailer AutoAnything.com. Rhodes said he looked forward to formally welcoming the AutoAnything team to AutoZone, but he offered no additional details.
"The company's culture and leadership is an outstanding fit with our company as we look forward to growing our e-commerce initiatives for many years to come," Rhodes said.
The AutoAnything Web site promises shoppers a large selection of the world’s leading brands backed by a one year price guarantee and free shipping. The company was founded in 1979 by Selwyn Klein who began as a manufacturer and retailer of Blue Ribbon genuine sheepskin seat covers and custom carpet floor mats. In 1997, Selwyn was joined by his eldest son David and they began to focus their efforts online. In 1999, Selwyn's younger son Trevor joined the company to oversee the website development and enhancements, according to information on AutoAnything’s Web site.