Shares of AutoZone Inc. (AZO) dropped 1.8% in premarket trading on Tuesday as the auto parts retailer revealed its fiscal fourth-quarter earnings. While the results were positive overall, the domestic commercial business fell short of expectations.
Strong Financial Performance
In the quarter ending August 26, net income rose to $864.89 million, or $46.46 per share, up from $810.0 million, or $40.51 per share, in the same period last year. This exceeded the FactSet consensus for earnings per share of $45.17.
Net sales also saw a healthy increase of 6.4%, reaching $5.69 billion, surpassing the FactSet consensus of $5.61 billion.
Domestic Commercial Sales Disappoint
However, total domestic commercial sales saw a more modest growth of 3.9% to $1.499 billion, failing to meet expectations of $1.55 billion.
Positive Same-Store Sales Growth
AutoZone experienced a 4.5% increase in same-store sales, outperforming the FactSet consensus of 2.4% growth. This growth was driven by a 1.7% increase in domestic sales and an impressive 34.1% jump in international sales.
Initiatives to Drive Future Growth
Despite the underperformance in the domestic commercial sector, Chief Executive Bill Rhodes remains optimistic, stating, "Despite lower than expected growth in domestic Commercial, we believe that the initiatives we have in place and are implementing will drive stronger growth in fiscal 2024."
Exciting Growth Prospects
AutoZone also saw positive results from its International stores, with Rhodes expressing satisfaction with their performance. He added, "We are excited about future growth prospects across both Mexico and Brazil."
Year to date, AutoZone's stock has gained 2.3% as of Monday. In comparison, the S&P 500 has advanced 16.0%.
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