Installer Sales Increase Autozone Profit

CHICAGO, May 27, 2003; Reuters reported that AutoZone Inc. the largest U.S. auto parts retailer, said on Tuesday its quarterly net income rose 23 percent, bolstered by higher sales of replacement parts to car repair centers.

AutoZone, whose shares are hovering near their all-time highs, has benefited as Americans put more miles on their cars each year and keep their aging vehicles longer, driving sales of replacement parts.

A 30 percent jump in commercial sales helped offset flat sales to "do-it-yourself" customers at retail outlets open at least one year, AutoZone said.

AutoZone, with more than 3,000 stores in the United States and Mexico, is pushing to expand sales to the professional car repair market as growth at its retail stores has slowed following sharp gains the year before that are creating tough comparisons in the current fiscal year.

The company said it had increased market share among both local repair shops and chains. Commercial sales account for about 12 percent of AutoZone's total revenue.

Savings from programs designed to reduce costs in the supply chain also boosted profit, while share buybacks helped lift per-share results by reducing the number of shares outstanding, AutoZone said.

AutoZone said net income in the third quarter ended May 10 rose to $126 million, or $1.30 a share, from $102.3 million, or 96 cents a share, a year ago.

Analysts expected Memphis, Tennessee-based AutoZone to earn $1.27 a share, with estimates ranging from $1.20 to $1.31 a share, according to Thomson First Call (News - Websites).

Third-quarter sales at its stores open at least one year rose 2.8 percent from a year ago. Total sales increased 5.2 percent to $1.29 billion.

AutoZone said an accounting rule change for vendor funding arrangements in the third quarter resulted in a noncash pretax charge of $2.6 million, or 2 cents per share.