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Standard & Poor's Rates AutoZone's $200 Million Debentures A-

5 August 1998

Standard & Poor's Rates AutoZone's $200 Million Debentures A-; Outlook Stable

    NEW YORK, Aug. 5 -- Standard & Poor's today assigned its
single-'A'-minus rating to AutoZone Inc.'s $200 million 6.5% debentures due
2008 and its 'A-2' rating to the company's commercial paper.  Standard &
Poor's previously assigned its single-'A'-minus corporate credit rating to
AutoZone, single-'A'-minus rating to the company's revolving credit facility
and single-'A'-minus/triple-'B'-plus rating to the company's mixed
securities shelf on July 13, 1998.  The outlook is stable.
    AutoZone announced a tender offer and consent solicitation for the
$130 million outstanding 10.5% senior notes due 2005, issued by Chief Auto
Parts Inc. which was recently acquired by AutoZone.  These notes are currently
rated single-'A'-minus.  Upon redemption of the notes, Standard & Poor's will
withdraw its rating on the Chief Auto Parts debt.
    The ratings are based on AutoZone Inc.'s leading market position, a strong
financial profile, and solid track record in the large, relatively stable auto
parts retail aftermarket.  These strengths are mitigated by intense
competition and the challenges of growing in the maturing "do-it-yourself"
customer segment.  AutoZone's 2,001 auto parts stores primarily serve the
"do-it-yourself" customer who repairs his or her own car out of economic
necessity.  AutoZone's recent acquisition of Chief Auto Parts Inc. adds more
than 550 stores and gives the company a presence in California, where AutoZone
has few stores.  Growth in the "do-it-yourself" segment is expected to slow
because of the increasing complexity of new cars and better quality of parts.
Still, AutoZone is the largest and most efficient retailer in the market, and
typically has been able to displace less competitive operators in new markets
over time. This trend is likely to continue through AutoZone's store expansion
program, or through additional opportunistic acquisitions.  The company enjoys
economies of scale in purchasing, distribution, advertising, and information
systems which are critical to managing the large and complex inventory.
AutoZone's strategy of providing excellent customer service through
knowledgeable salespeople and offering good value through everyday low pricing
on parts, has been successful for many years.  Same store sales growth has
ranged from 6% to 15% over the past eight years, while operating margins have
averaged 15%.  The company's addition of incremental sales to professional
installers during the past two years has partially offset the flattening trend
of "do-it-yourself" sales. The commercial business negatively impacted
operating margins during its start-up in the past two years.  However, margins
are expected to level out as the business matures.  AutoZone's 27% return on
permanent capital is the highest in the industry.  However, this return could
decline somewhat given increased competition from the expansion of other
chains and the potential for continued weak "do-it-yourself" sales.  The
addition of commercial sales and stringent inventory controls should help to
soften any downturn.
    AutoZone's debt leverage ratio of approximately 40% (including debt
associated with the Chief acquisition) reflects a large operating lease
component that adds more than $300 million in debt equivalents.  Standard &
Poor's expects that this ratio will remain below 50% as continued strong
profitability offsets additional debt needed for further investment in the
business.  Funds from operations are expected to cover total lease-adjusted
debt at a strong 40%-45%.  The company's mixed securities shelf and revolving
credit facility provide the company with solid financial flexibility.

    OUTLOOK: STABLE
    AutoZone's financial strength and strong execution skills should enable
it to grow market share within the maturing "do-it-yourself" industry, with
incremental profit from the commercial segment expected to support
profitability measures.  Additional acquisitions are expected to be carried
out within the context of a conservative financial policy, Standard & Poor's
said. -- CreditWire