AutoZone reported net sales of $2.1 billion for its second quarter ended February 14, 2015, an increase of 7.7% from the second quarter of fiscal 2014.
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Domestic same store sales, or sales for stores open at least one year, increased 3.6% for the quarter.
Net income for the quarter increased 9.8% over the same period last year to $211.7 million, while diluted earnings per share increased 15.6% to $6.51 per share from $5.63 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.2% (versus 52.1% for last year's quarter). The improvement in gross margin was attributable to higher merchandise margins, partially offset by the impact from Interamerican Motor Corporation (IMC) which was acquired during September, 2014 (-29 bps). Operating expenses, as a percentage of sales, were 35.4% (versus 35.2% last year).
The increase in operating expenses, as a percentage of sales, was due to higher incentive compensation, impact from the IMC acquisition, and self-insured employee medical costs. Partially offsetting these items was a favorable credit card litigation settlement of $5.4 million (+26 bps) recognized during the quarter.
Under its share repurchase program, AutoZone repurchased 43 thousand shares of its common stock for $26 million during the second quarter, at an average price of $606 per share.
Year to date, the company has repurchased 614 thousand shares of its common stock for $326 million, at an average price of $530 per share. At the end of the second quarter, the company had $544 million remaining under its current share repurchase authorization.
The company's inventory increased 11.9% over the same period last year, driven by increased product placement, new stores, and the recent acquisition of IMC. Inventory per location was $631 thousand versus $589 thousand last year and $604 thousand last quarter.
The acquisition of IMC contributed $11 thousand to total inventory per location this quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis was a negative $47 thousand versus negative $74 thousand last year and negative $76 thousand last quarter. ■