AutoZone reported net sales of $3.4 billion for its fourth quarter ended August 27, 2016, an increase of 3.3% from Q4 2015.
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Domestic same store sales, or sales for stores open at least one year, increased 1% for the quarter.
Net income for the quarter increased 6.4% over the same period last year to $426.8 million, while diluted earnings per share increased 12.2% to $14.30 per share from $12.75 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.8% (versus 52.5% for the same period last year).
The improvement in gross margin was attributable to lower acquisition costs, partially offset by higher supply chain costs associated with current year inventory initiatives (-19 bps).
Operating expenses, as a percentage of sales, were 32.1% (versus 32.2% the same period last year). The slight decrease in operating expenses, as a percentage of sales, was primarily due to the favorable comparison to last year’s higher legal costs (+30 bps), partially offset by higher store payroll.
For the fiscal year ended August 27, 2016, sales were $10.6 billion, an increase of 4.4% from the prior year, while domestic same store sales were up 2.4% for the year.
Operating profit increased 5.5% on an operating margin of 19.4%. For fiscal 2016, net income increased 7.0% to $1.2 billion, while diluted earnings per share for the period increased 13.0% to $40.70 from $36.03.
Return on invested capital was 31.3%, while full year cash flow before share repurchases and changes in debt was $1.167 billion.
Under its share repurchase program, AutoZone repurchased 482 thousand shares of its common stock for $370 million during the fourth quarter, at an average price of $767 per share.
For the fiscal year, AutoZone repurchased 1.9 million shares of its common stock for $1.45 billion, at an average price of $763 per share. At year end, the company had $395 million remaining under its current share repurchase authorization.
The company’s inventory increased 6.1% over the same period last year, driven by new stores and increased product placement.
Inventory per location was $625 thousand versus $610 thousand last year and $629 thousand last quarter.
Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $80 thousand versus negative $79 thousand last year and negative $69 thousand last quarter. ■