Press Release

MEMPHIS, Tenn., March 4, 2014 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.0 billion for its second quarter (12 weeks) ended February 15, 2014, an increase of 7.3% from the second quarter of fiscal 2013 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 4.3% for the quarter.

Net income for the quarter increased $16.6 million, or 9.4%, over the same period last year to $192.8 million, while diluted earnings per share increased 17.8% to $5.63 per share from $4.78 per share in the year-ago quarter.

For the quarter, gross profit, as a percentage of sales, was 52.1% (versus 51.9% for last year's quarter). The improvement in gross margin was attributable to higher merchandise margins and lower shrink expense, partially offset by the inclusion of the recent acquisition of AutoAnything (20 bps). Operating expenses, as a percentage of sales, were 35.2% (versus 34.7% last year). The increase in operating expenses, as a percentage of sales, was primarily due to the timing of advertising costs (22 bps).

Under its share repurchase program, AutoZone repurchased 404 thousand shares of its common stock for $200 million during the second quarter, at an average price of $495 per share. Year-to-date, the Company has repurchased 1.082 million shares of its common stock for $492 million, at an average price of $454 per share. At the end of the second quarter, the Company had $727 million remaining under its current share repurchase authorization. 

The Company's inventory increased 12.0% over the same period last year, driven by a combination of increased product placement and new store openings. Inventory per store was $589 thousand versus $544 thousand last year and $566 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis was a negative $74 thousand versus negative $54 thousand last year.

"We are pleased to report our thirtieth consecutive quarter of double digit earnings per share growth. The credit for this accomplishment goes to our passionate and dedicated AutoZoners across the globe who always put our customers first!  During our second quarter, much of the U.S. experienced extreme weather conditions, and those weather patterns accelerated our growth in certain failure related hard part categories while our deferrable maintenance categories were challenged.  We are continuing to test a variety of initiatives focused on improving inventory availability.  One of the key initiatives is in the implementation phase, and while it is very early, we are pleased with our progress to date.  The other tests are ongoing and it will take several more quarters before we determine our next steps.  We are very excited about these tests as they are providing us with great insights.  While our operating expenses, on a percent to sales basis, were higher than in previous quarters, our investments were purposeful and focused on improving our reputation for delivering trustworthy advice and providing the best parts at the right price.  We remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended February 15, 2014, AutoZone opened 28 new stores in the U.S., and four new stores in Mexico. As of February 15, 2014, the Company had 4,871 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 367 stores in Mexico, and four stores in Brazil for a total count of 5,242.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.  Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, and public sector accounts.  AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories, and non-automotive products through www.autozone.com, and accessories and performance parts through www.autoanything.com, and our commercial customers can make purchases through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, March 4, 2014, beginning at 10:00 a.m. (EST) to discuss its second quarter results. Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing (210) 839-8923. A replay of the call and slides will be available on AutoZone's website. In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, March 11, 2014 at 11:59 p.m. (EST).

This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP measures include adjustments to return on invested capital, adjusted debt, adjusted debt to EBITDAR, and cash flow before share repurchases. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Company's comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP. Management targets the Company's capital structure in order to maintain its investment grade credit ratings and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables. The Company believes this is important information for the management of its debt levels and share repurchases. We have included a reconciliation of this additional information to the most comparable GAAP measures in the accompanying reconciliation tables.

Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 31, 2013, and these Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual results; developments and business decisions may differ from those contemplated by such forward-looking statements, and events described above and in the "Risk Factors" could materially and adversely affect our business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may materially differ from anticipated results.

CONTACT: Financial: Brian Campbell at (901) 495-7005,
         brian.campbell@autozone.com
         Media: Ray Pohlman at (866) 966-3017,
         ray.pohlman@autozone.com