AutoZone Inc.

AutoZone exited the quarter with normalized growth rates. It generated growth in domestic, commercial and retail same-store sales. The overall sales in this quarter reflected the continued strength in its industry and the solid execution of its growth initiatives. Also, the retail transactions improved meaningfully for this quarter but were down 2.2%, while the commercial transactions were up. The average ticket of AutoZone in both commercial as well as retail experienced strong single-digit growth. The company delivered positive 2.7% comp in its domestic DIY business this quarter. The transaction count trends improved and the ticket growth was up. The sales floor of AutoZone outperformed hard parts in its retail merchandise categories. Wiper, oil, and battery categories performed well and lapped successfully with very strong performance. The friction category in both commercial and DIY performed below the expectations of the management. AutoZone announced the development of the company’s two innovative domestic distribution centers. Also, it announced an additional capacity in Mexico. AutoZone opened 41 net new programs this quarter. It has been increasing the penetration of its market-leading ALLDATA shop management, repair, and diagnostic software suite to existing and new commercial customers. Traffic was down as compared to the last year. We give AutoZone an ‘Underperform’ rating with a revised target price.