AutoZone's fiscal fourth-quarter results increased less than Wall Street's expectations on a yearly basis, while the auto parts retailer's domestic commercial business underperformed analyst estimates. Net income rose to $51.58 a share for the quarter ended August from $46.46 the year before, but trailed the Capital IQ-polled consensus of $53.41.
Sales rose 9% to $6.21 billion, just shy of the Street's view for $6.22 billion. The stock declined by 2.5% in Tuesday trading. Domestic same-store sales edged up 0.2%, a decline from the 1.7% gain logged last year, and fell short of the 1.2% increase originally projected by analysts in a Visible Alpha poll.
Meanwhile, international comparable sales increased by 4.9%, showing robust performance, while overall same-store sales moved 0.7% higher. Chief Executive Phil Daniele shared insights on their performance, stating, "Domestically, our business continues to be challenged by deferrals across our discretionary merchandise categories, but we were pleased to see accelerating commercial sales performance." He also noted that while currency rate moves slowed sales and earnings growth, AutoZone's performance remained strong. The gross margin deteriorated by 21 basis points to 52.5%.
Operating and selling, general and administrative expenses rose to $1.96 billion, up from $1.78 billion year-on-year, indicating an increase in operational costs that could impact future profitability. AutoZone's inventory rose 6.8% to $6.16 billion as the retailer opened 68 stores in the US, alongside 31 locations in Mexico and 18 in Brazil, bringing its total count to a remarkable 7,353 by the end of August.
Daniele expressed excitement regarding the company's strategic initiatives: "We are excited about the initiatives we have in place to improve inventory availability, continue to accelerate our domestic commercial business, grow our international businesses and remain focused on delivering great customer service." He reaffirmed AutoZone's commitment to investing in the business, maintaining a disciplined approach to increasing earnings and cash flow, while prioritizing strong shareholder value..