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million for the quarter, up 9.5% comparefd to last year. Earningsz per share increased 25.9% to $3.13, the company’se 11th consecutive quarter of double-digit earningxs per share growth. Frank Goodman served as vice president of businesw planning and analysis with helping determine newstore locations, before leaving in 2000. “It’s a greatg mouse trap and they’ve done a great job runninf it,” he says. Now a chief portfolii strategistwith , an investment advisoru firm, Goodman was part of the team that helpec AutoZone expand from 500 stores to more than 3,000o locations across the U.S.
and When he was there, AutoZone executives looke at motor vehicle registrationa providedby , a data vendor. “Soo you know where the cars are and then where you should consider building a Goodman says. “It’s really quite the advantage to have that mechanicaldemand feature, so it’zs not all the whim of the but it’s also the demands of their cars.” At AutoZone’e peak, the company was opening a store everyg day. In the company’s most recent third it opened 42new stores, bringing it to 4,17q locations in the U.S. and 168 in Mexico. The company couled open more next quarter, since storde openings are seasonal, according to Goodman.
“It’s very difficulg to get stores open at the end ofthe it’s much easier at the end of the summer,” he Goodman attributes a large part of AutoZone’s succesas to the company’s culture of WITTDTJR, whichb is an acronym for “Wha t It Takes To Do The Job AutoZone research revealed that a person seekiny to repair a car would make an averagew 2.3 visits to an auto parts stors to get the problem completely solved. that .3 was a visit to a different auto parts store,” Goodman says.
“So management, understanding this, said that the compang had to get the number of visits AutoZone has convinced employees to build asales ticket, not just to get the customer to buy useleszs items but to help solve their proble m quicker. Also, since fear of doing somethintg wrongin do-it-yourself projects is a big concer for customers, employees are trainefd to be forthcoming with theifr automotive knowledge. John R.
Lawrence, retail analyst at , says anothe r reason AutoZone has excelled recently is due to an increase in the numbef of cars whichare seven-eight years old and older out on the “They’re out of they have to be fixefd and in this economy, everybody gets pinchedr and you have to find the cheapest alternative to keep your car Lawrence says. AutoZone might also be gainingy sales fromcar dealerships, and theifr related service departments, Besides providing auto parts for do-it-yourselt customers, the majority of its AutoZone also sells parts to garages.
People are also deferrint maintenance ontheir cars, and when they do performn this maintenance, they are oftenn buying better quality parts and increasing theier purchases at stores like AutoZone. Brian Campbell, AutoZone’ss vice president of investor relations, agrees the companyh has some tailwind in this economy because peoples are looking tosave money. “It’s a healthy one-two punch of the challenges of the economtyand execution, spending some dollars to make sure that we’res capturing those customers once they come into our stores,” Campbel l says. An example of this is AutoZone’s domestivc same store sales, whicjh increased 7.4% last quarter.
The company’s salesw per square foot, at $58 last is the highest in the Campbell attributes that tomany factors, but focusesa on the company’s systems. “Just about our entired information technology infrastructure is primarilyinternally developed,” he “They are systems that we haven’ t bought off the shelf. It’sw a self-learning system. We keep a lot of data and we continuwe to scrub that data toidentify trends.
” This allows the company to tailor its inventory more effectively, a key tactic considering how many makes and models of cars there are on the “You have to have a lot of parts to be able to say I’ve got it,’ on the front end,” Lawrence says. The company’s competitors, including , , and , are all performing betterf in the current economyas well. “There is obviously a tailwind with the economic situationh of new car sales down and peopl e having tospend more,” Lawrence says. Advance Auto Partzs reported total salesof $1.689 billion for the first a 16-week period ended April 25. This was a 10.3 increase compared to total salesof $1.
53 billiob in first quarter 2008. Shelly Whitaker, spokesman for attributes sales to recenteconomicf changes. “People are keeping their cars longer, with the averagew age of a car increasing,” she says. “As peopl e are keeping those cars longer, they need to do more work on those cars.” While the company is seeing more do-it-yourselfers concerned abouf increasing fuel economy andgeneral maintenance, Advance focuses more on the commercial side of automotiver parts retailing. “We’re seeinhg a lot of people who used to goto they’re going to that corner garage to save some Whitaker says.
Advance opened 114 storez last year and planes to open another 100this year. AutoZone’s stock has been another strong point forthe company, hittin g $159.36 in mid-day on June 3. Its 52-weeo high is $169.99, the stock’s all-time high. That’s a far cry from the mid-$20 range the company’s stock was trading for a decade ago. “We’vwe been saying for the better part of a decader that with any weakness in the we wouldbuy them, hold them and it’s been a great investment,” Lawrence says.
“When you have 18% margins, you’rw moving into the fourth quarter, whicn is your biggest periodx ofthe year, and they have executed as they have in the past six we think they’re being a little conservativee with the numbers.” The company’s stock repurchase plan is humming along as well, with AutoZonee buying 450,000 shares in the first quarter for $65 or an average price of $145 per Fiscal year-to-date, it has purchased $713 million of stock at an averagde of $130 a share and it has $396 million remaining in its current share repurchase program.
The companhy has used its cash flow to make investmente in itsstore base, including larger storew with additional space for supplying other stores and garages, Lawrence says. AutoZone is also spending more moneu on training and retaining while making sure it attracts the best new talentf with a focus on improvingemployee benefits, accordinfg to Campbell. AutoZone employs 1,300 peopl locally. “We’re continuing to grow, opening storesa and adding personnel,” he says. “To us, this is an opportunityy of continued growth.
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