MEMPHIS, Tenn., (GLOBE NEWSWIRE) -- AutoZone today reported a surge in net sales of 8.1% for the quarter as cash-strapped consumers flocked to the nation's leading auto parts retailer to extend the life of their existing vehicles amidst the recession.
Net income for the quarter increased $9.2 million, or 8.6%, over the same period last year to $115.9 million, while diluted earnings per share increased 21.1% to $2.03 per share from $1.67 per share in the year-ago quarter.
"We are pleased to report our tenth consecutive quarter of double digit earnings per share growth," said Bill Rhodes, chairman, president, and CEO. "During these challenging economic times, we believe our merchandise and service offerings provide a compelling shopping experience for both our do-it-yourself and professional customers. We remain committed to growing our business through a relentless focus on customer service, continual refinement of our product offerings and ongoing improvements to grow our commercial sales, all while managing our expenses appropriately. At the end of the second quarter, our balance sheet was in excellent condition, and we remain committed to our disciplined approach of growing operating earnings while utilizing our capital effectively."
For the quarter, gross profit, as a percentage of sales, was 49.7% (versus 49.9% last year). Gross margin was negatively impacted by higher than prior year shrink expense of approximately 30 basis points offset in part by lower distribution costs as a percentage of sales due to improved efficiencies and lower fuel costs. Operating expenses, as a percentage of sales, were 34.9% (versus 35.2% last year). The lower operating expense ratio primarily reflected positive leverage of store operating expenses of approximately 80 basis points due to higher sales volumes and lower promotion costs, offset in part by higher investments in hub store enhancements of approximately 20 basis points, higher medical costs, and an increase in legal costs associated with estimates for minor settlements.
Under its share repurchase program, AutoZone repurchased 2.8 million shares of its common stock for $375 million during the second quarter, at an average price of $133 per share. Year-to-date the Company has purchased $647.2 million of stock, at an average price of $128 per share. The Company has $462 million remaining under its current share repurchase authorization.
The Company's GAAP inventory increased 5.9% over the same period last year. Adjusted inventory per store, which includes supplier owned pay-on-scan inventory, was $511 thousand versus $504 thousand last year, an increase of 1.4%. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $50 thousand from $55 thousand last year.
During the quarter ended February 14, 2009, AutoZone opened 20 new stores and closed one store in the U.S. and opened eight stores in Mexico. As of February 14, 2009, the Company had 4,141 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 158 stores in Mexico.