Mild Winter Stifles AutoZone's Q2 Sales

Mild Winter Stifles AutoZone’s Q2 Sales

Domestic same-store sales for the quarter, which ended Feb. 15, were down 0.8%.

AutoZone reported net sales of $2.5 billion for its fiscal second quarter, a 2.6% year-over-year increase.

Domestic same-store sales for the quarter, which ended Feb. 15, were down 0.8%.

The story of the quarter was the mild winter weather, including the second-hottest December on record. Batteries, antifreeze and other seasonal products – typically high-demand items in winter – “were our worst-performing categories” in the retail and commercial segments, CEO Bill Rhodes noted during the company’s March 3 conference call.  

The mild temperatures led to “particularly soft” sales in AutoZone’s Midwestern and Northeastern markets, according to Rhodes. The sales drop-off accelerated during the last two weeks of the quarter.

“Our sales fall-off was more pronounced for our DIY business than commercial, but we certainly saw the trajectory of our business slow during this timeframe for both businesses,” Rhodes added. “With over 25% of our sales coming from our Midwestern and Northeastern markets, we could not make up for the sales shortfall from these areas from sales in other markets.”

While Rhodes emphasized that AutoZone’s top-line results came in well-below the company’s expectations, he praised “all AutoZoners across the entire organization for their hard work and dedication to delivering great customer service in light of a challenging sales environment this past quarter.” He noted that the company was able to deliver a 2% increase in EBIT (earnings before interest and taxes) and a 7.8% increase in diluted earnings per share in the second quarter.

“Unfortunately, as we have stated many, many times, the timing of our second quarter can result in quite volatile sales performance, both good and bad,” Rhodes said. “And the timing this year couldn’t have been much worse. In the end, weather impacts normalize over time, and our focus is on our long-term performance.”

During the quarter, AutoZone made progress on a number of strategic initiatives that “we feel will benefit sales over time,” Rhodes noted. Among them, AutoZone opened two new megahub stores – bringing the companywide total to 36 – as part of the company’s push to improve its inventory assortments and grow its commercial business.

“Our megahubs provide very deep local-market coverage for hard-to-find parts,” Rhodes explained. “This is critical to both of our sectors, but particularly important to our commercial business.”

AutoZone’s commercial sales increased 8.2% year-over-year, and represented 23% of the company’s total sales, according to CFO Bill Giles. AutoZone has a commercial program in 4,942 – or 85% – of its U.S. stores, and in most of its international stores. Average weekly sales per commercial program were $9,400 in the second quarter, a 5% year-over-year increase.

“We have grown our sales with mature customers and mature programs at a substantially improved growth rate the last two years versus previous years, indicating that our offerings, products, coverage, customer service and ability to enhance the customers’ overall shopping experience are improved and have been recognized and rewarded by our customers,” Rhodes said.

Technology has been another key focus. The company has been upgrading its systems with the goals of making it easier for customers to do business with AutoZone “while simultaneously making it more efficient for our AutoZoners,” Rhodes noted. During the March 3 conference call, he highlighted the recent implementation of a new point-of-sale system in AutoZone stores.

“This new system leverages new architecture and technologies that will expedite retail sales transactions by making the workflow more succinct and logical with touch-screen capabilities and allowing us to make future changes much quicker as we replace some very old legacy codes,” Rhodes said.

AutoZone opened 25 new U.S. stores in the second quarter, and launched 25 net new commercial programs. The company opened two new stores in Brazil and one in Mexico. As of Feb. 15, AutoZone had 5,815 stores in the United States, 608 stores in Mexico and 38 stores in Brazil, for a total store count of 6,461.

You May Also Like

NAPA Auto Parts Parent GPC Reports Record Q1 Sales

Global sales for the Automotive Parts Group were $3.5 billion, up 7% over first-quarter 2022.

Genuine Parts Co. (GPC) reported record first-quarter sales of $5.8 billion, up nearly 9% over first-quarter 2022.

Net income was $304 million, up from $246 million in first-quarter 2022.

“We are pleased with the continued strength and momentum in our business and excited to report results that exceeded our expectations for the quarter,” said Paul Donahue, chairman and CEO. “Our performance was a clear example of how our multi-year strategic transformation to a global automotive and industrial company is a competitive advantage that distinguishes GPC in the marketplace. We benefited from our business mix and the geographic diversity of our operations with continued strong performances in our international automotive businesses and in the industrial segment. We are extremely proud of the outstanding work by all our GPC teammates.”

Advance Reports 2022 Sales of $11.2 Billion

Fourth-quarter net sales increased 3.2% to $2.5 billion, while comparable-store sales were up 2.1%.

Genuine Parts Co. Reports Record 2022 Sales

Full-year net sales for the Global Automotive Parts group were $13.7 billion, up from $12.5 billion in 2021.

O’Reilly Reports Record 2022, Q4 Revenue

Comparable-store sales were up 6.4% for the full year.

Advance Auto Parts Reports Q3 Net Sales Of $2.6 Billion

Comparable-store sales decreased 0.7%.

Other Posts

Phil Daniele Takes Over as AutoZone CEO

As part of a previously announced transition plan, longtime CEO Phil Rhodes becomes executive chairman.

AutoZone Announces Leadership Changes

Longtime President and CEO Bill Rhodes will step down in January, among other leadership changes.

AutoZone Recognizes Contributions of Top Suppliers

AutoZone named BBB its 2023 Vendor of the Year.

AutoZone Exec Philip Daniele to Keynote AASA Vision Conference

The conference is scheduled for April 11-12 in Chicago.