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

Advance Auto Parts Q1 Sales Increase 1.3%

Comparable-store sales increased by 0.6%.

Advance Auto Parts reported first-quarter net sales of $3.4 billion, a 1.3% year-over-year increase.

Comparable-store sales increased by 0.6%. However, comparable sales increased by 25.3% on a two-year stack, which blends comparable-sales from 2022 and 2021.

“In the first quarter of 2022, we delivered our eighth consecutive quarter of comparable-store sales, adjusted operating income and adjusted earnings per share growth,” said Tom Greco, president and chief executive officer. “We started 2022 with strong mid-single-digit comp growth through the first 10 weeks of our 16-week quarter. During the final six weeks, we experienced comp declines driven by our DIY omnichannel business. This was primarily a result of headwinds from the expected lap of the DIY sales boost from the 2021 stimulus as well as a slower start to the spring selling season due to cooler temperatures and higher precipitation. These headwinds have subsided during the first four weeks of our second quarter with comparable-sales growth within our full-year guidance range.”

Record DIFM Sales Drive Solid Q3 For AutoZone

DIFM sales continue to rebound from the lows of the pandemic.

GPC Reports 19% Jump In Q1 Sales, Boosts 2022 Guidance

Sales in the Automotive Parts Group were $3.3 billion, up nearly 11%.

O’Reilly Reports 7% Increase In Q1 Sales

Comparable-store sales were up 4.8%.

AutoZone Fiscal Q2 Sales Up 15.8%

Domestic same-store sales for the quarter, which ended Feb. 12, increased 13.8%.

Other Posts

AutoZone Exec Philip Daniele to Keynote AASA Vision Conference

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

NGK, AutoZone Receive AASA Channel Excellence Award

The teams shared market research and applied POS data and other information to develop an oxygen-sensor program.

AutoZone Carrying Lectron EV Chargers On Website

The move by AutoZone makes Lectron its most widely available EV-charging provider.

Rhodes: Pricing Isn’t Only Driver Of AutoZone’s DIFM Growth

AutoZone’s DIFM sales have benefited from investments in technology and the addition of megahub stores, among other factors.