AutoZone Stock Falls as Domestic Commercial Growth Lower Than Expected

Net sales for the automotive replacement parts maker were $5.69 billion, also climbing from the year-ago quarter and beating expectations of $5.61 billion.

But total domestic commercial sales were $1.499 billion, below the $1.55 billion analysts had forecast.

Louis Navellier, chief investment officer of Navellier & Associates, however, found reason to be optimistic. “The UAW strike is going to help boost AZO’s sales since replacement vehicles will be delayed, so AZO’s parts business should grow,” he told Barron’s in an email Monday.

Same-store sales for the quarter rose 4.5%, falling from 7.1% a year ago but higher than the 2.4% jump analysts had expected.

“While we started this quarter slowly, we saw improvements in the back half of our quarter,” said CEO Bill Rhodes in the earnings release. “Despite lower-than-expected growth in domestic commercial, we believe that the initiatives we have in place and are implementing will drive stronger growth in fiscal 2024.”

Rhodes offered a bit more detail on those plans for growth during the company’s earnings conference call.

“Over the last five years, we’ve averaged 140 domestic store openings and 50 international openings for a total of roughly 190 new stores a year in the Americas,” he said. “We plan on accelerating this pace and aspire to open as many as 500 stores five years from now.”

“FY 2024 will remain around 200 but we will ramp from there,” he continued. “You may be asking why this change of strategy and why now? The answer is our profitability per store is materially higher since the beginning of the pandemic.” 

AutoZone stock fell 1.5% to $2,485.17. The stock has gained 0.8% this year.

Write to Emily Dattilo at [email protected]