AutoZone (AZO) Q4 1998 earnings summary

Executive summary

• FY98 sales rose from $1.5B in FY94 to $3.2B; the store network reached 2,657 across 38 states, following acquisitions of Auto Palace and Chief Auto Parts.

• Growth strategy centers on new-store expansion, acquired-store integration, and comparable-store sales; historical store-count growth is not expected to continue at the same pace.

Financial highlights

• Net sales increased from $1.5B in FY94 to $3.2B in FY98; growth and future financial performance depend partly on profitable new stores and sales gains at existing locations.

• Employee count increased 34% in FY98, from approximately 28,700 to 38,500.

Outlook and guidance

• Plans include opening auto parts stores in Mexico in FY99 and converting the Chief locations to the AutoZone name and format; profitable, timely execution is uncertain.

• Expansion opportunities are sought in both existing and new markets, with store clustering intended to improve advertising and distribution economies; continued comparable-store growth is not assured.

• On Oct. 21, 1998, acquired real estate associated with 100 Express auto parts stores for approximately $108M, with plans to convert the locations to the AutoZone format.