AutoZone (AZO) Q4 2003 earnings summary

Executive summary

• FY2003 net sales were $5.457B, up 2.5% reported and 4.6% excluding FY2002’s extra week; net income rose 20.9% to $517.6M and diluted EPS rose 33.5% to $5.34.

• Domestic comparable-store sales increased ~3%; retail comps were flat while commercial comps rose ~27%.

• Operated 3,219 U.S. stores and 49 Mexico stores at year-end; opened 160 domestic stores during FY2003.

Financial highlights

• Gross profit was $2.515B, or 46.1% of sales, versus $2.375B and 44.6% in FY2002; operating profit rose 19% to $917.8M.

• Operating expenses were $1.597B, or 29.3% of sales, versus $1.604B and 30.1% in FY2002.

• Adjusted for listed non-recurring items, FY2003 net income was $518.0M and diluted EPS was $5.34; comparable net income rose 26.4% and diluted EPS rose 39.4%.

• Q4 FY2003, a 16-week period, produced sales of $1.829B, comps up 3%, operating profit of $360.1M, net income of $207.4M and diluted EPS of $2.27.

Outlook and guidance

• Expected ~195 new store openings in FY2004; expansion inventory needs were expected to be funded substantially through extended supplier payment terms.

• Planned to rely primarily on internally generated funds for most capital expenditures, working capital and repurchases, with remaining needs funded through borrowings.