AZO - Earnings call transcript Q2 2021

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Operator

Good morning, and welcome to the AutoZone Conference Call.

Your line has been placed on listen-only until the question-and-answer session of the conference. Please be advised, today’s call is being recorded.

If you have any objections, please disconnect at this time. This conference will discuss AutoZone’s second quarter earnings release. Chairman, on CEO quarter. the company’s a be the presentation short highlights Rhodes, President will and making Bill of the conference promptly XX end call AM The time, central at AM XX Time. Eastern will

begins, Rhodes following the forward-looking listen regarding Mr. requested that the Before statement you statements. to has company

William Rhodes

Good Jamere, statements. the are we’ll Obviously, play to everyone. you have going forward-looking morning a curveball.

the compromising accounting and that historical private such Harbor forward-looking will, statement. of interruption assumptions sustainability, the of ratings, perception of Risk forward-looking strategy, this expressions. litigation including position, forward-looking growth ability the as company’s statements in company’s provisions public assessments strain Act train of Certain rate, presentation retain should, believe, company’s or and Safe the the are public risks company’s supply the experience otherwise, interruptions. tariffs, contained in ongoing the or are statements epidemics These read anticipate, pandemic novel global the impact XXXX. hire, to I’ll or intend, to cash light for risk and conditions, looking a in technology on suppliers, insurance, of war failure detail expect, year statements under trends, company the and without estimate, future company’s similar be market international of the of expected in securities of could, fiscal cost words and So uncertainties, Factors Reform may, delays cyber-attacks, impact plan, made the debt and XA employees, of weather, typically including health more XX, and of construction integrity the origin raw discussed subject constitute project, The on downgrade information, and based terrorist by demand, to new seek, the ended or challenges appropriate. management of reputation, XX-K Risk limitation, and to use impact Certain are Report that factors chain credit including the product information changes and statements disruption of in energy consumer to or developments other recessionary current of material systems inflation, access Form standards stock availability of self due markets, repurchases, credit carefully. damage competition, company’s business the and feasible of financing, of laws in levels, associated August risks activity, conditions, Factors health conditions, prices, available in are to These with subject historic be forward believe of regulations, impact future number qualified to flows, issues, prospect the Item the as of Annual confidentiality, uncertainties such the coronavirus, a Part these should these section contained anticipated in read I to XXXX, war

and decisions in those adversely of Forward-looking business. the future such forward-looking above Factors contemplated and events and differ materially and not statements results, by may affect the business guarantees developments and statements are from described actual Risk could performance company’s

statements. However, and it risk could other its factors it is understood to identify these predict. affect or not should be possible that forward-looking that Also

result any Forward-looking events otherwise. future as statement no undertakes speak only the to a made, applicable obligation as whether required of company forward-looking of law, information, statements, new the except publicly as date by update or

Tax. With second Investor Jackson, Relations Vice thank morning us are good Vice Well, President, conference Chief AutoZone’s for Executive Jamere Treasurer Brian call. today and me Campbell, Financial Officer; quarter Okay. today for and joining you and XXXX President,

conference today along read had are with an available the the about quarter’s our our some categories learn about weeks, not Relations quarter, hope this regional click discrepancies. our Regarding to I them. To quarterly our performance, over press start release results. I'll morning, the www.autozone.com that see comments under If and talking drove any off XX earnings the our time merchandise you’ve calls Investor the sales on opportunity press and second to slides link. on spend Please website, results, release complementing trends

of As press chain we in and had our said morning, the not release deliver heroic supply kind we without of AutoZoners. I this the could results store efforts our

and While our describe essential their to company, our classified to essential seems remarkable insufficient results. workers, as contributions our customers

safe up be help Our a during been priority exceptional. our AutoZoners so our to customers. And environment. AutoZoners our all the being of pandemic stepped nothing to, top To sure short providing and have remains can work really with of committed they

talk Jamere, I knew the our will about Time say is or been investments was this right something we'll just making. he AutoZoners. ETO Thank Emergency additional discusses we we've While thing we the offered more to AutoZoners Offer for when again. do the you

Okay.

Let's our results. turn to sales

our quarter. slightly quarter commercial rates weeks. strongest retail on growth both four Our came and the retail the at than up commercial of were quarter, this comps end retail similarly comps to last With overall for the were commercial, comp strong sales and being stronger XX.X% for

QX. Let's told comp weeks of you an quarter. In the cadence. our ran on We sales last X.X% we for the our four weeks this first last review call of four

accelerated sales XX.X% comp. a to Our

XX.X% last balance we of for the saw ran quarter. acceleration, of consistently further pretty weeks As eight quarter. the a was the We over arrived, sustained comp holidays the which the

with down in middle, and was growth versus pretty close sales, traffic upward This us to higher. both us traffic It stronger. slightly - encouraging quarter's ticket ticket see the ticket was for to moving split starting although January was inflect

mixing due than growth in hard first higher quarter we experienced the sales was quarter. this stronger part what to Our ticket

health, priority and close safety and state have our pandemic, and all be local and follow well the Our the Throughout number and tabs to mandates CDC continues of customers continue one we being our always to the ordinances, the AutoZoners. national, on guidelines. kept

reward protocols, perform sanitizers we hand would PPE our announced that their a with safe shopping and environments. COVID-XX. And the working facilities once Board ensure our This of putting our safety like team's they completed our provide other continue questionnaires entering for every team a in providing members doing including management AutoZoner, our enhanced to masks, efforts part-timers. many take other vaccination is to AutoZoners inspired masks logical just require we to shopping what first. to environment. next just week, AutoZoner is to by continue That's and $XXX work last and We our provide safe, and be every right, cleaning safeguards step to I and commitment

December. happen stimulus January, to the and these the in The this first our chain, To we quarter, package in year that of more done pandemic. a been values would I as demand, handling and have go onetime what the $XXX over ended effect late stimulus away drivers our unemployment a were continued part checks in-stock July. we enhanced supply full our this In for improve. was provide further extra Addressing week see on see, color our our passed from remind You culture levels the the you in over of sales to job we've of have and funds little of industry with force billion majority as anxious solid distributed performance that Americans. $XXX and billion was of further last last benefits the to

nicely, our of disbursements, did remained the throughout quarter. in we than our and see pick the size business April sales smaller elevated the While up remainder

While to we lead feel we encouraged with current environment. should the continue sales additional environment, to be strong stimulus selling any a

bases, better that were with others quarter, perform store commercial represent did base, as customer over and some consistently. than Again, strong there were the of our regions always there majority pretty of the markets. our certainly geographic During Northeastern well, the others saw the the both we the are. solid markets Across but Midwest retail markets, XX% and as country as remaining these which just underperforming not

sales spread colder winter. these quarter. the of to effects last closed. markets did and separation XXX was it? and performance approximately a others For the mild winter example, But due year this was basis lingering gap weather come the for Boy, happening this between later comp the believe did the winter points And year. We in

we closer mild rate. have I experience why unprecedented not sales sales to summertime shows data historically growing to industry, fourth And our could say are we been upcoming times, So continue we comp industry's quarter. discuss with the during gains. The that encouraged our the proud our data believe more won't for the mid single-digit and in have growth about to three we be the affected winter share industry has retail based range, to the sales on

know how in quarters months. both thrilled typically now, like recessionary remains the thinking we these many sales into of about of to to fiscal would our and remind While them heading maintain XXXX. fourth is spring resilient. to the charge are that gains you you I'll third summer environments, share I'm remarkably sure business our and for we're have

nothing pandemic typical. this about However, is global

customers ensure the with need our objective resources focus provide they Beyond our our AutoZoners exceptional and AutoZoners, customers an on experience. safety of is primary shopping with the our providing to to our

comparison have the about XXXX much optimistic difficult third quarter package. from year's last in the April more stimulus fiscal the fiscal quarter, are we will but fourth fourth We as environment quarter benefited a obviously sales heading the into

when is store for of the remains quarter the predict comp XX.X% true the us this sales for remainder against year's year For fourth now, quarter fourth were growth. we the of up to it of difficult for This sales year. especially previous

in we economic over our difficult products be will growth sales these to high expect and believe we our services during demand While time, more continue times. moderate will

benefited it time in follow. if year. customers We reminded to outside in XXXXs, vehicles. of remain new our continue deep more long of have XXXX, that strongest customers, growth growth in periods, a capabilities this have we of over term, those our years many to economy customers years XXXX protracted showcase skills in the environments. of have Over decades those experienced the that These us recessionary during periods, they as been early coming environment, has maintaining on last sales the outsized changed past, the all after focus followed. believe Therefore, business quarter, last and current XXXX, Last these we particular, equivalent three and on behaviors periods to recessions. periods been you retail three allowing recessionary their believe each XXXX, XXXX declines retained we recessionary the optimistic and industry followed the never enters the the and out we by upcoming will Interestingly, we'd consumer our and the in the

our Now let's move into performance more quarter. specifics for the on

sales year's versus up Our last same-store second were quarter. XX.X%

than a than growth beginning retail historic norms. million. Sales at total of year. approximately last our $XXX above XX.X% higher sales strength of was income the XX%. higher net XX% the and Our the up showed were quarter and in businesses And forecasted approximately share, our quarter, was commercial Both commercial sales EPS same-store with certainly and $XX.XX we DIY

averaged $XX sales, $XX,XXX we per program million in For in commercial, over over which weekly sales per week. was

the last as While months lower program average that weekly winter per decelerated us. normal months quarter are sales is from for selling

Moving us sales. this I'll remind encouraged have time. a The doing we service share believe what fragmented opportunity and we and market, forward, commercial are highly product significantly with remain to offerings in you are sales our market our provide that, a business. our initiatives over we place is and $XX very tremendous billion we within grow helping

in across differences our quarter, to While trends retail interesting some business. the were geographical there particularly there this merchandise categories, continue be

be Our up. showing hard like strength. categories and force small But to business mats with parts repair floor continue our picked antifreeze, tools, definitely sales categories strong,

our the In with since with the business force. line in hard floor we fact, is hard first pandemic sales parts the saw in our line This our quarter quarter. began for grow where sales comped

are improved as categories close high overall improve. miles categories this batteries, as We business. will rotors like believe many categories business brakes performance in gap as driven merchandize the as Our comping and certain such with to not continue

and spring we way was having but Overall, view impact winter business did our or material late for arriving, it year's As as arrive. winter, this not summer on the one the other. a upcoming it

growth will We time. surge from pandemic-related our the over sales expect that moderate

However, the we in initiatives continue will retail invest and both for our commercial to that us well growth future. in position

additional this continue times, difficult payroll our addition, products On believe prospects. services call, time-off. In significant expensing more we last and expense about quarter. will us additional quarter's emergency to we would gives high announced during was second in and our The AutoZoners we provide our the economic confidence with demand more resiliency to be during be

do we This believe award least our embraced we extra been by ETO benefits, is to the team. While this history, our field. could it second the support our we've is time enthusiastically in has time-off the offered in AutoZoners

calendar Our didn't off March the utilize values. paid or their to to safety. was work an vacation we Board exceptionally with very with you, take to paid the Directors tell remains who is of take get wait AutoZoners address the heroic vaccine, get recognition I'm sizable them benefits honor investment our We it in their provide who of of AutoZoners have of this consistent emergencies, January, checks efforts. until right to medical to in our leaders time-off the the we in ensure a AutoZoners year we and paid proud and XXXX. bank. use their in AutoZoners with live stated and team I offered in out have a $XX feel back to of vacation important these to additional time paid what the incremental In million ETO end a

my Now Jamere? the over it turn Jackson. call is to Jamere pleasure to

Jamere Jackson

Thanks, morning, Bill, and good everyone.

mentioned, outstanding As another had Bill quarter. we

let initiatives in our take the centers to on growth exceptional this To are and for Our QX. driving and specifics morning, a start me results. our heroic minutes P&L stores delivering few in AutoZoners the distribution our elaborate are of efforts

which For parts quarter includes up billion, domestic the were sales, total $X.X and XX%. Mexico Brazil stores auto our

total under million. AutoZone store $X.X to just year. For four over last in just ended, QX the $X per sales This million quarters trailing were compares

our initiatives. color let commercial and Now little Starting sales give a our me business. on with growth

in million. growth of commercial to nearly sales sales, on XX.X%. our weekly commercial $XX XX% sales. $XXX against with customers up was technology have DIFM sales our total XX.X% focused than higher program We faster-growing business weekly program disciplined quarter, For represented to the total building we increased and our QX. in domestic In are points three where Sequentially, the our acceleration quarter, second commercial sales a service, commercial and averaged pricing, we investments been $XX,XXX, million per were our assortment. Internally, executing

portion regional tremendous a We with have and underpenetrated commercial and of in the We in market on XX% business as significantly domestic our national, fragmented we're our highly of local building are stores, we focused opportunity market. have our this program now accounts.

leveraged increased customers. existing XX opened wallet our total DIY our remained net as share finishing infrastructure programs, of And This with quarter, we new at store efficiency sales and X,XXX per programs. our near-record levels with we

accelerate on believe believe further. Let quarters for Fundamentally, that me marketplace. the have model to we be balance us areas clear, we our parts service. and improving three on year, forward, investments are providing move and growth this double-digit assortment a pricing initiatives more and past our our the of enabled exceptional we will core fiscal gains improvements to us by are as core commitment our competitive we the we focus underpinned strategy share sales is growth repeating These grew the for we in focused in and the we quality in drive share working. well position And focused even remain by parts, covered made We of XXXX. believe that our our

our our improving more Mega-Hub end and Mega-Hubs XX one we bringing strategy locations, expect this quarter, We year. availability. to First, open fiscal X total our Mega-Hub the between parts is and opened the of by more XX to

raising now to to frequently. and lift, help build-out our stores of XXX. availability the yes, have increasing into and success hubs we're at our say, us meaningful we and more sales driving mega XX expand XX from These parts Given it coverage Mega-Hubs target XXX

of will with and simpler service the and making to for that We're customers. and the we're commitments technology technology professionals our and delivery tracking times efficiency The Second, business our we and make significantly do improve are electronic in accuracy delivery making to driving to we our levels. it drivers. leveraging improve ordering times we're investments AutoZone, sales

Third, being we to committed price are competitive.

believe to right using in the market have to a price. dollars. EBIT merchandise innings categories in and and business investment key on laser are have pledge We a transformational we hand and sales our intelligence science to the up to of the growth higher focus our competitive story. lead the we commercial growth have accelerated We're We live best the pricing like where and early at that data

an Bill but are business. moment would color for Now playbook business, our our commercial DIY lot retail acceleration mentioned solid which won't spend like a gave our initiatives is of intense that on about I seeing we running I DIY repeat, growth. results on DIY to We're in excited we're a I gains initiatives. the in driving our the Like earlier, share

strategy our drive assortment the to earlier benefits I tremendous mega work DIY mentioned First, and hubs that business.

and improving trial activity. Our impact and repeat a investments coverage are on leading to meaningful availability, purchase

to we front. Second, with experience shopping we have work improving done focus on continue digital the customer the on the

efforts delivery have want Buy next-day In-Store, to to ship Our meet where Pick-Up us Online helped and home and in they win customers shop. how

We are products. improve our to investing easier to the array technology customer broad experience and it shop to in of make continue

approach, sellers competitively Third products. sophisticated to priced laser-like certain compete and like with competitors to and using a commodities in typically pricing have analytics online-only in commercial mass parts we our non-traditional in data slow-moving and We're very drive on decisions and categories, disciplined where we and categories marketplace. similar the focus being

on line our this have and focus key capabilities environment, living a our right data-rich tested is create is This give increased effort it gross a to growth, business. we having profit categories us margins. slightly markets, lower we're approach Fourth, and and dollar faster-growing advantage. us We and pledge top our albeit of have in and tools gross yielding we the at price, a at and execution. simply believe relentless meaningful a helping merchandise up is competitive Again, the best

centers and environment. results have our in exceptional tough AutoZoners in a Bill As our delivered mentioned, distribution storage

perhaps record quarter, made is the In company best last AutoZoners advantage continue time-off. while record in store see additional supply traffic, This return, us winning our our focus volume process our marketplace. chain store in on we're investment and we meaningful customers. handled and for competitive investment still the execution said I in have is we emergency delighting As our to a the

spend a me let minutes international. few on Now just

with First, we're Mexico. we making progress in pleased be continue the to

rate U.S. sales. During store a new and XXX to dollar quarter, seven last stores stores equivalent rate. than the again the in last opened reported our second Like higher of quarter, than rate. roughly sales rate result played second higher exchange quarter's finish finished sales sequentially. as the accelerated our quarter That's XX% were with devaluation, at last we impacted. U.S. negatively X% The the the year's dollar quarter And exchange a role total

macro challenging, remain for we're our a in committed foreseeable Mexican opening has the we store We economy. the While Mexico the signs believe in schedules future. of environment been seeing turnaround to

to Regarding and to this way. in Brazil, devalued opened finish quarter. XX% headwinds invest face we we a will Brazil one an market AutoZone new important XX with Brazilian over and The continues last year. Long stores be disciplined roughly real for term, QX for store will

me and P&L on gross the margins. Now spend let few minutes a

gross did year. quarter, including points. higher was due that costs, For supply points basis and benefit initiatives, to basis mix our not down is last XX repeat margin margin remaining pricing this year the came points a approximately from program shift. our onetime headwind of The loyalty XX basis XX chain

pricing on dollar line and power. To profit focused and drive still overall, the though, pricing top pricing that remains we're above, clear gross will gains. rational, industry's we discussed have I As competitive be

top sales see by and We and gains. drive and both when transaction taken approach. evidenced Bill have and and to earlier. gross The is dollar our work into that remain the This share ability disciplined a the action working. translating higher tested our as mentioned growth market is categories we profits, dynamic we We strategy have profit in line certain

customers This the outcome our new profit the As quarters, outpace business gross over we for a for we're we're continue driving as and to refine next margin planning that sales is our good and drag gross retention. strategy rate. several from higher dollars

in faster focus roughly better, at historic All making DIFM and will the and our fair gross and we're way. of rate improving rate position we're profit auto segment. of committed the growing to overall double capturing suggest our our competitive the we businesses market that to our absolute a primary than parts share disciplined operating or are dollars total a at Again, investments growing in be our continue DIY

store well to teams expenses, continue and expenses in this environment. operating Regarding our operations manage teams, particularly our commercial our

expenses time-off by were Our expenses emergency do. up overall during our of emergency year's related SG&A heroic QX. decision was pandemic the But expenses, time-off growth. X.X% which absolutely We believe provide approximately last XX.X% included $XX AutoZoners million to other thing are the quarter's undertaken right versus COVID-related and in our to represented to for the efforts this the

have of perhaps most is As last ever. important maybe I said one investments quarter, this made, the we

manage to in sales continue will line with volumes. We SG&A

million, rest EBIT versus Moving P&L. to the XX.X% prior up the for the quarter of the $XXX quarter. was year's

QX Our last XX.X%, for quarter. related was was million the higher prior versus $XX from up facility, expense completed quarter. and year the to year's year's both $XXX bond a up third EBIT basis The billion in X% the XXX-day over expenses issuance $X.XX Interest margin points the ago. fiscal credit just XX million, the quarter

quarter in $XX just last end range Debt planning under for was the versus of the $XX fiscal $X.X interest at QX $X.X year's just of ending billion are $XX.X billion. million the quarter outstanding million third last versus million same over We of third quarter. XXXX in to balance the year's

quarter finished EBITDAR. the metric two level at debt adjusted times Our

important While based may our decrease in investment-grade we our are committed rating capital strategy. strategy. equity of conditions, and term, repurchases metric remain an market that increase quarter, And and both any allocation we long element our leverage our share debt given to or on

tax, versus quarter. XX.X% second last was rate XX.X% tax Moving year's in to our

EPS. rate while XXX net year, as points options aren't Stock and predictable, rate basis benefited stock option last it our exercises ultimately This tax quarter's and affect points. and from benefited such, income they XXX exercise, our basis will

investors credits model activity, us assumption XXXX, on XX.X% impact this stock cannot at Because exercises. effectively we any rate. predict suggest to to before option option For we the due committed of the on tax we reporting remain third quarter stock fiscal approximately the

EPS. Moving Net for quarter. income was last year's versus million, to and up quarter $XXX income XX.X% net the second

quarter. per quarter share by share XX.X% last the lower was $XX.XX, count prior year's diluted X.X% factors quarter. The of of Our to for combination XX.X from these over up earnings million year drove second second the

Let our me talk cash few minutes flow. a about

quarter, was second million over operating approximately generated the $XXX QX. This last For we $XXX year's of flow. million cash up

results flow million sales million benefited cash and earnings AutoZone's had $XXX operating the our of versus and At from end, strong million authorization last times. Our $XXX previously approximately was stock under year. discussed. two $XXX metric quarter leverage We repurchased buyback quarter the our we remaining share in

Regarding debt in higher approximately significantly our We with remained quarter, sheet, levels. cash flat cash the on cash. $XXX of balance than sheet, and excess balance have is now historical cash and our last million billion our $X was equivalents which

quarter. Inventory store well period growth improved inventory store less versus flat and managing year accounts by last $XXX,XXX remains as last also strong. $XX,XXX per per last per was versus our inventory, merchandise as year liquidity assortment. same increased on a inventory our negative last position $XXX,XXX quarter. and last stores last was was location $XX,XXX year. inventory over Total driven We're a X.X% payable year, QX the Our $XXX,XXX and negative negative $XX,XXX inventories product defined new basis, Net versus

XXX.X%. the finished last inventory gross of QX percent a as of year's at payable versus quarter accounts XXX% result, a As

repurchase moment Lastly, allocation and on share program. our a capital I'll spend

to We future, restarted our we have recall, will to of of view buyback during the first we sheet. the balance methodically and back intended you based utilizing flow our utilize that our we cash our program cash on some on buy excess said quarter. began currently ongoing free the As stock

As our near and we will comfortable the simply have repurchases execution. we concerns feel temporarily about again. our if strategy But said last we with suspend quarter, term, we

on and I equivalents of we XXX,XXX allocation plans level through enable repurchases, our disciplined remainder This our shares. amounts and to strategy. as $XXX cash remain fiscal the our hand As this continue reducing as million of representing will such, We expect spent cash grow mentioned, and of near-term us the stock meaningful confident capital part year. to return of cash to in on shareholders business

value So our had strong shareholder a wrap which drove by and and We and returning growth EPS. comp cash ability robust very driving quarter, earnings our strong we income initiatives, cash to by up, increase shareholders. to highlighted investing in exceptionally sales, drive double-digit in to in remain a excess net confident long-term our

Our initiatives ongoing shareholders. in turn gives I'll our tremendous drive significant growth our and to delivering, Bill. me back are And it this for confidence ability now value and to

William Rhodes

a have to recognize you, Thank Jamere, and I take moment and you.

to day board team. public, Your grasp of thank and the continue extraordinarily require of to very many manner. us across their you of you to than continue while glad extraordinary, six unique a servicing customers, These our months day. I'm to here. managing in extraordinary less our differently so is doing proud safe business the fundamentals they team, joined this but to so for in being things be the look business motoring our for commitment at the We're and times and

to how that learning times, in are U.S. and operate remain wary of exist, we can in we the international volatility our the these both While effectively markets. volatility

extraordinary who them and to go forth We work, helping are school. committed fortunate our or to have servicing and families to customers must We continue thus see to to to layups. innovate no but to far, continue deliver we we execute. There on and back our must get worked They've continue simply we get deliver. are must their people, well focused exceptionally are to and must stay commitments

tremendously opportunity as ongoing business. to and trends as continue much see commercial work. We're possible will to slow do in We gain retail possible well. going our continues within understand share We're business domestic as our limit the headwinds. tremendous as Our And we going domestic to hard future. a work to to

to very as season. of into continues to business spring have we still Our in we head growth. do well and our the always, are work we as do selling early innings But

while safe keeping our will our First their providing and with on foremost, focus automotive our our needs. be customer's AutoZoners and customers

ourselves success. our greater Secondly, company continuously extraordinary even for we challenge these must position to future times during

will five measured future three like what ultimately look our to We be years by from cash now. flows

to and on on continue industry, in I particular, be our bullish Lastly, AutoZone.

Now, we'd like to for open up questions. call the

Operator

Our first question UBS. Michael from comes Lasser,

now is line open. Your

Michael Lasser

continuing elaborate on investments Do being you investments temporary Rhodes, for bit - the be down Bill a few I to or you and to gross of that weighting going other the a margin? margin on pricing are longer-term foreseeable view you this your is future? this once on next you will beginning your stabilize be to gross condition trend want your gross margin and get as quarter is a of

William Rhodes

found places in both our the proposition invest the to our for to happen what's for very just value we've and exactly We don't the manage now. we've in found years question, I know particular time, we how as pieces, Yes, been not retail you year opportunities thank some margin business They're you've specific going from commercial and gross artful able but to specific Michael. business. improve decades. where seen customers. Well, to very over a been

innovate. Our team continue is to going to

the value that trying We raising best. are sweet we and prices to customers are that constantly our constantly spot value the prices, they're - getting find where lowering

Jamere going be over So said, it's last about which year. term. I had onetime margin, don't a points, to XX long if was the what know gross and you from But recap exactly negative basis the what we

of which be margin embedded the all that gross points. them, things to accumulated not two know what three So, was there, Frankly, now. or smart to is within one XX in years that to were price I'm of points, XX basis going basis from the

Michael Lasser

you confidence that And it accelerate? that driving commercial visibility that you you - customer of to seeing already lot this make year. that accelerate Are How give Okay. you the statement? wins your what's some can articulated growth can a

William Rhodes

with in our Yes. early which We ability And difference, elements. we many allows ago taking commercial in delivery better. DIY in in able Mega-Hub commercial enhanced commercial an business. rolling but room strategy it. six guess, of we out so last technology, meaningful we're and Hub understand and website, We've also technology the which And leaning say very It strategy. well. manage communicate delivery that our significantly business and talked, with, We've were making that three out probably tremendously customers. customers. our rolling it's That's innings and months our a meaningful has to it Handheld strategy, ago. times a our although, developed us better as helping our of the our to already think times what probably mean, a I are to to element to new be our study, be difference years portion we the new towards commercial it's yes that a this rolled different we or we more We're began embarking ability and new is is to and XX easy delivery have I our to years still go. on reduced out of do months, times

it's brand. then, ongoing I course, building the - Duralast evolution of think don't the So and and of

for coming position. issues home different of Not an stickier our us level mention, that It's amalgamation in So every And think these to during one resulted allowed And that individual pandemic it's has at we customers, all to different competitive stay at improving there were global a together our and safe day. to I and long-term introduce and customers. at relationships. the the some not home orders, issue. ourselves

Operator

Morgan comes Simeon Stanley. Gutman, Our from next question

Your line open. is

Simeon Gutman

you category. seeing can investing the well. Or of consumers? doing is in of I in we're you price of hasn't there about from we remarks. on reaction elasticity prepared We're this the about, 'Hey, think past, the immediacy a And lot in touched talk in Can talk I of think some you're investments you're for and the future. price the been this, elasticity this making? some the

quarters customer, a So year come when a from or few now now, back the position.' in a from they we're better

William Rhodes

Yes. say couple things. I would a of

We're We're unit of First, strong working. we're not metrics to of strategy is seeing And pressures as from ticket. pretty and are remains What We're working. industry the material. it's our point is fact of up. traffic. The so seeing rational. the seeing What seeing seeing not that a said we're seeing is line benefits all the strategy that I that seeing have. cost go pricing we growth, script, is we're our the ton top in data We're share clear growth. numbers the

the a this of is surgical. those and are doing data we're what is analytics. that And a of give but other us. a makes of price the us not being lot of confidence across part that and for using makes lot thing very we’re So sense butter-spreading, business, the doing sense for consumer lot what strategy declines In peanut we're very we're very surgical words, sophisticated

we're is our our lean continue strategy. this the approach over we for Listen, merchandise as we we spent pledge continue going will as this our so, to in in to shareholders, time to I to the the a we last I six year and I if or And and move So the forward, having into price, have, customers the the have past the so, marketplace. of at - of hand can right we the delight we're delivered business. our live that competitive months to over going results way the up best continue win be to or line see the bottom like

Simeon Gutman

driver And is seeing of than be follow-up that. what for inflation you just a my are you calendar bigger pricing Thank then XXXX in on pricing? you Are prior XXXX. it Can terms for - Okay. was years? in or

Jamere Jackson

we recover pricing. will make we that. to to be inflation, inflation, today time I over taking material don't do, enough recover Well, if any disciplined. on disciplined increases that we're sure price we to the to business. What see frankly, in have price quite to is we we price those Where disciplined see approach take we've concerned. we that we're is to have that's from done bumps mean, be seeing that see commodity that us But commodity something our And be

an environment do we sense down, we to enough we moves commodity have see price we to pricing, pricing for and pricing in as up take and take even makes be it can taking So price where that Bill as make, we're disciplined said, where to price us we're about as inflation. trying the surgical where power and we're

Operator

Christopher Horvers, comes question next JPMorgan. Our from

Your is open. line

Christian Carlino

It's Christian Chris. for Carlino on

it an - have earlier touched been might question. on Just

is - outlook, get be there redemptions margins? to Just was flat last lap start chain the margin when the you markdowns, it this higher gross loyalty supply and XQ wondering these leverage to to to impact start that one-time year, going where And were up year, the similarly, XXXX gross on you correct? from lapping

Jamere Jackson

That's right.

seeing XX is we related talked and of points chain of initiatives and supply said, the other XX% remainder chain costs say costs, environment, the that that had to future today, in we're is going lean we're into this because we outlook the into growth, the we're continue So basis About we about. XX basis quarter. was And to top dollar We're it's line. getting and what deleverage working. about We're that have as forward. this that our supply that move strategy what roughly we the to about the we to in getting is going lean as points is EBIT I'll

delivering early strategy it's So for we you'll an about the won't in us. point, and of date-certain inflection when this see we're innings necessarily be because

William Rhodes

a second, Let too. me to that add for just

is mentioned customers is reason part from are doing to You as costs The we our costs don't biggest because business we to our happen us. forward. returning The to loyalty go more customers our more our up repeat loyalty. loyalty coming stores growth with going what's are And existing of know frequently.

pressure year to and it continues it's share, profitable for we're gaining share gain us. a and death hope We because are I another point it next means that. very additional with tickled is

Christian Carlino

events the then hurt the expect both better Texas the the winter term, of lagged you net recent you but in about as the in these Texas, near we positive summer? events when weather, and the weather And impact on think a to whole would in get

William Rhodes

down, There's temporary when people and immediately you're while locked our - for And and yes, business right. but are suffers business time. suffers up, period our a sustained significantly, rebounds warm Absolutely. things of a

changed or our put and nine we us. about expected a hit, under-car and to lag a typically we because on this those tear that a were talking parts. certain year, last soft pandemic. be importantly, that something dampening conditions have shouldn't And before summer. spring business More in And the will winter results talking significant summer the the was months effect it's incremental pandemic be mild and The that But spring about when for Well, our last fact mild wear everything. there's winter. so we had to

Operator

Jordan, Our Bret Jefferies. next question comes from

open. is line Your

Bret Jordan

share seeing could the you maybe peers? where for about side these bit share less? on you little maybe a more three-step and gains talk of, the warehouse Are more cadence and you are share improving Or you're in the about, non-traditional And two-step or you from gains. model? as distributors of Talking you shifts from could bucket of if seeing us sort seeing DIY gain the the channels an some well. Maybe see where

William Rhodes

times sector, all of have. have indications Yes, on times faster or terrific the what's share to it times gaining the versus question. you growing And we're what's between going by - or times three rates two which we three going commercial in bifurcate on we're yes, two both in than retail industry sector growth the

don't share from up can picking share we are commercial in headline the We lot retail as gains. but the channel. a On of growth in retail, have the have data gains. on at really look good believe we We we good traditionally, a mass data what's numbers

same as stores is getting get in a think visits, the I on are we're and we that of incremental at they making above lot in not visits the are rate those sure, going people what beyond large did And future. frequenting those those we so past. the we're that focused

coming online fact, been over as not hard to of losing before to and say from. where we're share losing time. comes is think might it's in this brick-and-mortar some the share channel, think also also, that the maybe omnichannel place, gaining to share strategy I I think commercial In that have back sector, we the I

share are less market than industry in commercial X% the We today.

the particularly paying I our have doing, probably against over WDs. certainly our what to places. of our competitive We and and think understanding distributor the different strategy. multiple think wholesale changed significantly time, likely position, that we've is attention more building competitive And and we analysis them market coming intensified it's we're our from

in about deliveries. it's done sales what to that place, we force what we've this now done technology our a think improve building You assortment, we've we've with got have and going

four, our years different five vastly is I ago. think what was that it in the competitive positioning marketplace than

Bret Jordan

question you. supply Thank And great. then on Okay, a chain.

is that of to your You particular or in the I in sort general? areas - hear mentioned shifts market in seeing guess, import Do category about in we some your strong around in of that were issues a there shortage, supplier the categories are obviously, guess, costs. stocks remarks. either a But I batteries base is your diversify freight you lot And and that? any

William Rhodes

the supply August. a Yes. Certainly, over significant less it, chain July, had, call experienced disruptions we lot months. than June, today XX last Bret. Certainly We've

supply calls, fuses. those I I mentioned mean, think had with enormous on chain couldn't had such certain came keep with parts and one we tools. of many as had Asia. through huge of it's the as as I and surge as been we did it's just of We been couldn't or for surges in trouble has we our fine. into while. this business these cold sandpaper long trouble with of I those. that that We we give we kudos business get ran that an And then extended most worked team had or a some snap and cold for our suppliers China battery We've been. our battery to just have strong up,

very were suppliers sure to lots in good was make of and creative team we Our with shape. worked different

have needs any don't we So acute right now.

the issues Some edges. on

Our back position more it's take yet, our in-stock normal probably improved, a but few has not months. to to levels significantly going

Operator

Our Sigman, Seth next question Suisse. Credit from comes

now open. is Your line

Seth Sigman

at spring strength was I there the is pulled in wanted last think strength sales at I of concern time in meant to were year, Earlier time, maybe the this the the the on year, being back that that DIY and follow-up forward. the the business. DIY a

suggest I really here that again, you DIY guess that, that wasn't pick As would see the true. business up

that you you. just So of I in I now, and the seeing Thank guess, guess, it? DIY just do the strength sustainability right how about think business and pull-forward you're the

William Rhodes

and went worried. sat think since. six because If question, going business five some where overall, dip months. high the in softer. sure it But that ever last we to at Clearly, the XX answer forward Seth. soon they safe our were cars might I terrific how seen it it tough anything, we where has business, a battery those all. We've That's boomed. as up we're we home battery that for or our no not might has business sustained pulled I'm weeks We've winter weeks, parked But talked as be over really levels business. spring, last battery away, against our seen battery weather exceeded expectations have

as we that back talked with when normal our have for right during And tax you business sales is far customers periods and outperforms the And when dollars, of had get of it when of just now? year. we as when it some beginning refunds fragile, much about to refund seen about that How share of financially but we just a they we three surge out we been lot our It's season, the to those periods sustainability disproportionate decade in see through funds tax As the spend of end stimulus which it this these moved think refunds. a saw when that of environment funds. term seem for we into surges, is, we time about if of a January And a long me in And within last talking business business us. every customer because day, evidence day, who quarter. We've time, really improved single weeks, up resonating get one the moved keeps quarter another It it get quarter. saw April, the tax nearly that when and money, significantly those it's saw are our incremental when our came often incremental the time. thing within incremental over last way that showing wasn't we that have the specifically, out. in sustained time itself again stimulus

April. is our the could indications what it our those that comes, about time strong that frankly, our incremental would we're another business dwarf dollars seen each be to All stimulus, because normal. better we've could have business? Now has which talking what for does If mean than very happened we business performed last

Seth Sigman

And else? well? actually four at stronger mean, I the weeks something that through guess, you and gap narrowing so, do retail rate? period elaborate of that Did accelerated Bill, think or the you period. can And the on between commercial that's mentioned that just you I mean exited last the commercial a stimulus and as if

William Rhodes

does nearly up Yes. in are business. in the - of most commercial commercial as stimulus it business end And I as the the consumers plays the socioeconomic I higher ladder. higher the business DIY much on don't socioeconomic think think the

money incremental as much them. doesn't mean that So to

continuing business. account is But down In are elements were or the up commercial is of with picking as business the to businesses again, street there servicing particularly than rebound. really business national account has do they national And that fact, think I has UDS to national both been that players, pre-pandemic, well. end business still the that stronger were the aren't as account doing the that, the the versus business. our consumer picking Commercial some strong of and

Operator

Our next Fadem, Wells from Fargo. question comes Zach

Your line open. is

David Lantz

Thanks taking our Zach. Lantz for David for on is questions. This

mega evolve a can hub in performance business So how market? to talk within XX% certain growth commercial you open in commercial, attribute hubs? the you much mega would in you And new how about to tends once a

Jamere Jackson

Yes.

available, of us it that key is increases hubs and that, the mega we enables to the more. So yes, SKUs with it have say, number

with And for available, people grew gives I'll well customers share bodes that continue business. have a parts a into XX%. that is I probably locals want tremendous a say the create significantly that and that that those going us to underpenetrated. about our existing we the faster-growing focus What We so is as our extent opportunity to mean, I nationals. that, on we're grew But and X% coverage one to we we're to customers. commercial new and story us

give And gains. hub in strategy, technology, So the these that we're competitively the to marketplace. it. being priced, things doing growth create as about We're a playbook talked faster-growing an us on on business the mega excited about, laser-focused all we're we're we we're things execute the fact execution of opportunity with with pleased that seeing significant and that we share pretty this that

David Lantz

you Can me. vehicles for think and could more over the think the one you happen long-term electric impact in the about there? the talk you just then And rollout industry is happening that of what

Jamere Jackson

Yes.

we player, believe to And a as be we there's big AutoZone to going engine. a be First just of going are all, market. the with is combustion today internal

We're like is not wed Our just in going over follow We've to our strategy changed simple. We're assortment the significantly to time consumer latest engine reflect the internal the we've combustion technology. technology. to just past. done

threat this a not operating us. accidental of is an So position We're for from strength.

market, about like supplies business think our today, blades. EV to parts supplying we're you already things and the wiper If

We have world-class and merchandising. capabilities in supply chain

And the of seat table help us timing us great retail market relationships with this the can in partnerships we tremendous the volumes at the commercial changes. have We and and business distribution gives who and points. have have the that OEMs today footprint a forecast

but and mean, we and risk engines, both DIY for there with those. versus I things internal supplies And think DIFM. there'll be opportunities the clearly, will be will to some be risk, - offsets. there'll So as parts offsets there at are combustion vehicles are in about will be us be at that that electric there

a in what listen, we're see has challenges closely. that despite cautious and because watching from some headlines bit the near-term So market announcements OEMs, the we we're

market rapid adoption a infrastructure profitability. we the look player, a to there's stations to the be you we're to consumer. growing X% for at and going going some going take and and public we going particular, slowly. and not The consumer be uncertain. frankly, it's there's believe significant We today an market roughly business It's to all, prime need has simply ready probably But grid to charging U.S. It's partnerships. combination be of uncertain private in investments. - of we're going need path be is to First for pretty going to expensive. is model And some be out. the of to some charging there follow The built quite And power time. if think do the

Operator

Our D.A. Michael next Davidson. question Baker, comes from

now Your line is open.

Katy Hallberg

was what two asked. Thanks wondering, category Katy one of stimulus, you. is our so Baker. saw to any sort spent for for This much between you if those. the Thank guys of customers you taking Kind saw tagging between questions. shift your if I the and of questions Mike in difference on on retail of previous rounds any

William Rhodes

We've I really seen What I parts Yes. any battery been items. talked business don't strong. the shifts. significant strong. the the this business, mentioned think floor we've in seen we a of our sales seen category of about business - being we failure-related in has quarter - hard in recent some really is particular, have resurgence particularly

of winter down winter hold of driven our same lack the socioeconomic having higher business, I do think also items We've those a in some at And that, rotors and the with may to the actually that year, the not miles we're this be talked and has like I think maintenance rest that of personally about year. the the that like. from and maintenance products getting groups that's levels being a and for normal some and fact winter our of are brakes into impacted. on things last negatively more experiencing

Katy Hallberg

mentioned was use end plans other wondering some about just repurchases investments fairly sort any cash. are through if being then the guys strategic real balance. I on excess confident you And of cash the the of that of just And know more there I share again, or quickly year. to

Jamere Jackson

finish we we're one in our inside return of that, form cash to tremendous generate financial disciplined firepower our has disciplined The in our be will and in currently. we of as continue number cash flow Well, the plan, to a said And significant invest that our confidence out got year. execute going investors in amounts priority business the is the the to what going our free to in flow. gives both and been way business repurchases and continue to to we're us in we've take to a cash tremendous way. invest that of We've balance free business

Operator

Our next question Montani, from ISI. Evercore Michael comes

is line now Your open.

Michael Montani

Montani Mike on for It's Greg Melich.

a to follow-up and could. I if wanted had questions. for X Bill then two Jamere, I Just ask for

for been of billion you Bill, in We've think is areas? if then is that of some BXB you today And And investment about just ordering, almost for related you off, business kind first lot type business. Just those two retail then as what well on if thinking in but a what's if true? to I'm probably percentage And digital if that, technology your the a Bill, So was multichannel. could $X go expand obviously, talk same can you working there and business. wondering, about there's little the of bit, initiative range, of FedEx as incremental well X% kind been color on X% question to just, BOPIS? care

William Rhodes

look I But a somebody to hate him there, Bill just new and lot said on and and Used setup this really would question, this a Mike. put at me if was answer Bill hard There's the to it unpack Thank Jamere. let I it with you for it. you question. time. Giles

digital about picking really customer's channel, it's talk let's retail order where want not the like a business. they're sector, parts. picking way commercial In the system So our our the they to

also same two particular. things with easier So the to team some we made a made way the ways primary work us. or phone buttons. years, also of lot there make a and work proud with last online doing We've doing in call are to been regardless make us, over it digitally it interact for decision - up the work done we've how they initially of go customer. been of with that's We've exact other pick significant doing trying customer. ingrained really and with order ALLDATA they office the us ALLDATA couple easier click that of And And the strides, back of a we've the fulfill lot They in and parts. more purchase they

pretty increase but We we of still over customers commercial So seeing continue are phone. that believe are digital our I'm time And and of really interactions penetration our at we to are with hope business where majority that. a today with pleased rapid the the will vast growth, the significant percentage over in pace.

three On the with. retail that side of different the business, kind have interact businesses we of we

Online, Buy In-Store. have Pick-Up We

than the to online the get of shows next-day us have on home, comes Online next-day in you markets, traditional with can do to you customers have our can center FedEx, Mega-Hubs, ship where We of in with discount. purchases, at is leveraging home p.m., the if our customers Buy which knowledge doorstep we'll next to most to provide three In-Store delivery, ship next-day price of the again as those proves the or really But ship rate have again convenience Each fulfillment order stores omni-channel rates the We've and as and Pick-Up out AutoZoners that once which to our twice growing a to home XX an are way delivery we or But great mentioned that valuable And a significantly, and points, our delivery, our customers. and generally business. remember, got business. high which to to our In-Store to that our electing be late rest faster Pick-Up have it us at to we is great on growth world, is with delivery, one next-day ship is us and day. Hubs have again the growing us, the customers couple the their or of you program and rate and of XX% twice customer Online provider. very notion touch of midnight do our that - we home we're businesses Buy

okay that unpacked I you. hope for I So

Michael Montani

But P&L then to thinking Thank we get is be have That hour. And isolation. of could the mitigate. up really heart questions, this, analyze of the an obviously, to guess it seem Bill. tougher But COVID kind go kind lot for is we bps. was to range. XXX we was Walmart you, try Great. question $XX of headwind be hour you XXX a I think all the running an And to can We've helpful. one been really around then in investors, wage. $XX-plus above which Jamere, for levers to pull there's think of to this have saw example, And bp-plus we which you from $XX we the the minimum hour thing, when new to costs

kind So productivity in of is share this a can you can the case pricing power that mitigate there should headwinds rational on confident would color of that this where Just extent to you a any we these super way? kind of be happens initiatives, be all that helpful. some

Jamere Jackson

Yes.

about things be will while. several this that what we one. disposal we've One environment. It's will of there a couple mitigants about uncertain are all we a been we is, that as that and So cadence into see think at see this the contemplating we'll do things still that. our move These for

our workforce here us that that, teams us that's have done really is job accelerated that environment getting have very in with a a highly we And seeing thing driving meant leverage is this delivering. first time, for growth, see say productive operations, decent sales I'll The where field. in over we've of our you the what tremendous inside you're that productivity. can And is we

So that's one.

thing the make wages, inflationary to to commodities the is are whether there they're company when business, that second have in as The that a you be is, recover reality you pressures or disciplined sure those.

out AutoZoners. the for very think we're we area of minimum right inside it going pricing. P&L, that third our to pricing And cost believe as see future. power we're pricing wages, disciplined stands I we ways what's to we the so to do find And company. offset the front. the our going on to with we're relates from to any thing the And been that always Whenever have into then that me inflation philosophy That's

today, on impact across that. will on AutoZoners so labor. acquiring which and the sure happens business cadence an we're making focused what's legislation with in And doing competitive the that always we're right for have But of the terms our

extent to have future. there we're going happen business changes the there, that to in the competitive and us landscape, be are enables in we're to the And that to so competitive going that a wage be

William Rhodes

right. All

is business to our want we a believe granted as with we about customers our shopping we us. the conclude our for We'll for to prospects industry take reiterate, excited We're the growth have Before just take moment understand alternatives our call, I nothing solid. to strong and year. model is

But and exciting year. is help We want us stress, like not this should a to sprint. that always, have succeed plan this I marathon an a that fiscal

very day basics focus safe. continue As we to for continue you Have great Thank today's optimizing confident will to focus be stay call. and and long-term participating we AutoZone shareholder successful. are in the on a on value,

Operator

Thank you for your participation conference. in today's

at may time. this You disconnect

AutoZone (AZO) 2 Mar 212021 Q2 Earnings call transcript