AZO - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen, and welcome to AutoZone’s 2022 Second Quarter Earnings Release Conference Call. At this time, all participants have been placed on listen-only mode. And we will open the floor for your question, comments after the presentation.

Before we begin, the company would like to read some forward-looking statements.

Brian Campbell

Before we begin, please note that today’s call includes forward-looking statements that are subject safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

guarantees performance. not are statements of future Forward-looking for Please company’s Form most this that morning’s could Exchange XX-K and results important and from the press release expectations. Commission and recent Securities differ other cause with refer discussion uncertainties filings of risks to and the a to annual materially actual report on

reconciliation measures Today’s Forward-looking of non-GAAP you. obligation can to no the is floor company statements speak undertakes financial certain GAAP only to to of include as pleasure the found Operator: be CEO in such our the non-GAAP of over It to call statements. yours. the release. press floor measures. also your Thank A Rhodes, Sir, my date made, host, Bill is and will now AutoZone. turn update

Bill Rhodes

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

second are www.autozone.com the Relations Quarterly with our had the Please an about learn not, hope quarter, our on Conference comments results. Earnings you've Investor to read If and release our today complementing press quarter's Calls release, press slides the under opportunity along on the them. available website, to I link. Regarding click see

our the centers have start Everyone, and customers very extremely stores the COVID-XX we Omicron presented. AutoZoners, exceptional team that AutoZoners priority the has of responsibility recognized remains highest I and am in COVID-XX to across the takes our for As service face well-being how begin, giving in pandemic, proud stress the to distribution and the of of want our challenges our and respond we Since variant. our and continue consistently we the to to has seriously, safety all of this continued recent everyone organization

for cadence their our sales This we sales, we customer exceptional morning, dedication customers thank quarter, is service retails any start will you by our merchandise our overall to fiscal our our also and the they discrepancies. and share needs. drove AutoZoners same the our saying remainder way automotive affecting we performance regional the will weeks inflation business trends, think the and our helping We'll same-store costs of over providing the DIFM review categories how will how quarter, This XX of that year. to for their versus and DIY with impact

the of in on touch I'll subject pricing Lastly, industry. the

last XX.X% Our very this domestic strong year's impressive of XX.X%. top quarter, same-store were sales on an

an of the Our once and fiscal sales XX.X%. team on executed environment. top has again delivered amazing this exceptionally in In delivered our very impressively, two-year accelerating challenging Impressively, very QX team reported XX.X% second QX comps same-store despite of sales we high of our XXXX's year, level same-store ongoing results quarter.

four-quarter basis, trailing million generated billion annualized sales Our record $XXX $X.X a retail growth than commercial strong we sales, generated Commercial ago, year. XX%. year accomplishment. with versus domestic sales more set $XXX a and second with incredible quarter were an XX%. commercial billion We million QX this last in north growth $X.X quarter a rates up of both for in in On commercial in just

us basis, average compared quarter, XX% $XX,XXX last in We also XX. commercial. any last On exceeding record from sales for versus set year. last second year. for of XX% total a company per our quarter $XX,XXX sales, Domestic record to in X% represented two-year at weekly sales another accelerated our store a

We're improvements host for we've availability. in store commercial to our had several coverage. growth and been strength We've satellite leveraging of initiatives Our of inventory be want continues on driven working the improved Mega-Hub Duralast years. a the brand. sales to I last massive a host the by We Hub emphasize, and key

have We with. business make do to us to easier better technology

We improved we We've consistent deliver. with we're our enhanced 'priced delivery our living that effectiveness pledge the and force's sales right' our times. proposition for have value significantly by being

to in also proud at continue we organization's execute commercial and DIY. their performance. We in of team of our and proud extremely are last top very very quarter this We domestic performance year's well We're comp X.X% our ran of XX.X%. on

we this stacked of quarters points it's quarter, the on of two-year to we consecutive build full DIY during available more pandemic, first continue comps our the portion those As stages share than on the modestly we gains our built initial us, four data to two-year gains. business. of to but From comp not in of reflect the to from enormous more three have only remarkable mature XX% retain continued the accelerated

Our performance, the amount and sales last substantially gives the the of us benefits, of from enhanced considering more stimulus time on the and exceeded ending has expectations our sustainability these the of levels. unemployment conviction

cadence. sales on Now, let's focus

then sales late The could deceiving result again federal the stimulus in calendar few and a through quarter the strengthened last February. January November the in as from comp accelerated year's of the of last of had as Our as sequentially through progressed we same-store year. January distributed decreased days be around first deceleration the quarter

from On very XX stacked were it almost results basis, past look to comps. like Given believe and been we, this months, dynamics stable. instructive pandemic, monthly the others has benefited the the in more identical two-year at the who've were

XX.X%, periods QX, For XX.X%, the quarter four-week two-year XX.X%, the and comp and respectively. increased our of XX.X%, was

weather Overall, experienced material a winter weather northeastern warmer we weather, pretty our until US, the feel we February, while in in sales the play performance. of role than the not remainder normal Regarding experienced did usual trends. country

forward this is to normal therefore, see not big trends we the to months, story we will weather look and spring a weather upcoming we summer. believe or As be planned quarter for

drives historically reminder, maintenance. weather, and a failures cold extreme hot, either As accelerated or parts

growth levels, a transaction it X.X%. decelerated growth versus Regarding as expected, was traffic versus sales seeing of customers. year, up It of we count come slight with retail, the from for commercial to due and was from to stimulus last to our pre-pandemic be existing transaction we slightly ticket enhanced saw in unemployment. the This us see be growth, the continue this growth and we momentum ticket strong, both domestic and most quarter's in from the are elimination to traffic our months. acceleration remain spring was our In encouraging heading pleased new trends sales although business, continues while businesses up into meaningful

to were there difference regions basis quarter, between country. some are. balance the of did better points as than mere there compared During and Northeast this that the XX quarter, saw the a But always others geographic we the Midwest

in gain and Northeast remain are suggests we markets. that in came of definitely our late January market continued winter to close. expecting the the in data most we share As Also, share Midwest, will gap

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

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

an $XXX and share, $XX.XX was XX.X%. increasing impressive was million income EPS a our net Our

Regarding our material, our retail than maybe the X%. merchandise sales categories less hard in categories, slightly but grew parts not business, our faster say, floor than

strengthen batteries Americans hard successfully performance customers driving select drive well. We've our more, like seen maintenance failure-related last in have more. very get parts our back businesses failure-related pleased believe year. As we've strong been to with as and our to rates especially We will that growth continue lapped business categories perform

me Let pricing. and address also inflation

from quarter, inflation. This saw we over by our X% sales increase

slightly basis. increases believe We was categories in of cost quarter both over goods through way be the like-for-like on as work many the key continue X% a our higher system. will merchandise up to and numbers While third cost their

has suppliers, transportation impacting As and inflation our rising us and space. aftermarket all raw are material been costs pricing, in the labor prevalent

our but higher deflation. following way will do is inflation, have about we of has We see we disciplined to decades to that notable no and typically say long not last, for that industry continue. It how pricing expect periods corresponding been this also

I While goes businesses. we encouraged will be to and difficult X-quarter basis and continue three-year that, midterm forecast current both commercial a consistent and that past stacked it the for sales. with sales the our our on say have sales basis, been is to near a comp to all environment, two-year DIY remains What

forward, excited it's our are we levels absolute growth about to initiatives. While predict difficult going sales

environment, Our fade, are even if believe an share term. we execution is trends our in for we industry. in for and that Currently, have favorable sectors. gains team's uncertain, we very the industry achieved near-term growth the solid these And positioned while exceptional the long that macro tremendous both remains over

our we performance executing on be XXXX, the our FY commercial sales expect by in we to as For initiatives. strength our led continue business differentiating

seeing will, provide and emerge. markets through we are As as color transparent as about what the our on and always, trends progress we outlooks year, be we

answer Before or is the pricing. no. philosophies to pricing past like practices. I'd call a if The changed from have handing resounding over Jamere, subject short disciplines AutoZone's of the And to address

done these not our QX and in two adjustment we commercial to initiated competitive a in four, with adjusted retail with but competitors. While were pricing be through channels, other quarters last year price pricing further some direct moves

Specifically, we mass, in commodity the on reduced retail our premiums business, highly particularly products. visible to

our significant commercial, meaningfully Regarding WD the change more than as our prices is service have level been competitors higher always, in our always superior.

or receive over premium too gap. service by been narrowed but emphasize roughly have for but sure pricing a make We advantage, changes our Our year premium the so narrow, I not we last that that narrow. must eliminate half. we

and our created this some productive While shown has think prudent have community, we a in results investment the that this consternation was decision.

market want are to leverage dropping rational our be it ago, when new in years that in have to We see is deployed. crystal assortments, to don't been local technologies strategies. anyone delivery clear. Hubs very We with as I clear, pricing. our three commercial about comprehensive want that continue Mega-Hubs, with and strategy we to times to comes launched new industry due I a improvements availability And solely as growth our conclude pricing

pricing enhanced. ourselves We those didn't with of remains and is our envision improved last pricing beginning we've execution WDs. stance. last at stated year's and to team's beyond easier any Our made that reductions versus do additional the QX, our year, deployed We've business we

the call turn over I'll Jamere Jackson. Now to Jamere?

Jamere Jackson

Bill, everyone. Thanks, morning, good and

comp in XX% EBIT quarter XX% As we a growth, growth EPS. Bill growth double-digit and a strong mentioned, a second had with in

distribution morning, us me strong first P&L to in our and for fiscal take to let conditions. this advantage the of our been To centers half in QX. for have specifics initiatives great deliver the few have remarkably a market and elaborate efforts results the on start growth take enabled Our AutoZoners results robust moments of to our continue of stores as the year our

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

sales me stacked customers let basis. $XX million company $XX,XXX, represented on our total a color sales. up increased quarter. our Sales of XX% at up were local business our sales our as broad-based program was for DIFM national averaged on approximately the two-year and weekly XX.X% XX.X% quarter, a and XX% domestic give with over million DIFM growth Now commercial to total in our initiatives. growth $XXX Starting were little and commercial our for to sales, as grew second sales per just again, the XX.X% both we Once and accounts our weekly

results and acceleration represent delivering the exceptional of business. selling I While is the the our the building chain. faster-growing that we quarter results highest second execution lowest are continue commercial in the reiterate quarter, focus for history on quarter to our a better-than-expected want initiatives as seasonally second is quarter to our our on volume

fragmented We winning are customers. of share business making new portion in highly our this growing in existing by increasing market of progress with the wallet and tremendous share

we're leverages program our approximately our stores, regional which our We business accounts. building have commercial with local our and XX% in DIY national, infrastructure, of and domestic

This programs, finishing new with opened X,XXX total XX programs. net we quarter,

and As our providing in remain believe of and dynamic. the XXXX reflects first in and in competitive we lead our this parts, the the the We way drive of year seven assortments, double-digit execution us the sales results service Duralast with gaining at to year, half quarters. continue the will delivering growth and has outset brand, share, enabled past for exceptional I and strategies the quarter our particularly growth FY improved quality said will second pricing confident commercial

notably, And Our accelerating an us core marketplace. businesses. even us driving for in position in are is growth and future Mega-Hub positioning retail well strong strategy commercial our and and performance our initiatives our the brighter

Let little me add more on a color our progress.

Mega-Hub more approximately to strategy fiscal the tremendous our year. mentioned now We I XX the expect XX quarter, last Mega-Hub locations, we us momentum. have given over remainder open and has of As

XX mega mentioned I commercial per was the significantly weekly higher growing the moment footprint. much the sales While program $XX,XXX faster balance average the averaged per than of and are a program, ago, hubs commercial sales

we are fulfillment additional surrounding as lift other leveraging the these meaningful our DIY learning parts XXX,XXX sales access What expansion market expanding network. entire As machine delivery business. our have we create greater our our parts and competitive as gives to driving stores. coverage to advantage, sales business, our serve stronger meaningful and ability store deliver closer times. capability but customers box a analytics only the a both assets tremendous product performing mega typically to for inside the well and and AutoZone a By hubs as sales drive carry individually, and our density source sophisticated, well the stores to we for and thousands drive of continue customers our learning, improving result, We're hubs an proximity commercial reach, and building confidence results. and to testing availability that in we're continues mega and predictive of faster-growing even of lifts lift The roughly to assortment SKUs to a availability are not is are expanded

side On of nearly three sales our up of points two-year and resilient pandemic. The since and share XX.X% of our business been domestic market maintained business the remarkably for retail the as we same-store on start the stack. gained business, have was X.X% has up retail a

Bill ticket inflationary an we with traffic saw go slightly in X.X% environment. mentioned, up raise as to to continue we As along prices growth

and driven, aging challenging leading in gains momentum customers and improve sales market as have and dynamics, growth initiatives new with also continued park, a share network. our car used growing expand shopping leverage trends and are assortment, our the car macro to These and customer fuel Our DIY. to along sales experience, Mega-Hub Hub miles for favorable in a we

as to meet have and to progress in and Our constraints needs. challenging made where improve our in-stock available positions, supply have were we able while navigate still are been to below a chain great environment. pre-pandemic, supply continuing product logistics customers' We've

market taking give to thrive us who of a in our environment. AutoZoners, are care key competitive customers, this Our enables that us advantage

performance favorable Now, get there's business have of comps exceptionally our remain macro for the that the half great due in year both strong, of XXXX teams. DIY FY XXXX. conditions in we back confident to we us, half no had tougher question that are fundamentals execution FY But back by the and remain our strong and

Now, I'll say regarding international words our few a business.

we're We with making Mexico continue and to progress in pleased Brazil. be the

the growth. and our and With the be AutoZone's in growth and rates three contributors over base countries, and stores finish on in opened line we a will contributor outside And growth both significant in finish earnings markets the just XX% constant now schedules meaningful quarter, disciplined basis, in countries stores with sales of Mexico growth to store an saw committed continue to expect future stores to total US our both to in accelerated future. to commitment be overall. international the attractive expansion During to way, we and store to opening currency only in a XX. XXX new Brazil We growth with sales two remain we new our saw both in with

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

our down the margin our in range gross first our the increased margin mentioned in XX growth the XX quarter down I we on XX.X%. basis year. mix, gross For where we where expected this saw as in coupled points, driven last previous accelerated the with basis a by the we margin to the that in points was have shift quarter's were in total but down our gross call investments versus dollars similar quarter commercial profit our business, initiatives, pressure, drove quarter, primarily

performance that primarily than merchandising through actions resulting in pricing slightly initial margin our inflation, focused expectations. driving improvements, has offset been Our team better on

in in with mentioned actions continuing inflation the We're call, earlier pricing to to categories, the our product continuing inflation costs. prior the see are transportation driven rational. center we Bill in As certain distribution versus industry's cost cycles, headwinds to along rising be consistent primarily with fast-growing year, and inflationary and offset take range our to would last by down mix expect third remains quarter the in business. pricing commercial margins XX QX from bps We

our primarily year points percent basis basis SG&A approximately operating expenses leveraged expenses. to up QX sales points. $XX of leverage Moving expenses, was by million strong our or XXX X.X% last pandemic-related as a driven and and results as versus year's The were XXX prior

dollar rate While averages, our maintaining growth. accelerated higher SG&A growth has than been historical a high customer we've on levels of focused of been during period service

growth an underpin invest will these to and at to also investments our productivity. in and IT pay experience, We in continued pace dividends user initiatives, speed, accelerated

with and on expenses be will SG&A line sales as forward growth manage we time. disciplined growth to We in continue over move

from of rest $XXX down versus million, versus was $X.X strong the last quarter $X.X X.X% million, at year's of prior up the to quarter our for at debt growth. EBIT the a billion line the top as Interest $XX.X end was outstanding year Moving QX by the for ago the billion driven P&L. just end expense year. the XX.X% QX quarter over quarter, was

million the last We flat interest quarter are year. with planning $XX of in roughly XXXX, for fiscal the QX range third

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

benefited quarter's year, options -- XXX year stock last points last basis it basis benefited exercised, points. while rate from exercised XXX This

of investors stock suggest before XX.X% model assumption option approximately XXXX, For we to fiscal us at on any third exercises. the credits quarter due

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

income the count a lower per up of $XX.XX, Our of It's than the XX.X% for combination higher earnings count diluted was year's second over share share prior last net to share and quarter. second quarter drove XX.X X% quarter. million year's lower

flow cash QX. free our Now let me for talk about

free versus year. million up and generate us $XXX in cash the of of X.X% XX.X% flow, expenditures, prior spent cash the the prior $XXX to in Year-to-date, million million cash, capital generated allowing flow For have $XXX $XXX generated second we operating million versus free year. up we quarter,

strong to forward, You we flow our continue should amounts incredibly shareholders. returning generator an meaningful going and to us committed expect of cash cash being remain to

last repurchase new year. X.X% less our the inventory, year, we below and over negative our in leverage negative mainly April, very per merchandise and per historic payable QX our of have the sheet, Net versus our assured negative due period and ratios strong Regarding our through cash inflation. as stores quarter. sheet, balance $XXX,XXX store basis, position also last our remains $XXX,XXX versus liquidity rest by defined X.X% increased managing as a our prepayment program on a balance inventory was but Total bond was remain We're inventory well the share driven last our excess a norms. exhausted up on inventory year accounts same and last inventories $XX,XXX store balance

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

allocation capital Lastly, our spend repurchased moment billion on quarter. I'll and AutoZone in stock repurchase of share We a nearly the program. $X.X

As we of the end outstanding. below of XX the million dropped fiscal quarter, shares

of program emphasis, million repurchase started share XXXX, we had when As in our we a XXX outstanding. shares point

had million. beginning X% we free outstanding buy we has back the less year the XX authorization. generated allowed of under cash quarter over of $XXX under the us buyback year. have shares we At fiscal just our since than to powerful Now end, share The remaining million this

enable this our long-term growing the and We of remain where strong return return target business. in business will amounts inception bought committed in cash strong our in we a of up, approach over drove area expect wrap sales, we To which to in back since capital buyback disciplined cash quarter, allocation investing in highlighted and and existing EPS. income another generate that had shares free XX% by very our invest a while increase our of stock X.Xx XX.X% shareholders. powerful the have comp XXXX, assets meaningful our to leverage to to the outstanding increase XX.X% in and net to us We flows

driving by shareholders. to and earnings cash our driving investing our robust We initiatives, are in excess and value growth returning shareholder long-term cash

work. to continues strategy Our

improving are We turn are overall Bill. market, fair shareholders. significant disciplined way. to value our for a to faster capturing competitive businesses back to positioning our growing it drive confidence tremendous committed DIY in a the our our significantly and and continue at in And I'll ongoing and I we now than ability our DIFM have while share to rate

Bill Rhodes

on you, Thank strong XXXX very Fiscal Jamere. execution. service a to start, customer and superior off we is and flawless focused remain

of sales tremendous over remarkable AutoZoners and on those us picture. I of of due volumes expressed continue is our a over have EBIT if XX-month success. of Our versus go based define the a XX%, had that and culture to exceptional each phenomenal. big incremental back our pre-pandemic, a increased XX%. pandemic, back basis want for will Six talk and our to very difficult to increased minute that the has would service business would step two trailing this about and nothing our on and of government time has months to consumer forecasting a historic variants, disease, the happened the years pandemic. you two contributions those on. future all to light years nearly was responses, short are sales ago, uncertainties: and has profits by as the to asked in closer norms. the have On But expectation into What competitive we our Throughout the profitability nine now is dynamics nearly some our us, and

sales this back If six as in the is will a months, of the corresponding have in true, suspension in shocks, difficult retail growth decline or gains may permanently from years acceleration all, XX the a pre-pandemic We nearly growth significant of material that are fourth be pre-recessionary share believe While economy significant had perspective to six it our our society last the the stimulus unemployment, consumer as levels. not to time both And and most, commercial. leading to positioning have behaviors the profits next holds nearly our sustainable. changed. if still improved, in and past and is without competitive is indicated predict and year by it XX has morphed, believe months we we enhanced very to our this last

has performance return characteristics. very flow it industry is but high unique, Our cash long track record of with and a strong

measurements As radically. we some the sales the the at we've begin to will skewed. pandemic, our become measure used to the pandemic, of all recently lap the beginning of our second performance anniversary of Remember, dropped

rebound sales and to several retail rebounded with XXXX took Our it April lagged months recover. commercials quickly but the stimulus,

the two-year measurement QX, stacked XXXX. For comps basically comp we well reasonably holds of delivered QX in overall as flat

However, that won't two-year to commercial comparison our measure be And for three-year in migrate We the to business the in light meaningful. would QX, as of XXXX, performance comparable. you be amazing in then comps. for overall comps won't encourage

continue in industry on our the favor We on to opportunities near our is for our bullish long-term. We in be and, the particular, XXXX. backdrop for macro and believe

Americas helpful the across they we'll advice. need get out be get when customers to out drive, and and and Our there want

together, worked with a collaboratively Our exist team good has for dealing suppliers, they have everyone. job very chain and challenges and the diligently our that enormous done with supply

retailers. our expect improving that we continue, While we they better our in And than also believe most are are we belief. and results, to stock levels in-stock that support

excess Virginia. focused so as remainder This And XXXX, distribution the historic acceleration open an us distribution that we further just share, centers have investments to profitable our a additional that Mexico enhance allow of store growth new pandemic, base in center in in and our new continued US hubs need domestic mega bit to fuel commercial now in center recently support the in our a we center basis. country. the a a announced our businesses. retail capacity also planning new to meaningful plan We're service have business. availability more California is We're fiscal more we're in we For distribution learned our as growth We on to and to are a XX initiatives. growing we XXXX, growing some In domestic in during exciting chain. fiscal very will to a supply but in launching in on open very always, distribution targeting of doing

at retail hub the materially inventory of many, our sales strategy times our mentioned As help core commercial is both mega to This years improving us for we've to before, is many and many come. expected availability. drive strategy

will mega hub Mexico. be our and leveraging We further in also strategy hub

to bullishness we open Americas These particular, in the growth Brazil. throughout year, our I expect our how in being acceleration their the proud to expansion on notable in We're than in fiscal the disciplined with investments more I our own for and reflect distribution For very new our capacity stores XXX across of prospects. industry am commitment and, being yet AutoZoners safe manner. and our reiterate a servicing we're particular, doing to aggressive. also centers, so want customers stores

And welcome to we on industry our and on flows I our to providing safe, and, look customers our to be keeping AutoZoners five on continuously focus bullish challenge now. automotive we customers will much very that will AutoZoners. very continue particular, extraordinary years greater even First for ourselves And be investors that company our much, like cash ultimately and measure secondly, AutoZone position while foremost, future us and from must success. our their with future needs. three by these our in during times what know We challenge.

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

Operator

gentlemen, two to ask and for questions open is Ladies person. questions. [Operator per please limit Instructions] all that Certainly. participants now We do floor the Q&A

Your Bret first question Jordan from is Jefferies. coming from

Your line is live.

Bret Jordan

Hey, good guys. morning,

Bill Rhodes

Good morning, Bret.

Jamere Jackson

Good morning, Bret.

Bret Jordan

Yes.

On the longer-term to Brazil three see do and of longer maybe or on term, of a Americas potential size five you how thinking expansion, basis? sort Mexico the even

Bill Rhodes

Sure.

grow the numbers, current believe kinds given the both said to the United continue we Mexico, in foreseeable So of at and but what future. is, can specific we we we States for repeatedly haven't levels have Bret,

We believe we do So foreseeable that in the U.S., XX the it's can that's to XXX, Mexico, XX XXX for future. stores, stores.

is it be larger than much So it's much, going to today.

just As far as started. Brazil we're is getting concerned,

worked there model were all careful for nine very over and us. years You this about sure very making been that methodical now, and for know, thoughtful and down we've we

Board to worked Just our about knew where works. for customers. ago, at we model the we that it felt was Brazil a now year We stage like the presented comfortable, the we're

in will faster But stemming it's us it now than XX-some-odd the comfortable long are stores, Brazil I long will much go. term, be for for larger to we growing way Brazil. financially, being up We with and Mexico out AutoZone. end works believe, over and a

Bret Jordan

obviously, guess, Okay, great. out contribution, business? give you any more seen of gains, commercial share the your us meaningful you versus either the side any And you within the quantified and any called And independent on at it's X share recently? gains, color have then national I points. DIY Could

Bill Rhodes

Yes, specific very business, We in have -- data. could. Bret, DIY the don't wish I just have I we

front-of-store all items. We have for POS data

And So during that with the seen that it's XX% crystal that's we share. growth gained give we the economy reopened. was up in And that pandemic, clear said, and the we as suspect would where we before personally. X%, some height Never are you. sharing comfortable of of we back over that which

not. have We

In with. grow top fact, very, that, of we've share very of on pleased we marginal been which amounts continued to

what sector how specifics, it share we're side but growing, that tool doing are two-year against we're this On a we we so the and we that have direct can't we're we this comfortable the gives you commercial basis, rates a of have business, the insight. or on we XX% exponentially many that the is the industry growing at at us But look don't when is I times sector. quite think that don't tell growing,

Bret Jordan

it's the sort comparable whether down a other, rates? than Do are or account, growth business and or you feeling the of have they national both is -- stronger up street

Bill Rhodes

times the as fast nationals during right now. depths of street. the down growing comparable pandemic. and up changes the as They're That the The very weren't growth over rates

growing I high at think that's now. both really rates. changed They're

I think the sectors mentioned for during Jamere both quarter. like XX% even

relationships up really for really both we So, and program with sectors And our have and of a developed that well. specific account we're really, are We've those our pleased. really street nice Vantage, down Pro partners. the call we very some national doing really,

Bret Jordan

Okay, Thank great. you.

Bill Rhodes

you, thank a day. Yes, good Have Bret.

Operator

Thank you.

Your next from question from Fargo. is Wells Fadem coming Zach

Your line is live.

Zach Fadem

good Hey, morning.

fact well the versus weren't So, availability today now been you as And where you price, and historical peers local last years? talk regional, think for national, can about serve? able you're do to price the how historically as about simply of biggest over share trending that for a your serve is WDs think drivers the sales the to your customers, Do-It-For-Me as bit that customers accounts, of of drivers certain that's across able you you or your and couple gap

Bill Rhodes

start. I'll Yes,

of business there's element, by of What strategy that are the is misnomer the in at are did looked methodology new Every it we core the not we about our our United that many in And did years changed They store think the of commercial an I ago today has We a further than at assortment element growth. in leans on States. commercial. our product a embarked strategies our that assortment a the different all ago. we four years store growth. every offering. pricing into four elements

in And significant We to are We've store. concept local availability? publicly, over go XXX. with get We've increase least market Mega-Hub a to called came this now also to had we how Mega-Hubs. said at said going we up we're XX going

and than our maybe time I will be it think we're both they be than it's do the to than of XXX, better as single feel that things them, projections. Jamere -- and Mega-Hubs, going time. testing more Every one even about measure we closer the every I XXX to like

and new decade of these largest So, the and, frankly, which immature how better we've endeavor they're at single taken sales relatively all was devices improvements. we history about doing the to develop times business. so our technology We've down near a XX% our techniques. we more handheld goal. We've those we we so times. deployed sales they We've as mature that's We've company's enhanced customers deliver commercial We're delivery picking force, we've delivery tenure, the products. that getting and the right in with drivers driving their and our products, got done digitally. ago. When far sure products, understand can brand professional, the nowhere And Mega-Hub interact they're rolled all out make when also our stores

category then stronger up have this to be pricing on national customers the in we prices then our with In So, transparency commercial we've front. customers we're that from see penetrate We that. -- And and level price down account street philosophies our brand don't somebody we're to become continues improving in every certain that day. stronger to different The and retail. really Everybody have else. going business gaps. Duralast and the our business, didn't board of are lowered can we that the retail everybody's of commercial different the going the priced same excited service have and be about across

versus We've including the cut, worked. So, I to distributors. them focused were was knew level as in gap of a versus have And total you that length testing, a the offering at price, – proposition remarks, we we of the don't of talked service making sure competitors We about it cut value our transparency. our priced. about we it that set We so year a premium by different strong cut about priced premium is after the warehouse been the called year value about because half. gap a gap on prepared Then said always proposition, them. we ago our

extraordinarily And So your with all X%-ish, to did pleased we've I XX% answer questions? over You call kind time. has embedded it them there. of worked percent. X.X-ish been that few in of had Zach, a how

Zach Fadem

No, no.

of So that the points your inflation? XXXX. Do-It-For-Me for to follow-up in three growth in volume you've see wanted thinking pandemic. And just terms still DIY the I versus was build are taken about versus to How expectations a just you whole that share great. I market since price industry on as you presume room of on

Jamere Jackson

things. our dynamics. you are few four One, there would at a if say I results So specifically, really look

holding. been The our drive has It's helped friend. higher and first to the are a volumes certain is, inflation pricing actually extent, us

maintain half, take similar in reasonable, dynamic. three same us seen inflation are frankly, for pricing we're business. a half. you that see grow, up could look back is in mid-single that an expect about where of aging gains I we is of those that up the growing quite as on this pricing the strength gains versus up points lot in level DIY shares digits If And that and we'll a the initiatives and We're the you We've pre-pandemic. and for seeing. we about park. then last confidence And we're hung share -- growth go to are we've which the that to then Bill we've in have talked car retails we've nearly you giving at if dynamic length talked mean, those driving macro at forward. talked It's us our commercial, both share first about, The us

the And actually look used XX% than the price general, you that those the have to encouraging actually cars sticker many selling at they're higher car that that just dynamic higher in you're their if holding. car You are versus used new values are maintaining customers prices I And mean, because pandemic. invest comfortable are seeing value pre is actually in prices. residual our up, vehicles

So as not pre-pandemic to fundamentals direction pandemic. see is levels when comps when the that we you the together, say going to back don't sales certain And date move coming or saw other, into levels. we'll won't what are things whole of to prior mix suggests the to those it all the while industry return that one We that you'll the is about a expect strong. be we

of confidence dynamics the lot and future. growth industry our the a about us backdrop So gives

Zach Fadem

for Thanks that. the Appreciate time.

Bill Rhodes

you. Thank

Operator

you. Thank

coming is question from next Nagel from Brian Your Oppenheimer.

live. is line Your

Brian Nagel

good morning. Congratulations. Nice Hi, quarter.

Bill Rhodes

Thank you.

Jamere Jackson

Brian. Thanks,

Brian Nagel

is you're issues not here second know of you are I again guess, from are issues. anything now but -- have your I to pass in to we the guidance, Is inflation, the factor higher in opening your sales kind fiscal anything say, these along them I what importantly, about geopolitical of price as to, concern And just together. climbing point probably questions. merge then I the seeing guess a is Bill, I strength at question specific health due all the gas I your to? look and you there on I'll so just I so QX prices does off, to talked inflationary sales prices, not States prices business. my there? mean, Do and provide is there two gas at gas you consumer? of those United first mean, ability in the in fiscal acceleration front. comments, -- is AutoZone terms into mean, more in QX, the

Bill Rhodes

Yeah.

great points, two So Brian.

First different of what versus of things there's a that all, QX changed lot QX, changed. and

I maybe -- or head going on in clearly, effect and QX lagging more to execution point inflation inflation in our execution. our had not in growth so. a lot think we're team's But we than a we has sales but and this hang our QX, a did material our our

accelerate So element didn't much. acceleration, and that we is an that of our

as our know historically, is a tenure until a it said a that here. $X we $X miles hit hits What fluctuated know, direct been be gas nothing once it industry And time Then what accelerated we've and between gallon, ton when hit that since my on there's think fluctuate a seemed a miles prices or you of There's historically a true And not as our if hit three I correlation this will a very up don't that could far almost gas driven. down. as followed long prices. they us, during it don't magic and significantly gallon prices you a correlation now gas two-year as long, two because points it's historically, business point and it, prices, you've it will it basis. and for gallon a business Gas time. see goes long I driven. we a point. in but know we result it impact $X again. hold if it in But We for goes to that gets of change to magic

So we've sometimes tailwinds like had. we're going industry to have

macro just optimize have based that to headwinds. business through manage our going environment. to this performance sure and upon we need the both environments We we're Sometimes, make industry

Brian Nagel

very Congratulations Thanks. That's helpful. again.

Bill Rhodes

Thank you.

Operator

Thank you.

Horvers is from coming question next Christopher JPMorgan. Your from

live. is line Your

Christian Carlino

be sales drivers chain Hi, the and some It's you're Christian morning. Carlino you year? you're supply just or on that to inflation, help guidance. second potential product calendar good of us of lay that And be going ahead Could not do I'm thinking lift out expect Chris. whether the for you understanding costs XXXX? the half of in how this it a to about giving

Jamere Jackson

Yes.

in seeing also inflationary passing higher like we're impacts, categories. the that seeing disciplined rational, it's been We're we've see industry inflation we the our given higher typically, costs. point in We've I providing. costs nature raised very And are I is certain as of about As this mean, we pricing that goods doesn't just We're retail that board. inflation. transportation remained inflation. mentioned the in across the labor and look the cost prices the And essential the important with line to we past. at are of what along done off, fall if the But just has we you industry, think recover pricing competitors seeing history demand is before,

been digits. it's we mentioned, As mid-single

expect the to similar dynamics in of raise half be you could year, and We we'll prices see disciplined back the that accordingly.

every than filling past. on we're at it in this we're digits frankly, rates. are inflationary lower-end of inflation side But care quite business. The inflation in to about from in take a I look other there's provided If It just a at terms customer at benefiting of And look our higher environment, transportation, the industry. seeing And are of benefiting that dynamics higher what look so even our is customers another year. and Xx percentage we probably you which as in of the coin, seeing our that probably an is own single customers, wage wage that little we're think low basis, it's isn't it that, that. rates maybe particularly you our wage wage to has labor, up safety if you rates, our goes as relates is AutoZoners net, broad-based inflation, in a probably more seeing inflation. look We're that, from -- bit seeing

the an would have in than more they past bit have environment. the little been resilient made a dynamics inflationary in consumer those probably So lower-end

wobbles this we're keeping but point, at So seeing not any that something our on. we're is eye it

Christian Carlino

the market your pricing sift you then, on Maybe visibility color. that all across you to to I How peers? really data, -- the think pricing And build Could the helpful technology should able are to commercial front? to I opportunity you're have of than, clearly the speak we guess, do appreciate That's out commercial to fulfillment on you that. Got better a through doing about some opportunity? of lot say, improve business. the leverage technology it. side

Jamere Jackson

Yes.

don't excited things that, are underpinning One store in the nature growth say is, things cost a of that to standpoint and out you CFOs help pricing the and the about figure pricing think hear us are growth investments we're the about lot get side, technology thinking they're on because that help business. AI development of able I'm only I'm making which to that. we're And in learning typically machine all really we're doing technology. in But the what how really and more using the surgical sophisticated making to from typically, drive us side a with we're excited improvements about really our And investments we're about that strategy. the

given our a And in field, about receiving pricing doing like I side do we're But technology AutoZoners that. technology advantage a more a standpoint. that are from and our as we on-the-ground what from indeed, the there. to using we're think sometimes with It's competitive little business. that us it's we you the combine intelligence of So commercial the on capabilities the difficult, bit

Christian Carlino

Thanks. very great a it. much on Got Thank you and quarter. congrats

Bill Rhodes

Thank you.

Jamere Jackson

Thank you.

Operator

is next Morgan coming Stanley. Simeon Your from question Gutman from

is Your live. line

Jackie Sussman

come availability. has product outlook chains stock two much on on narrow your Kind is been Kind is what Sussman Simeon. back? kind first an as and the Jackie over on in-stock question has how there? been the of for is of This supply last Hi. does quarter. advantage it Congrats Thanks. years, My a in great of just of

Bill Rhodes

And question, I'm gotten past and suppliers, time. we've good And really, the or compares at years. on unprecedented our data in-stock fantastic except over supply creative. during which have of direct don't couple a our lot team chain for competitors they've and that we a we've worked team, It's retail this levels frankly, of to walk-in merchandising our very of really really way proud really, our Yes. position with stores, how Jackie. general, in our done

States has merchandise into challenges getting Far team East all the our United logistics Our done centers. with the an the from distribution to amazing job

before versus is of points whack-a-mole. gains to has to another for our And bit to But we're category, back quantify hundred a got moves it's in getting had in lift, of a much and position, a basis, below an where into solve category, Overall, it game this better that embedded we've of us about. we normally. and art out. position basis level. is, too improved much it's how belief get just -- been to couple a better is then even just that little figure then in-stock it in-stock we share that a go of it Trying We sales still into it and category. that been our Our on weekly But today others. it's moves ways better

Jackie Sussman

products And kind of Understood. a you. you of bit Duralast penetration Have over-indexed Duralast you Which Got by about category? disclosed are are talked the brand. kind under? product which and

Bill Rhodes

Yes.

category. done obviously grow. haven't part our over We of to product said and hard We sales half it by it's continues

some years Duralast introduce listed top couple And in different in the or which categories that introduced we we which our brands went we Elite business. what It's well. commercial development as categories has it of is A added the too added never commercial chassis, well. Duralast brand one program, ago, had we brand, extensions. years We've the category. number three Gold really line Duralast continue piece the we We in did by doing category? two strategy struts. to in said, Not about shocks done four and of part sold we as two ago, extremely the brake are ago, by and product market and Duralast interesting, was research pad And long

just to label. So it label. commercial And trust. in we had been got People the interesting. turn shows was private Duralast have you customers if the decade, it's overall We've said our continue have back and brand. it private high-quality We brand, of the successful power have products clock couldn't and turn would you Duralast because a the to we don't that

Jackie Sussman

great Great. quarter. a Congrats on

Bill Rhodes

Thank Jackie. you,

Operator

you. Thank

Scot Truist. from coming from is question next Your Ciccarelli

live. is line Your

Unidentified Analyst

is question. I Hi. just on Joe a for [ph] This Scot. quick had

in do success the Mega-Hub guys could have that And an rollouts going acceleration strategy, does shown what of you we margins? look like the you see Given forward? think for and year these next

Bill Rhodes

answer yes. Jamere, Well, in some store Jamere answer is you him. color? I'll The add for so want charge it development to is of

Jamere Jackson

for these year key sure making is and writing my assets. plan us for You're we development Thanks. The this year. that leverage next

mentioned, Bill us and DIFM dividends our paid for the on to lift Mega-Hubs business, benefit going down we've expectations. both time building As to And business assets proposition our every put for we're overall Mega-Hub a and go doubled strategy, to are it's our our the ability in faster. very outperforming further the and these strong a market, provide us. DIY there's network, The

we're a One things testing mentioned Mega-Hubs higher marketplace. in the of density is I of

we markets do that doing to double a are typically close cannibalization so that put in and It's too if way and You the analysis it's we're about actual get what to we're overall our finding the parts research from bullish that into we're we're is based the But we stores when going on we're that's disciplined and is proximity expectation. lower. marketplace, those on or assets we've worried you a standpoint. exceeded lift more results and seeing, it. that that's why why done Cannibalization down and a the

Unidentified Analyst

Thanks. it. Appreciate

Bill Rhodes

Joe. you, Thank

I reiterate. a want solid. strong believe our to position is industry our a call, We Before business the moment to take model is we in conclude and

as shareholder year, take us customers our on about focus we with continue the excited confident Have a understand Thank and prospects nothing growth for day. the basics we shopping are participating successful. the our call. we as much We optimize for and of to in today's continue can XXXX, you we to to very granted strive FY are will for have alternatives to AutoZone for value great be remainder

AutoZone (AZO) 1 Mar 222022 Q2 Earnings call transcript