AZO - Earnings call 1 2024

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Operator

Good day, everyone, and welcome to AutoZone's 2024 First Quarter Earnings Release Conference Call. [Operator Instructions] Before we begin, the company would like to announce the following forward-looking statement.

Unknown Executive

Certain statements contained herein constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, position, strategy, seek, may, could and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we will appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation; product demand due to changes in fuel, prices, miles driven or otherwise; energy prices; weather, including extreme temperatures; natural disasters and general weather conditions; competition; credit market conditions; cash flows; access to available and feasible financing on favorable terms; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws and regulations; risks associated with self-insurance, war in the prospect of war, including terrorist activity; the impact of public health issues; inflation, including wage inflation; the ability to hire, train and retain qualified employees, including members of management and others key personnel; construction delays; failure or interruption of our information services technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyberattacks, historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation, challenges associated with doing business in and expanding into international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; impact of new accounting standards; our ability to execute our growth initiatives; and other business interruptions.

report and Factors discussed XA XX, section X our risks in more under XXXX. these for of Risk XX-K the contained annual of uncertainties ended in are detail Part the Certain year Form August on in Item These be should factors carefully. risk read

adversely actual factors above those our Forward-looking such contemplated affect and future forward-looking statements could and businesses and statements. of guarantees developments are described in by risk the may materially not Events performance results, differ business. from

However, that identify it factors not or forward-looking speak is predict affect other made. statements statements could be and only should understood date possible to or only all to such that the these risks

forward-looking required as result by future or new a applicable events the information, publicly of obligation Except any whether statements, otherwise. undertake as we no law, to update

Operator

It over floor CEO is Thank turn my Chairman to AutoZone. your now yours. Sir, you. to and Bill the floor Rhodes, of pleasure the is host,

William Rhodes

for joining and Brian Phil Good Daniele, Tax. Officer; Jackson, Financial morning, President, are and Chief Quarter today CEO-elect; today for thank Jamere us Campbell, Call. AutoZone's me First you Investor With and Relations Treasurer, Conference Vice XXXX

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

to in solid contributions the resulted during we As our we their begin quarter this thank our for want AutoZoners morning, performance. that

while us per sales with which profit lead we total first, by both pledge X.X%, impressive share very teens grew our our grow earnings high rates. operating allowed As our and by to customers states, putting

build phenomenal on As we to continually XXXX. from we pandemic years able have been performance of the the said, to have XXXX previously

sales XX%-plus over were I X to are this team our now, perspective, $XX.X impressed enormous time XXXX trailing continue billion, X-year with horizon. put billion. To quarter to in increase post-pandemic a our a sales made leadership Congratulations performance. who FY And possible. be and sales that Our success everywhere our AutoZoners $XX.X

first the a basis. constant were on same-store -- sales our company total our and For X.X% quarter, currency X.X% sales total

international more part and an quarter, again, constant where currency our international, strong encourage As quarter, growth began deploying had of disclosing a has on are focus a comp. you our capital, sales become important where increasingly global story we area XX.X%. we to last We number up the

Brazilian and double-digit same-store had Both sales growth. our Mexican

excited growth short- very the of long-term about and prospects international. are We

we are openings expectations accelerate Our will of international both years, and ultimately continue the we to next store in XXXX. by stores new mature store a and DIFM, both over XXX several plan grow getting to to volumes, minimum DIY new

this up Next, year. domestic X.X% last same-store of our and QX were X.X% to quarter compared last in quarter sales X.X%

last X-week Our sales Breaking retail our were still the X% the middle first our performance in X segments, were expectations, sales environment. X% segments, but the roughly for our for and in but into DIY October. X-week in was resilient below X, same-store current both slightly weeks negative still,

Commercial we we but quarter, than accelerated finished. sales, other stronger for the on started hand, the

was years each of As over of were the businesses similar. know, last a performance the the comparisons the remarkably X-year you of few quarter And some basis, distorted. on this

strong Our last comps against year. exceptionally X.X% commercial business grew

are the on to positive and having have those to by new continue performance. efforts in impact be in top encouraged we Importantly, place growth a line accelerate we our commercial, initiatives

the Midwestern our regional clearly between markets performance as period basis Northeast we of further specifically, impacted the point country. retail was And gap DIY second analyzed a and on XX rest saw slowdown, we our our as and results and basis DIFM a versus sales the business

We this snowfall. of happened the But us." in gap about enough to continue of "what attribute weather to year winter to lack and lack performance last

our not encouraged retail and highlighted enjoyed at in retail sales are that levels, commercial encouraged -- businesses. While we we domestic businesses with are that steady not gains We performance, domestic as we and we seeing satisfied executing our we and are unit both share to share previously progress. and dollar were peak

domestic elevated, to The Turnover, levels pre-pandemic time adoption have in-stock a decline. first to levels. technology leading have decreased improve higher improved. of distribution history. we And nearing programs, times. Productivity levels levels significant to Our deployed are rates, centers opened penetration XX% delivery much seeing in we commercial still while the customers our is is our for in commercial reaching to number new beginning service

seeing Even strength are from many new in only those continued more the weeks as openings encouraging old. we program sales are is

Now Phil? to the I'd the over call to to -- on the more quarter. Phil give quarter on turn like Daniele color in-depth

Philip Daniele

and Thank Bill, you, good morning, everyone.

Our sales domestic year's growth. X.X% top quarter same-store last were X.X% of this on

improving many the long-term the voice share same-store strong AutoZoners placing are reinstituting said vitally moment we that a we year commercial, progress I Bill exceptionally of meaningfully. against across from to ago, changes we in a making right organization particularly in up for are we've more believe room to areas, hiring important with processes were from what we made reiterate sales our and execution many ensuring ago improvement. of is While want

pleased still this We to Our but the have with do, saw X.X%. business. we were grew we domestic business improvements commercial in work

quarter sales. quarter and the As $X.X grew record share auto in began represented the domestic another we commercial improving, XX% with billion sales of for our commercial business sales set believe Domestic we for X. part

years. been driven for have growth by the we several continues sales Our to last on working the be key initiatives commercial

strength high-quality store adding in that coverage, the new intense to and inventory business the availability, with. us and focus improvements Mega-Hubs, of Mega-Hub Hubs brand make an material products Improved enhancements with technological Duralast Hub satellite and do easier on

efficiently sales are more delivery We enhanced improvements with also operating effectiveness. and in times force

XXX majority the of in them programs of the in back XX opening opened half quarter. opened through of programs, week X those the QX, XX we XXX commercial In of net the new quarter.

us programs quarter sales for in minimal have opened remainder While for FY do that the the and they growth impact late on 'XX position quarter, the beyond. sales of

to our progress As shared, of domestic I of the Commercial, penetration. Bill want as year continue should get made of didn't now sign growth believe was as of we business that approximately to easier last reiterate, comps have improve our will of will improve. that is move and or through in We the and XX% rates get we we've years When we X stores. execution really over so. stronger line commercial the SVP our sight have a previously level great commercial It reaching I to

domestic last had of quarter X.X%. year's Regarding on flat DIY, this we comps top of comp

gain the seeing industry. us is share both While units, we across data our we comp continue line in indicates to our have to dollars and the what expectations are but below we available with in

quarter. weather, of winter. mild this It this quite summer when fade was slow is will down year Regarding our into sales it the time sales as

was year, This the in Northeast and in part than year, the sales remainder categories hard weather-sensitive the underperformed of country. last October warmer the Midwest and

the comp X the the weeks flat quarter, comp X% last comp retail and comp X weeks X first saw was X.X%. X%, second weeks up up While for the we down our

retail clearly weeks last performance of for the short full over we quarter. improved quarter, expectations X the of our fell the While for our own

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

versus in was similarly. traffic our while this traffic Regarding growth, ticket our quarter's ticket was X.X%, retail, down up

last increases expect more from from our get we to growth significant the particularly X% removed large ticket X% We return to in the costs. will inflation, due to year freight further levels normalized as to range due

continue we for ticket. see trends, commercial to for traffic growth rates relative ticket -- our Regarding higher to

During there are. regions did that the than quarter, geographic others some there as were always better

saw between and the XXX to compared balance performance worse basis This point Northeast the the of a quarter, Midwest country. the we

we in part As below-average sold last the a experienced weather-sensitive parts the with Northeast of and very year, mild winter less country. this the hard Midwest snowfall,

into Heading volatile performance we meaningfully But always be most a either that second QX a impacting normal weather are positively fluctuations the our is pattern. our as extreme, negatively. reminder, quarter sales planning short-term as weather or more for quarter, can

Regarding consumer back feel We retail categories categories our as sales more pulling we hard saw business, on merchandise low-end discretionary purchases. our do floor discretionary parts customers. from in the started the underperformed pullback

me and address Let pricing. also inflation

our for will be to quarter that we decades, industry inflation. year migrating and pre-pandemic single-digit that as quarter, inflation pricing low expect a roughly ago. very second And is inflation levels, from I as back industry lapping saw up was reiterate X.X%. the result, the high we very ticket about has a This disciplined continue. similar inflation to for believe been We to want our

not entered that higher reduced It following and periods. industry has increased pricing inflation, of we into have industry to to has those our we historically costs also have the lower as is reflect maintain one of believe periods notable cost, Historically, increased, pricing margins. commensurately

remain sales For the our second to commercial sales more DIY trends to quarter, improve. difficult we expect our and

will, We markets and about be on trends seeing outlook are always, our what provide and as color we emerge. transparent as

and call other business color on highlight Before handing to of Jamere, give year. new key I'd the few some like for our the a to priorities fiscal

are Mega-Hub rollouts; availability. construction. progress domestic along First, we having to continue centers under X Hub transforming drive supply One good in on network, currently and chain on are X flight distribution initiatives and our we with our our improved that to is focus expanded making with secondly, distribution

more carry with closer Our leveraging the on growth inventory drive and customer entire to to availability network speed strategy is expanded to and efficiency. focused the

XX% internationally. at businesses a plan to to fiscal opened for performance grow continue to our we remainder XXXX. stores continue robust impressive store XXX pace had At base, and Additionally, total of the grow of last should quarter these internationally or

in Brazil. refine the many leveraging Mexico are of to We have our U.S. offerings in the we and learnings

call over to Jamere I'd Jackson. Now the like turn to

Jamere Jackson

good and Phil, Thanks, everyone. morning,

As discussed, with impressive total EPS. year increase comp a comp a XX.X% constant company basis, top we domestic last a Phil growth, XX.X% currency stacked growth, previously XX.X% have EBIT quarter and solid first first on in had of on both X.X% international and increase an in X.X% quarter sales Bill an

continued the in to meaningful We growth in centers drive solid of efforts a results, storage earnings continue enable our AutoZoners us deliver our distribution way. and to and have to

To few specifics for me morning, to elaborate start moments this a -- a the take let QX. our in make P&L on

commercial our total me more Starting let with our quarter, a up color billion, were domestic X.X%. $X.X And sales the business. and initiatives. give For on sales growth little

DIFM XX% domestic and sales. sales sales Sales company our basis. of of X-year X.X% domestic to domestic $X.X DIFM customers stack our billion Our our up XX.X% on and were XX% part to a auto increased total represented

by It's Our that the sales was average of again number opened per last productivity percent. to important out program programs were large over down weekly impacted sales have point $XX,XXX, a X per of six program a that tenth our immature quarters.

and programs our While these point-in-time early we're the metric, contribution business. productivity by these to the depressed gross of their encouraged openings prospects commercial

have domestic in our opportunity our XX% accounts. programs infrastructure, opened in more now with commercial storage intentionally and building the commercial response We market approximately stores, regional to we're of share. program our to grow with business national, see have tremendous leverages and local our which our DIY we We

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

acceleration progress grow our by initiatives new we increasing commercial as with share make of and share continue customers. Our business wallet to winning existing

more the locations a commercial of have will of Mega-Hubs opportunity. to to overall which growth growth, QX. we of business Mega-Hubs our us, in XXX the in largest The averaged now Xx continue lot we opened in continue programs higher we sales than Mega-Hub of grew opportunities significantly commercial support XXX and our X growth we with in believe new To the rate aggressively and our front is commercial commercial, runway single balance QX. than pursue have Importantly,

our and commercial for parts the inside performing our is These entire deliver drive and As a additional parts the tremendous and typically the and surrounding serve well giving sales are as assets an other a continues and XXX,XXX for our individually, capability AutoZone both business. access to meaningful stores. thousands the expansion sales as of store DIY lift to of network. lift lifting well stores reminder, to fulfillment assortment availability customers source as The SKUs carry Mega-Hubs expanded box coverage roughly

the future, in to expect north in we And on build-out. have We XX for but these and pipeline are will XXX of right rapid open focused continue full the to boxes and we and currently foreseeable locations, difficult aggressively are the expansion growing. Mega-Hubs to Mega-Hubs keenly have at find

our business, retail was quarter. flat of On the essentially side our the domestic for comp

ticket As growth. down mentioned, we traffic X.X% saw by offset X.X%,

parts. technology As we of by the to mid-single-digit and historical see move declining in forward, counts, line durability new we the with would driven growth, slightly to ticket offset low business, the changes expect in trends transaction by long-term for

purchases new discretionary market challenged existing likely is invest used in car and see that DIY aging a continue and to QX, to were park, and to challenging a While consumer sales growing car their we a vehicles. in continue

business the will resilient such, 'XX. As our we FY for remain DIY believe balance of

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

continue with pleased making We be we're the internationally. to progress

Our grew constant a on on and XX.X% sales basis same-store XX.X% an currency actual basis.

X We And success, the in in international. international remain During with and to contributor meaningful and XXX. AutoZone's X opened stores attractive XXX quarter, on our future we finish stores an with being given we're Brazil, ending to stores bullish committed growth. Mexico to

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

For quarter by LIFO $XX XX.X%, a versus primarily noncash was in credit $X points, LIFO our the driven quarter, up a million margin gross year's basis last year. XXX million this charge

improvement. increased XX quarter's point point from which strong very a in had margin, we years, both from gross basis basis last improvement XX LIFO Excluding

We've on million an currently will back in will credits, margin out we've over had LIFO XXXX. QX we through this unrecorded I through the once And previously, cumulative at FY had improvement. QX. in for margin $XX as I highest more credit reverse take And experienced modeling to we million now rate yet $X gross in LIFO any we to in point will P&L, P&L, We're deflation said expect credits credit fact, and we million we're rebuild the time. exceptional be since we gross balance LIFO our $XX and reserve. reversed begin charges have to the that not the based

to operating expenses. Moving

basis been up we versus were X.X% has percentage QX to initiatives. underpin last The paying with over being our deleveraged will dividends line year's to are in as disciplined as experience, IT SG&A we store as and manage growth in move SG&A and invest to we XX a payroll investments growth of sales SG&A on speed forward, sales as We're points. in expenses increase customer Our committed purposeful continue time. productivity. expenses These growth in and

the from quarter $XXX end driven the QX XX% range for prior the the to was same-store FY for interest growth XX.X% the $X.X year as was by favorable and of expense rest margin improvements, versus the Moving Interest LIFO up EBIT $XX.X gross comparison. including P&L. quarter year-over-year for quarter $XX.X at up $XX million, million our end last positive 'XX sales year, year. was last outstanding year. ago, We're planning versus a debt of of in at billion the expense the second QX billion the versus million our quarter $X.X the million,

Higher are debt levels rates the curve and borrowing driving this increase. across

quarter, rate For of quarter XX.X%. XX.X% and up first the tax year's our was from last

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

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

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

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

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

we For the million generated flow. in free first quarter, cash $XXX

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

Regarding QX our long-term target. X.Xx our and liquidity finished returning very at EBITDAR, position balance our leverage remains strong, to our sheet, ratio

versus a negative accounts while a inventory, store of versus store new quarter. last on a as inventory a percent up X%, negative total $XXX,XXX driven $XXX,XXX $XXX,XXX defined less increased by tens Our per year, per basis, store inventory Net was payable inventory last three last was merchandise negative year, growth.

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

in earnings, remaining free capital repurchased just program. balance allocation moment on under to end, at allowed and shares generated We cash $XXX a $X.X the year our the quarter repurchase stock X% of share spend the buyback strong our back outstanding has had this billion authorization. share quarter. of The and AutoZone powerful us I'll million buy and sheet we over in Lastly, quarter we

investing have capital to will existing to buyback amounts our of business. and cash XXX% in XXXX, our committed the disciplined allocation to meaningful of this in while growing inception outstanding assets We shares since in invest us back approach over the and of business that We then bought shareholders. stock return remain our enable

investing we a international shareholder that way. our fast-growing a to behind business, improving disciplined To look by earnings we share, margins our growth bullish in our business remain our positioning we're remainder robust a wrap as our DIY up, committed growing value returning in market our forward to reaccelerating. long-term on We're FY and excess initiatives, driving business a competitive expanding driving resilient And domestic cash of and cash and to 'XX, prospects and growth is the shareholders. commercial

drive I continue and Phil. confidence turn And strategy, to our ongoing value ability have to for to I'll shareholders. in in our tremendous our significant back now it

Philip Daniele

you, Thank Jamere.

During year, meeting our the theme new year, the the quarter, At our moment launched and Pledge. takeaways September. we I'd launched key like to sales we a discuss our the in to meeting, the national Live fiscal for from operating take new

have used put, theme our us we Simply it everyone deeply with else. it While AutoZoners. this resonate previously, to differentiates from continues

our been is the putting higher. personal we Board culture. The and core leadership team-based energy by and of and solve a of team I, helping goals our challenges It is approach on vehicles. their our ahead contributions at performance of is defined It event of our performance, customers' everyone's goals. and our The has based optimizing the culture, recognizing pledge team can the never never believe overemphasize

career our and our and AutoZoners. it's population AutoZone It yourself people, The at great summarize to family And It's our operating about values with comes the mediocrity. about it's responsibility, performance, Calling so exceptional about much more. the and not a and succinctly. diverse AutoZoners, it's standard unparalleled family. providing a customers pledge both opportunities sets of about caring strategy our

priority top XXXX's execution. enhanced Fiscal is

strategic many have stages projects of varying in completion. we Additionally,

opening a -- will focus XXX annual to by XXXX. as We and distribution continue new construction the are centers growth domestic we new Hubs. facility store direct of our ramping achieve store on optimization new Mega-Hubs our Constructions are our and international on our and new also up import openings

a on strong As of noticed, higher posted much sales domestic has international years constant few teams now. you XX.X%, basis International for comps currency same-store than our our comp. a been

these of one all mentioned growing believe I have be in of business. the growth While in in remainder We year domestic we will on the share for place number the over 'XX, focus investments plan FY a our XX for the months. next solid commercial

our focus on lead availability know will customer to service parts growth. and sales additional better We

are accomplish We we excited what of can year. remainder about the this for

like update to Finally, plan. transition our I'd leadership you on

Bill move President and and Executive month, role. one honors will my will will CEO. to I into Next It greatest the become become be of that of life Chair,

role an exceptional prospects ever be And while new will a and that an culture team. extraordinary you bullish about know have to I come challenges, seen, in because evolving opportunities have continue very but and terrific with I as we industry the

Bill say, believe As it it, but we days lie of and best I cliche, us. both a continue both sound to ahead bit may and AutoZone's little

had this leaders his long-term senior for tenure I legacies leadership. will their for service in contributions Executive company coming Pleas over years also the wonderful I They to him I'm amazing new X their contributions Saltiel Charlie teams the with XX nearly have his of and XX, they be Bill to and this to thank and role success: continue contributions evident and experiences built decades. AutoZone. thank XX thank have about as leverage those the make opportunity to leading and other teams their to him our an will and want Grant to Chair. his the want enormous Al in excited for XX-year McGee, respective

next I Charlie Sue, of happiness and Al chapters. congratulate each and Bonnie, in them and wish and well-earned Doris their Grant and

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

Operator

question Your first Jordan Instructions] Bret Jefferies. [Operator coming is from from

Bret Jordan

you Brazil about to much bit I a compares versus it the that? be going margins the phase to ramp more more difference? there, how Can required And international that's to be there is U.S.? going we And Mexico, see what guess, guess impactful investment in is I to an since that talk is

Jamere Jackson

been in from the and about rates operating particularly margins, healthy you that the the Yes. margin the on our you much a Mexico, very Brazil, more what we're very think side cost us very mean inherent able it's is I on business, we've a pleased have operating with and than both we margin which in total if progress that then have in we're And gross that pleased structure with given Mexico. making mature margins. with merchandising and the also business. margins obviously advantages to we've take standpoint, in gross In business been very standpoint, a wage labor, margin of from a attractive structure that's actions

business Brazil over And and we scales in matures believe similar advantages our as see time Brazil. in we'll that

net-net, margin on while international the with along a of going lot So also a to it's have we're come it. fast-growing that side, doing calories what it's business,

William Rhodes

Yes.

would I still in that we also we're continue think to money say losing I Brazil, there. add,

over we're with are in X we've ramping what We're our seeing that that store an years. investment of But the or operating count up losses some last very with So consistent X been comes kind aggressively. phase.

Bret Jordan

guess tip margin case. the would seem in I need into to to high I Brazil that what scale kind you very mean profitability? of incremental be do

William Rhodes

of those of XX expanding. opened think very that's the last as new are new months. But stores Bret. a or very we're in right, I I we've And stores have stores very lot a XX lot in immature. -- frankly, so are whole that we markets mean,

they're a good but now, see So new mature. not headwind we've causing pretty unanticipated. got stores new to markets and Right those how

Bret Jordan

The chains Do-It-For-Me, national account, performance? channel follow-up. Quick any dispersion, service tire independents U.S. Okay. versus

Philip Daniele

is. there Yes,

the focused most. have struggled at performed the lot a to the street big back And and accounts, well. and nationals tires, on are the really we've down national the ones business those folks been where talking goes the and kind up this getting happening the get the parts The If you year, pretty off they rate. particularly in that traditional the there conversations have of about has looked at They frozen the we weather just or not shop, take lots organizations the of power the tires local same from and rust of rate had aren't or it same previously. the tire see those job. those last That's on the at calipers off, they just

Operator

Your is from from Michael next question coming UBS. Lasser

Michael Lasser

performance the you run. over acceleration, Given this of quarter, And is commercial Do while the the eventually? you more of domestic fall to anticipated was achieve goal for performance in industry short an of did be still an it there AutoZone to that this stronger long business that is dependent the that goal? double-digit had achievable think it level order on the

Philip Daniele

Yes. Thanks. Great question.

that back disappointed happy about we're this term, commercial of faster. side to to because get to that the progress question we're we with little long range. X% have low growth types percent to frankly share we as such accelerate with said, the thought yes, particular those X% our think your growth we commercial the making. particularly of double-digit bit quarter. we on think we happy can time, And in I it, would We're but business over We're accelerate for slightly it a numbers

we the to we improve comps be X last And have execution, mature to to stores expand the believe over we we continue a able continue our continue believe continue our space. as opened will to DIFM that continue So quarters time, we share. we over to these in and we've to our grow market will long newer

Michael Lasser

make My long from roll drive you. bit back down. It faster sustainable? to Retail there a question prices the a seems like gross quarters? the margin. stable. And order might in areas coming costs is in some coming is to there on to is Got in business right certain remaining follow-up where is now a grow case How is benefit retail sense that it the

Jamere Jackson

one, merchandising the comprised Number Yes. merchandising standpoint, We're margin and pleased us job that pricing margins, it's done on a inside our a pieces. we're cost from gross tremendous job gross and of of we've a organization have we've there. with made and margins, great two that doing accretive finding progress given opportunities really opportunities

that, supply of work the done element has the Second chain. that quite inside been we've frankly,

some this chain you But so as the historically abated. business fashion now starting was the and of improvements those over over from see a margin been cost long very If out standpoint, have last some pressure term, our a I couple tremendous if we recall, look to supply to years you under pressures have over of disciplined or at able in gross we're mean, time. churn positive benefits

able good predictably investments marketplace. those and this to to pricing enabled earnings But has feel grow point to we're a said when move very standpoint are and we've improving results at we need it certainly us that pricing as the operate we're pricing units our And to We of environment. grow dynamic at very in point, But shape environment, as share. we pretty is be the us we and continue don't any pricing if feel competitive think forward. about to And we a we reiterate, this and we like do moves, where make have if ultimately from growing business those EBIT. the terms do pretty in make that we'll in in to

Operator

Your Cowen. from coming next Rakhlenko Max from question is TD

Maksim Rakhlenko

of as you're any level from the ago And WDs would as compared can well environment? you both a seeing the quarters And frame competition couple today then first, competitive speak changes pre-pandemic? there? of the to So if you how to

Philip Daniele

break parts. up into Yes. two I'll that

If changing from a not very of the time. whole competition. of business very we've there's long you think competition, DIY appears a that lot That is the period strategies for stable pretty a had stable, about base there of competitors new and or

other folks, lot ago -- the call O'Reilly side, on a our not kind strategy. about years DIFM of close-in pricing than or you competitors what there the X.X of think public On changes so what if did our we or their

struggled On with of the have time look to things you key kind that believe at in categories the versus today, some they some WD pandemic pandemic. over think I we really the side, one of is in-stock

they or more the say, of key become a and so, has, everybody returned categories, that Over they to on a they've players, year more acutely in-stock normal impacted it appears probably lot the levels. more those were than last, but have like public

not we're reminder, of we pretty to in-stock, but close. our back still a levels pre-pandemic As darn are

Maksim Rakhlenko

That's times it. the on And delivery then improving guys few you times Got remarks. touched a prepared helpful. throughout

how can then think now have in improve? much what to average delivery the should speak markets And get your cadence room you we just And there? the got about order times you've you Megas? So to the then are where in to more do

Philip Daniele

just depending can times to to proximity can the has or different store wildly Mega-Hub. And on Yes, a given through be a directly. delivery Yes. we of differ close parts be shop on and be Mega-Hub expanded what how call the that Hub may times wildly if relayed or store deliver or inventory part or delivery a it

delivery you're XX-minute of kind average times, that Our thinking in range.

X minutes. So is meaningful, X it a in be may but times XX% improvement pretty delivery to

sitting turn matters customer a when is there their bay. trying to that And

of leverage us So strategy key it's times, and improve customer delivery because we believe we'll a our for measure continue a service. to and that's

Operator

from Horvers Your next question JPMorgan. coming is from Chris

Christopher Horvers

everybody. to Congratulations

more wanted I broadly question consumer. the to So the on follow about up

You some the of tire talked businesses weak. remaining about

start discretionary and typically that front-room a is just some I much about the before the you of to see as consumer you releases? of you deferral talked seeing category that's potentially think to that Are slowdown you as this You of ultimately And in DIY. we're demand guess, point how that? think see evidence you in still the getting do front, worse sort of in that a building do pressure starts defer? consumer

William Rhodes

Chris. question, terrific a That's

and back step a talk this Let's basis first. long-term about on

been more i.e., talking about and more consumer. tough those business retail other long think retail time. about we much in a think the you which it times periods the any we've lot have If so of than the so over Much have time, the periods experience when business, of of you strength the don't more outperformed recessions, where time about we periods happen, of spend

retail the certainly trading product there's going business, on the We down don't assortments. So good, best we better, of a whole lot some in consumer. time spend down see the

we commercial this haven't for the extended haven't period we time. side, in that in of because we an have at think business proven been yet that sub-positions I level

DIY think trying may The would consumer we trading DIFM more I save sentiment. from as us in encourage into to all in be jobs believe they're there on money. I minor consumers fluctuations than are thing some that so focus certain that to

and the the extremely second enter thing quarter impacts the we worry in both one positive negative. and always they our second big weather on are As have is about can quarter, volatile, patterns I performance, the

sentiment. for Northeast, If we've we than and implications of term fall those bodes And months. particularly the the the said, have Rust we're that impactful us. in can then of the If the Rust snow and well as in thing have even is near that we get summer Belt, bit To impacts that's particularly ongoing the Belt to spring consumer significant the more we me, weather, in don't, as in the happen into a little get and a going to going challenge. ice,

Christopher Horvers

December comparison pretty a seem think you so to last gets was it the a of past year, tough, but winter the in terms warm follow-up today, last weather impact, good So look that, would as it was record And as right? like year. I

sort look of bit the guess, start being crystal I think ball, up So second you to a you of there's your a finish stronger ends as and weaker quarter? into do

William Rhodes

had holidays March, the of well. meteorologist it particularly this snow lack around go there Unfortunately, the into really, business we temperatures. Yes. business ice in of and the even staff but years, moderate the weather not Belt, quarters, And beginning we're weeks We to fairly implications And on, at for we a really not here have okay, end don't quarter It's and for couple thought, responded was day, the January, significant decades. our of on was and February, last running the going the interesting, Rust either. Chris, because out. And then year, weather. for they're of weather no a the

caution weak how the strong change quarter we can have beginning everybody of by approach really the sure I performance need our could over at term. that just to and second performances long weather, doesn't have and make we to driven always try strategy and that the we really

Operator

coming is from question Seth next Barclays. Your from Sigman

Seth Sigman

of to over It really few has I programs been sales the wanted last like Obviously, growth accelerated follow comp new a when time you've the up seems rollout quarters. basis at on commercial. on a lower.

So want can your you be. about it to you driving levels just where decision think help understand what necessarily around in-stock improving, but that us we better right particularly not now, comment as

that around about how thought process right we do now? accelerating think So

Philip Daniele

a Yes, that's question. great

even the SVP I those in If remarks, I on basis, we prepared go when stores. back it if was store performance individual the store facts has our of productivity to -- -- a if Commercial, mentioned per of you and are, improved per the

of stores time, where XX% went over worth through had phase around we our commercial. this back of a stores we less or our had of than Looking decade's XX%

slowly a say, years. stores XX period productivity, per up in on for we we've much really on to market X are didn't last stores Then we going the we and commercial of Today, commercial. productive differently to XXs, not focused store have -- those we've opening with now at And where believe slowly, X in ramped spot low ownership, them. we're -- looked that the stores where had different at and a time previously been we're years, share we them, we our -- and where high roughly several XX% a we that's of had

think over as we the period today. of of going think large didn't the open If like of but that we've you'll this see long will future, that into probably some, time for you stores that those model stores probably I vast previously be that majority we that commercial be have commercial. stores previously that There'll programs opened future. have into those productive didn't do we don't opening we and opened a have kind But the been as forecasted out think have stores the time, productivity of

Seth Sigman

store. a be an was for from thinking about this It's OpEx that whether I'm different reasonable. year? about follow-up in think then rate that including around a more SG&A improvement X% around that But per the to steady And investments SG&A thinking talked just from see that? need That a been to Okay. seems you're would relatively you commercial. And I'm How about may ways, drive throughout curious pricing, an growing planning perspective. at And be how few growth? you're start thinking a this I but in to your required pickup in

Jamere Jackson

program, very we been investing clear SG&A we we're We last so And have drive enabling of particularly store today. so, to form that and our IT. at of done are or a things pretty that the over around that's investment have come commercial like growth couple the and in but commercial. And these kinds initiative years in are payroll, us in very, pace profile also the of accelerated have the the that

they're exactly to to the better give for a get customers route tell we're us Phil we've times. and, us example, parts. to it frankly, where work For investments by that what drivers the in how opportunity mentioned delivery that are to fast on going improve our is in times quite deploy doing make technology we're easier doing delivery drivers The underpinned our all that and our made

we're terms of of and terms So profile pay us of in that for customer in of of those And in, are continue going that. in productivity is do terms the and service. things investment that dividends speed, going of examples to in we've invested to results, to better some terms

Philip Daniele

And also side. on ago. a our several -- we Today, we like You made DIFM the price price, pricing specifically investment mentioned years strategy. although you

pretty and to But Now is that. dynamic today. we where always our monitor from business, strategy pricing like pricing we a continue point we'll the of are a

current see don't major strategy. So pricing any our we or deviation from

Operator

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

Zachary Fadem

business, fiscal look parse And fair sequential sequential commercial factors? versus you of own to downtick slowing? So out industry we the you factors expect your whole are DIY move when it Or put is if industry and a help also like your together, uptick is broader a acceleration there give impact say QX? the but even you both to the through can and QX at that that commercial in the as year, 'XX in you these look DIY, us in trends a idiosyncratic confidence you as lot as

William Rhodes

Yes, I'll separate the two.

where about XX%. the gained on be range. First been still we in up retail coming during to share volumes of all, death the long of of We've X-year grow And are, the off to we to had tickled XX% in lots we X% pandemic retail believe volumes, retained We're for of period those that of where time we that of very X% time. holding retail we've in periods and to a a went business time. we've period frankly, time kind XX% our to of the

trying pleased want So we're the flat things, We're where very in basically with faster. to we're that. pleased with We're always but this grow We quarter. new retail business. are we

are let's aren't comp last commercial X.X% don't pleased XX% about year. with we of forget, the comping is comp quarter's business. where But this a in against We

in aspirations the or goals our X% We're disappointed. meet not discouraged. didn't we while So we're quarter, or X%, not

Again, look similar We it's in quarter, to depending on we second the to business. to going play quarters commercial have feel runway and similar probably a to X% weather minus going or decades, go the in that the We what not we're quarter. this first the long years. or know plus X%, in we've in to like seen

our and of second accelerate, Our the plan we on our to the to hope improve commercial particularly of side business as year we and continue is the enter the execution. half

Zachary Fadem

just gross basis about XXX the Got follow And points. then it. up for Jamere, wanted up to I on margin,

was points said that LIFO. think about XXX you I of basis

look possible And trend of two from a impact as talk well of and how the QX LIFO forward? question to we is as the going points more if is, in the basis impact So do to of the you and these supply mix? expect it first going XX at margins, benefit individually other about the then merge impact chain forward little

Jamere Jackson

Yes.

still you need so back think discussions, got $XX get that sort up that to or piece wrap So about before about if LIFO, of we our we've hopefully. through million of the P&L we

we deflation. done guidance. in and we'll what so, is likely our depending in it, in changes, to give or the If forward on you be going to latest ZIP update to the terms going it the quarter to call XX-ish X code. this -- code last latest cadence be see And expect ZIP We few our X in that quarters we've as of

play a that, call what you long standpoint, and margin the so look changes of and continue that XX it, doing ago a bps couple to if again, our we discipline drive that. what And run we of if out we from in that XX be you business margin the over we that improvement or intensity from said came driven would about a at pricing after merchandising have to able gross we're gross And standpoint with typically years think range. we've made term, to

but From is a so. was for supply suppression supply chain years it under of largely supply chain, standpoint, a again, improving in because our tremendous couple or chain are we

a a And So from quarter, last standpoint, of chain in tough I that it wouldn't teams but around. be bps steady expect every single quarter, turning that portion done to making a job was there. and XX improvements supply have we're quarter great particular, our

Operator

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

Simeon Gutman

now? me hear you Can

William Rhodes

Yes, can. we

Simeon Gutman

Okay.

not bit, don't to I wanted see because little reinvest pretty come going good prices -- this freight to down. margin I the AirPods temperature coming it cost ask is excess a coming environment Is Or somewhat price. you're to on that. unique the down? gross What is need to and power to in get the this happens to guess You has moment? a is input that about benefit forward margin? a about potential costs don't unique, any gross your work. mentioned Sorry in pricing you are that industry pricing

Jamere Jackson

us been we've the is down, we particularly what it's as as come rationally gross the rational, business, improve profile today. to behave margin opportunity certainly us the we freight come like and way pricing Well, in has behaving And decades, pricing that to that, for been accordingly. we an saw environment starting seen is for that and certainly incredibly business. The of said took has inflation of this you've historically, with out things I think

improvements invest gross demand. And so need deliberately to we to don't margin go drive see and a the pricing

that us have our we if we hesitate of the thought sort go to do then go which able out that case line, got to calories margin to was that be share units would and the we're opportunity drive invest and to helped not that market pricing that are today in that But to seeing we're grow and improvements margin we've believe operating that share the bands growth. the of market very margins gross expand ultimately the more to environment today drive add gross is very, rational, But bottom and us we for line. established an

Simeon Gutman

you it preclude Yes. the my a And but the do you'd the little about way you Bill comment a then on longer, any how In business. of progress could lead think businesses? think just do follow-up, these is bit of the of Rhodes or softness both take connectivity on that could I the DIY heard commercial? make health like regarding that to

William Rhodes

I I what go think back Simeon. I'll said, to

retail we think very the understand well. business I

business we've so in I know the what commercial cyclical don't think of significantly the As ramped is. nature that we business,

down said, trade as shop a job into battery people have a have, time are difficult a before. certain taken where of will to do periods that recessionary in DIY We job or it might I a to that sub-position there they brake

billion $X last the we a We recession, time business this was $X real But saw surpass billion. remember, our should commercial year.

the have we think deep insights don't business. just that do retail I in we the So

Operator

from from coming Inc. is Daniel question Imbro Stephens next Your

Daniel Imbro

with I maturity guess, the different are in existing new a mentioned, your new to an more the headwind program? creating commercial a an you're or versus for retrofitting just when store? growth. you Jamere, is expected adding curve And programs. immature in build What normal domestic the curve maturity recent commercial comments, DIFM and optical is it openings On

Philip Daniele

those end, over they pretty it maturity open quick different years, curves, and as imagine, and you necessarily later. on that's you That's stick they very between a been would X of those to that. tend store great years program question. then add Yes, then has it's But grow the some and a number new store the ramp hockey -- not and after a consistently probably front of first a then for couple that's net

go market we Keep low fact or an the that to a X% the competing the on execution of by slightly share. things of the back market a may said pretty we're majority X% we think we and size to period the that And that to I'll mind, time still relative we're owns market the earlier, in, specifically depending one way, in share. long of the space should vast have at and we to share, pretty be different WD continue store oh, grow the on improve it that of share, for who based city individual only although

William Rhodes

they're in I'd because were I Many service from the store in much add because about those a can't projected these servicing we will and them of as just already XX% if think of volume from closer proximity. another much customers new isolation. take think also, store you can another stores so better we're

one a markets, and in is ground a area, suburban those every little really service different. already. they're of start rural of the we don't the bit have we start little customers, they bit urban them So a a from many If of head But zero. so

Jamere Jackson

better, them service help to more share opportunity therefore, of net you So wallet. get

Daniel Imbro

just in How the trended that parts curious lot of is So private quality of years. quarters? the DIFM penetration side? couple seeing last we label. trending? label that right, would trade or Understood. on remembering the earning are the that more Helpful value consumer the recent And in price my becomes as either If color. invested then I'm I'm private a penetration or go the how on question And follow-up, DIY you just think up? Duralast is should sensitive I into the in

Philip Daniele

so brand I maybe investment more. that for quality Duralast in a frankly. on accelerated decades, little perception ago, has think XX years in going been mind, But probably Keep product really and Yes. the we

coverage we a choice. first Duralast the go we for Gold, over of generally But are, speaking, we about some has Platinum. our Duralast, private tiers, for we think And As family of couple other essentially brands, labels. Duralast most part, have

categories an a and brand, We in and things better, lot do don't have of best point. categories, But choice we we nature. in first, part, that what have. would Pro a best In generally batteries brand, have lot except a batteries we brakes, some whole a which have of coverage total in But opening we like down. brakes being and we have the price of that's some may whole stores. So We're good, the and for Duralast speaking, most up example. don't cases, be key our

Operator

next Securities. question from Your from is Basham coming Wedbush Seth

Seth Basham

aside, Weather but Just the you're DIY mid-single transactions DIY the ticket read? in also only to little anticipating like accurate and if expect it on a an seems to digit resilient growth. improve potentially that to a remain Is wanted business decline to slight bit follow-up you not business. low

William Rhodes

I absolutely that's think accurate, Seth.

years." for challenged "I've As the transactions been this the because over components dirty side we've better. that about been manufacturers vehicles years, challenged, said and the they've XX challenged retail for for reasons said is their of making many are OE and the of little secret much business a They're the have lot

of don't you'd on fall to, they technology those They Used have had Today, involved lot more components. of lot a in they're as much failures because frequency not. a components. those

amount over per parts. on those a on this the you but of So average X% technology the to price transactions, into what has an of happened long X% because as the going cost very periods piece have equivalent you have that's drag time

digits during frankly, look our we the -- to pandemic to has more drag see transactions. that it the grew eliminated transaction way starting didn't Today, lot a We the in past. in is single and, upper been transaction count similar

we're is, had hyperinflation, in inflation. retail of One challenges dealing last with the that double-digit year, still we the business

much isn't be. it as up normally so as would And our ticket

normalizing And I getting think from we're because past that's inflation high last and year. that super

than or sorry, that. the or years, X% X kind do the to about we hopefully than it, on underway X think to ticket to unit from and going to and that same-store all, continue -- But a we and first believe out DIY transaction average efforts we're As drag have a it's more thinking offset of more basis business improve X of or drag retail. have we

Seth Basham

helpful. thinking rate accelerate That's just XXXX, more from which expect at And industry an would calendar you for on DIY if DIFM to the you growth about one versus basis, expectations 'XX? look

William Rhodes

X going seen DIY to to rapid these is point significant thinks X% very everybody X%, is point DIFM over What and that faster. is rates commercial and we've time think decline. grow X.X a of going usually I grows very to grows DIY at periods to

COVID, you unless that there's next I big continue or economic out some think if be like rolled case. X years, the probably the to shock will something

Philip Daniele

Seems last calls. these appropriate, Bill, got the that Seth, on that you probably to to ask gets question answer he

before So that to industry call, take conclude we solid. the like to position I'd believe is business is our reiterate and our moment a in a strong we model

the for that but about we as our have excited are year, our nothing We prospects growth for alternatives. customers we take granted understand will

a future, for should a have us exciting is this not that We want marathon stress succeed help but I sprint. that plans to the and

value strive the on the shareholder confident for basis to continue successful. to we be basics will -- future, As and optimize we focus are AutoZone

participating and to happy want for wish call. I today's holiday a you and in everyone season healthy thank Lastly,

Operator

everyone. event. This you, concludes Thank today's

this Thank You time, wonderful day. may you at disconnect your participation. for and a have

AutoZone (AZO) 5 Dec 232024 Q1 Earnings call transcript