Record DIFM Sales Drive Solid Q3 For AutoZone

[Counterman]

During AutoZone’s fiscal second-quarter 2022 conference call in March, company executives asserted that its pandemic-driven sales momentum could be sustained, even after consumers blow through their stimulus payments.

AutoZone’s fiscal third-quarter results did nothing to convince them otherwise.

“We believed our competitive positioning was materially improved, as indicated by our significant retail share gains and rapidly accelerated commercial sales growth,” AutoZone CEO Bill Rhodes reflected during the company’s third-quarter conference call on May 24. “We believed customer behavior may have permanently changed. We continue to believe all of this today.”

AutoZone reported fiscal third-quarter net sales of $3.9 billion, a 5.9% year-over-year increase. The company’s fiscal third quarter ended on May 7.

Domestic same-store sales, or sales for stores open at least one year, increased 2.6% for the quarter. AutoZone delivered the 2.6% increase against some extremely tough comparisons: In the fiscal third quarter of 2021, same-store sales jumped nearly 29%.

If AutoZone indeed is able to sustain its momentum from 2020 and 2021, “it’ll be the fourth time in the last 30 years that the economy and society have been through significant shocks leading to material acceleration in our growth in sales and profits, without a corresponding decline back to pre-recessionary or pre-pandemic levels,” Rhodes said.

DIFM sales, which suffered in the first few months of the pandemic in 2020, continued to rebound. AutoZone’s commercial sales rocketed 26% higher to $1.04 billion, a third-quarter record for the company.

Weekly commercial sales per store also set a quarterly record, at $16,600, up from $13,500 in fiscal Q3 2021. The company averaged approximately $87 million in total weekly commercial sales.

During the quarter, AutoZone launched 43 net new commercial programs, finishing with 5,275 total programs.

“As I’ve said since the outset of the year, commercial growth will lead the way in FY 22, and our results in the third quarter and year to date reflect this dynamic,” CFO Jamere Jackson said during the conference call.

Rhodes attributed the DIFM growth to a number of companywide initiatives, including expanded hub and megahub coverage, “the strength of the Duralast brand,” technology investments, a more effective salesforce and improved delivery times.

Domestic DIY sales slipped 4.5% during the quarter – another case of tough comps. Rhodes noted that U.S. consumers received stimulus payments in the third quarter of 2021, which led to record DIY-sales growth.

“We’re very proud of our DIY results,” Rhodes added. “Considering we had such a tough comparison to last year, from the data we have available to us, we continued not only retain the enormous share gains in dollars and units built during the initial stages of the pandemic, but [also] modestly build on those gains.

“Our performance, considering the amount of time from the last stimulus and the ending of the enhanced unemployment benefits, has substantially exceeded our expectations and gives us continued conviction about the sustainability of the massive elevated sales levels we have experienced since the beginning of the pandemic.”

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