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 Vehicle parts retailers have been increasing sales to garages,
dealers and service stations as more Americans turn to them to
repair their increasingly complex vehicles.
AutoZone's shares rose as much as 6 percent to a record high on
Tuesday after the company reported a 7 percent jump in profit,
helped by a cooler-than-usual autumn and storms that encouraged
owners to service their vehicles ahead of winter.
The commercial repair business, or "do-it-for-me", is already a
major driver for AutoZone rivals such as O'Reilly Automotive Inc <ORLY.O>,
which gets more than 40 percent of its revenue from auto service
providers.
Memphis, Tennessee-based AutoZone is still playing catch up.
AutoZone's sales to commercial repair chains in the United States
jumped 14 percent in the first quarter ended November 23, but
accounted for only about 16 percent of revenue.
One of AutoZone's priorities in 2014 will be to profitably grow its
commercial business, Chief Executive William Rhodes said on a
post-earnings conference call.
Auto parts retailers are also growing their commercial businesses
through acquisitions. Advance Auto Parts Inc <AAP.N> said in October
it would buy General Parts International Inc to create the largest
North American retailer of auto parts.
AutoZone will slip to the No.2 position once the deal is completed.
COLD WEATHER ADVANTAGE
U.S. auto parts retailers are also benefiting as demand picks up
after a warmer-than-usual winter reduced the need for routine
maintenance in 2012.
Stifel, Nicolaus & Co analyst David Schick said recent cold weather
across much of the country would likely result in higher demand for
parts for the next six months.
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Analysts have also said recent investments in inventory and store
renovations should help AutoZone's sales.
The company said inventory increased 9.1 percent in the quarter,
partly driven by store openings. AutoZone had more than 4,800 stores
in the United States as of August 31.
The company's net income rose to $218.1 million, or $6.29 per share,
in the first quarter from $203.5 million, or $5.41 per share, a year
earlier. Revenue rose 5 percent to $2.09 billion.
Analysts on average had expected earnings of $6.28 per share on
revenue of $2.10 billion, according to Thomson Reuters I/B/E/S.
AutoZone's shares were up 4 percent at $475.17 in afternoon trading
on the New York Stock Exchange. They have risen almost a third in
the past 12 months, outperforming the S&P 500 index <.SPX>.
(Editing by Sriraj Kalluvila and
Saumyadeb Chakrabarty)
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