March 3 - AutoZone said on Tuesday that its second-quarter profit eased as inflationary pressures and other disruptions eroded margins for the auto parts retailer. The Memphis, Tennessee-based company reported higher sales for the period but a fall in quarterly net income that prompted a negative market reaction before the opening bell.
The retailer recorded overall sales of roughly $4.27 billion in the quarter ended Feb. 12, an increase of 8.15% from the same period a year earlier. AutoZone attributed part of its domestic performance to stronger Do-It-Yourself and commercial demand during the quarter, despite winter storms in January that caused disruptions to operations.
Despite the top-line gain, AutoZone’s quarterly net income fell to $469 million, or $27.63 per share, down from $488 million, or $28.29 per share, in the prior-year period. Analysts, on average, had been looking for quarterly sales of $4.31 billion, according to data compiled by LSEG, and had expected earnings of $27.13 per share.
Company executives cited a range of headwinds that pressured margins over the past year - including tariffs, winter weather disruptions and what the company described as a bumpy vehicle market - even as consumer demand for replacement parts remained steady.
Shares of AutoZone fell about 6% in premarket trading following the publication of the quarterly results.
Market context and company note
AutoZone’s domestic segment showed resilience with elevated Do-It-Yourself and commercial sales during the quarter, but inflationary costs and episodic operational issues limited the benefit of higher revenue. The company’s results reflected the tension between sustained consumer demand for parts and margin compression driven by external cost factors.
Analyst expectations and reaction
On an expectations basis, AutoZone missed the sales figure that analysts had forecast, with actual quarterly sales about $40 million below the average estimate compiled by LSEG. Earnings per share exceeded the analysts' consensus by a small margin, but the decline in net income and margin pressure appeared to weigh on investor sentiment.
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