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AutoZone’s 1Q18 Results Didn't Boost Investors’ Confidence

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Part 2
AutoZone’s 1Q18 Results Didn't Boost Investors’ Confidence PART 2 OF 7

What Drove AutoZone’s 1Q18 Revenues Higher?

AutoZone’s business

AutoZone (AZO) generates its revenues by selling auto parts and accessories primarily in the US market, Puerto Rico, Mexico, and Brazil. In 2016, US auto companies (IYK) including General Motors (GM) and Ford (F) benefited from strong US demand for utility vehicles and trucks. The positive trend in US auto demand also boosted future growth potential for US auto parts sellers like AutoZone, Advance Auto Parts (AAP), and O’Reilly Automotive (ORLY). Now, let’s take a closer look at AutoZone’s 1Q18 revenues.

What Drove AutoZone&#8217;s 1Q18 Revenues Higher?

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AutoZone’s 1Q18 revenues

In 1Q18, AutoZone reported revenues of $2.6 billion, which was ~4.9% higher than the same quarter of the previous year. During the quarter, the company’s domestic same-store sales continued to recover and rose 2.3%—compared to an increase of 1.0% in 4Q17.

AutoZone’s management highlighted that recent natural disasters in the US had a negative impact on the company’s sales for the quarter.

Recently, AutoZone started investing in data collection to recognize customers’ shopping patterns. The step should ensure that AutoZone customers get a better-customized shopping experience going forward.

Mega hub expansion strategy

AutoZone’s management also noted that sales at existing mega hubs exceeded their expectations in the first quarter. AutoZone also opened two new mega hubs during the quarter as part of its plan to open about ten hubs in fiscal 2018.

In the next part, we’ll explore how AutoZone’s key business segments performed in 1Q18.

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