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Inside AutoZone’s Q1 2019 Sales Growth

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AutoZone’s business

AutoZone (AZO) generates revenue by selling auto parts and accessories primarily in the US market, Puerto Rico, Mexico, and Brazil. In the last three years, US auto companies (XLY), including General Motors (GM) and Ford Motor Company (F), have benefited from strong US demand for utility vehicles and trucks.

The positive trend in US auto demand has also boosted the long-term future growth potentials of US auto parts sellers, including AutoZone, Advance Auto Parts (AAP), and O’Reilly Automotive (ORLY). Now let’s take a closer look at AutoZone’s fiscal 2019 first-quarter revenue.

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AutoZone’s first-quarter revenue

In the first quarter of fiscal 2019, AutoZone reported revenue of $2.64 billion, ~2.0% higher than in the corresponding quarter of the previous year. During the quarter, the company’s domestic same-store sales growth rate was 2.7%, much better than the 2.2% rate it reported in the previous quarter and the 2.3% rate it reported in the first quarter of fiscal 2018.

During AZO’s first-quarter earnings conference call, CEO Bill Rhodes stated, “We had a difficult sales comparison due to the sales favorability we experienced last year from three significant widespread hurricanes.” Rhodes added, “We are pleased with our recent performance and encouraged about our industry’s prospects for 2019 and beyond.”

In the last few quarters, AZO has been collecting data in efforts to recognize customers’ shopping patterns and provide them with a better-customized shopping experience in the future.

Mega Hub update

Mega Hub stores are AutoZone’s larger stores, which allow it to maintain an inventory of hard-to-find auto parts, giving it an edge over its competitors. The company opened two new Mega Hubs in the first quarter of fiscal 2019. With this, its total Mega Hub store count was 26 at the end of the quarter. In fiscal 2019, AutoZone plans to open ten new hubs. Of these ten, most will be Mega Hubs.

Read on to the next article, where we’ll explore how AutoZone’s key business segments performed in the first quarter of fiscal 2019.

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