Net income for the quarter increased $16.6 million, or 9.4 percent, over the same period last year to $192.8 million, while diluted earnings per share increased 17.8 percent to $5.63 per share from $4.78 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.1 percent (versus 51.9 percent for last year's quarter).
The improvement in gross margin was attributable to higher merchandise margins and lower shrink expense, partially offset by the inclusion of the recent acquisition of AutoAnything (20 bps). Operating expenses, as a percentage of sales, were 35.2 percent (versus 34.7 percent last year).
The increase in operating expenses, as a percentage of sales, was primarily due to the timing of advertising costs (22 bps).
Under its share repurchase program, AutoZone repurchased 404 thousand shares of its common stock for $200 million during the second quarter, at an average price of $495 per share. Year-to-date, the company has repurchased 1.082 million shares of its common stock for $492 million, at an average price of $454 per share.
At the end of the second quarter, the company had $727 million remaining under its current share repurchase authorization.
The company's inventory increased 12.0 percent over the same period last year, driven by a combination of increased product placement and new store openings.
Inventory per store was $589 thousand versus $544 thousand last year and $566 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis was a negative $74,000 versus negative $54,000 last year.
"We are pleased to report our 30th consecutive quarter of double-digit earnings per share growth," said Bill Rhodes, chairman, president and chief executive officer. “The credit for this accomplishment goes to our passionate and dedicated AutoZoners across the globe who always put our customers first! During our second quarter, much of the U.S. experienced extreme weather conditions, and those weather patterns accelerated our growth in certain failure related hard part categories while our deferrable maintenance categories were challenged.
“We are continuing to test a variety of initiatives focused on improving inventory availability. One of the key initiatives is in the implementation phase, and while it is very early, we are pleased with our progress to date. The other tests are ongoing and it will take several more quarters before we determine our next steps. We are very excited about these tests as they are providing us with great insights,” Rhodes said.
“While operating expenses, on a percent to sales basis, were higher than in previous quarters, our investments were purposeful and focused on improving our reputation for delivering trustworthy advice and providing the best parts at the right price. We remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively.”
During the quarter ended Feb. 15, AutoZone opened 28 new stores in the U.S., and four new stores in Mexico.
As of Feb. 15, the company had 4,871 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 367 stores in Mexico, and four stores in Brazil for a total count of 5,242.
AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States.
Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.
Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages,dealers, service stations, and public sector accounts.
AutoZone also sells the ALLDATA brand diagnostic and repair software.