Fitch Assigns a Rating of 'BBB' to AutoZone's $500MM Notes; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings assigns a rating of 'BBB' to AutoZone, Inc.'s (AutoZone) $500
million 5.75% senior unsecured notes due January 2015. The proceeds from the
offering will be used for general corporate purposes, which include repaying,
redeeming or repurchasing existing debt, repurchasing common stock and for
working capital uses and capital expenditures. The notes include change of
control and coupon step-up provisions. The Rating Outlook is Stable.

The ratings reflect AutoZone's leading position in the retail auto parts and
accessories aftermarket and its wide geographic reach with 4,340 stores across
the continental United States and Puerto Rico and 168 stores in Mexico as of May
9, 2009. The ratings also consider the company's solid operating performance and
positive free cash flow generation balanced by the challenging operating
environment and the level of ownership in the company by ESL Investments, Inc.
(ESL).

AutoZone reported a revenue increase of around 6% and an industry leading EBIT
margin of 17.3% for the last 12 months (LTM) ended May 9, 2009. The increase in
sales was primarily driven by new store openings and same store sales growth of
3.9% in the nine-month period ended May 9, 2009. The positive same store sales
resulted from an improvement in transaction count trends and a similar average
transaction size compared to the prior year period. The solid operating results
caused LTM leverage to remain steady at 2.5 times (x) based on Fitch's
calculation of (total debt + 8x rent)/operating EBITDAR and EBITDAR coverage of
interest and rent at 5.1x. In addition, AutoZone generated LTM free cash flow of
$704 million. Fitch expects free cash flow generation to remain strong and the
company to continue to manage to its leverage ratio target of around 2.5x (2.8x
based on Fitch's calculation). If operating results are weaker than expected,
Fitch expects management to reduce the level of share repurchases accordingly.

Nonetheless, the challenging operating environment remains a concern. The 2009
year-to-date miles driven declined 1.1% as of April 2009. In the event the
number of miles driven continues to fall, Fitch expects AutoZone's same store
sales performance could be pressured. In addition, ESL's ownership of the
company will increase as AutoZone buys back shares. However, ESL's voting rights
will be limited by established thresholds of 40% through December 2009 and 37.5%
thereafter, unless ESL acquires or divests of AutoZone stock.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Tiffany Co, 312-368-3185, Chicago
Karen Ghaffari, CFA, CPA, 212-908-0708, New York
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com

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