* Second-quarter earnings $4.78/share vs est $4.76
* Revenue $1.86 billion vs est $1.88 billion
* Sees faster growth in second half of fiscal 2013
* Shares fall 1.5 percent
By Sagarika Jaisinghani
Feb 26 AutoZone Inc, the largest U.S.
auto parts retailer, reported a 1.8 percent drop in domestic
same-store sales as delayed tax refunds and the lingering
effects of a mild winter last year reduced demand.
Auto parts retailers have been hurt over the last year as a
warmer-than-normal winter resulted in less wear and tear on
cars, reducing the need to replace parts.
The company said sales usually increase significantly during
the final two weeks of the second quarter. But this year total
domestic same-store sales fell 8 percent in that two-week
"Our belief is the approximate two-week delay in processing
of income tax returns this year was the key contributor to this
decline in sales," Chief Executive Bill Rhodes said.
The U.S. Internal Revenue Service delayed the start of tax
filing in 2013 following political wrangling in Washington over
the "fiscal cliff". Last-minute and retroactive tax law changes
meant it was unable to process any returns filed before Jan. 30,
delaying some refunds.
"We continue to see slower growth ahead (for AutoZone)
despite historically strong execution," Morgan Stanley analyst
David Gober wrote in a note to clients.
Gober added that near-term headwinds for lower-income
households would likely limit growth in the company's
do-it-yourself business, which accounts for about 85 percent of
the its revenue.
The tax refunds of some lower-income Americans are arriving
later than expected due in part to a closer scrutiny of claims
by the IRS.
However, AutoZone, which sells to both home mechanics and
commercial repair shops, said it would grow faster in the second
half of the fiscal year as it expects the severe winter to drive
up auto repairs.
The company said there was some improvement in its northeast
and midwest markets in the second quarter ended Feb. 9, but they
were still "negative" and about 500 basis points worse than the
western and southern markets.
The market is expecting demand for auto parts in the region
to rise as the U.S. Northeast has been hammered by a slew of
snowstorms since November.
AutoZone said gross margins rose to 51.9 percent in the
quarter from 51.3 percent in the year-ago quarter, as it spent
less on parts it bought.
Net income rose to $176.2 million, or $4.78 per share, in
the second quarter, from $166.9 million, or $4.15 per share, a
Revenue rose 3 percent to $1.86 billion.
Analysts on average expected earnings of $4.76 per share on
revenue of $1.88 billion, according to Thomson Reuters I/B/E/S.
AutoZone's shares were down 1.5 percent at $372.55 on
Tuesday on the New York Stock Exchange.
"It will take the visibility of improving (same-store sales)
comparisons to move the stock higher," Stephens Inc analyst John
Lawrence said, adding that the comparisons are likely to get
better in the second half of 2013.