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UPDATE 2-AutoZone profit rises, but shares decline
May 27, 2009 / 11:40 AM / 8 years ago

UPDATE 2-AutoZone profit rises, but shares decline

* Q3 EPS $3.13/shr vs est $2.89/shr

* Q3 sales up 9 pct

* Shares down 2.2 pct (New throughout)

BOSTON, May 27 (Reuters) - AutoZone Inc (AZO.N) reported a 9 percent rise in profit that beat consensus estimates as a slumping economy led more Americans to repair their existing cars instead of buying new ones.

Shares of the largest U.S. auto parts retailer fell 2.2 percent in premarket trading on Wednesday, with analysts noting that investors expected more from the company after a string of solid profit reports.

“While the (comparison) was very good, we are a bit surprised the company wasn’t able to post a bigger earnings surprise,” wrote RBC Capital Markets analyst Scot Ciccarelli in a note to clients. “Nevertheless, expectations may have been even a bit higher.”

The Memphis, Tennessee-based company reported fiscal third quarter profit of $173.7 million, or $3.13 per diluted share, up from $158.6 million, or $2.49 per share, a year earlier.

Analysts, on average, had looked for profit of $2.89 per share, according to Reuters Estimates.

AutoZone’s top executive noted that the sharp drop in gasoline prices -- which are down about 44 percent from last summer’s record high above $4 a gallon -- also helped results.

“The current economic environment, combined with the reduction in fuel prices compared to last year, has clearly been beneficial to our industry’s performance,” Chief Executive Bill Rhodes said in a statement.

Net sales rose 9 percent to $1.66 billion during the period.

Its shares fell 2.2 percent to $159.23 in premarket trading. They have risen about 28 percent over the past year, at a time when the broad Standard & Poor's 500 index .SPX is down 34 percent.

The deep U.S. recession has thrown the nation’s auto industry into turmoil, forcing Chrysler LLC to file for bankruptcy at the end of April and bringing General Motors Corp (GM.N) to the brink of it. (Reporting by Scott Malone in Boston, additional reporting by Dhanya Ann Thoppil in Bangalore; Editing by Derek Caney)

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