(Reuters) - AutoZone Inc (AZO.N), the largest U.S. auto parts retailer, missed analysts’ revenue estimates for the third time in a row as customers spent less on repairs.
Auto parts retailers have faced weak demand in the past year as a warmer-than-usual winter resulted in less wear and tear to vehicles, reducing the need for replacement parts.
“If the winter was warm last year, this year doesn’t appear to be better,” Morningstar Inc analyst Liang Feng said.
Memphis, Tennessee-based AutoZone’s shares were down 4 percent at $363.93 on the New York Stock Exchange on Tuesday afternoon.
“We’re still looking for winter to hit,” AutoZone Chief Executive William Rhodes said on a post-earnings conference call.
Sanford Bernstein analyst Colin McGranahan said that the longer the sales are weak, the less likely the weather is the biggest factor.
“Part of the issue is that you had pretty extreme weather conditions in 2010 and 2011 and you replaced auto parts. Even if you have a cold winter, you are not going to need to replace the parts again,” he said.
Demand is likely to be pretty sluggish for a while, he added.
AutoZone’s revenue rose 3.5 percent to $1.9 billion in the first quarter. Analysts were expecting revenue of $2.02 billion, according to Thomson Reuters I/B/E/S.
Same store sales, or sales at stores open for at least a year, rose just 0.2 percent in the period.
Net income rose 6.4 percent to $203.5 million, or $5.41 per share, in line with analysts’ expectations as gross margins rose 70 basis points to 51.8 percent.
The improved margins were helped by better pricing from vendors and lesser price inflation during the quarter.
AutoZone sells to both home mechanics and commercial repair shops.
Smaller rival Pep Boys-Manny, Moe & Jack PBY.N also reported a third-quarter loss on Monday on weak sales.
AutoZone also said that it will buy the assets and select liabilities of AutoAnything.com, an online retailer of specialized automotive products. Terms of the deal were not disclosed.
“AutoAnything (allows) us to reach into a customer segment that we really don’t participate in very much, even in our stores, much less over the Internet today,” CEO Rhodes said.
AutoAnything.com expects calendar 2012 sales of about $125 million, AutoZone said, adding that the deal would add to the company’s earnings from 2014.
Reporting by Mridhula Raghavan and Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila and Supriya Kurane