A 1.8% decline in second quarter same store sales at AutoZone was attributed to a two week tax return processing delay by the Internal Revenue Service.
The delay kept tax refunds out of the hand of AutoZone customers inclined to perform maintenance on their vehicles during the retailer’s second quarter ended February 9. Last week, Walmart also cited the tax processing delay as a source of sale weakness when it reported a 1% comp increase that was at the low end of its forecast range for a 1% to 3% increase.
"While we are pleased to report our twenty-sixth consecutive quarter of double digit earnings per share growth, we were not pleased with our same store sales results for the quarter," said Bill Rhodes, AutoZone chairman, president and CEO. "Historically, we have seen our sales increase significantly during the final two weeks of our second quarter. However, this year our total domestic auto parts same store sales for the last two weeks declined by 8%. 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."
Rhodes said the company expects sales during the remainder of the quarter will return to a more normalized level as last quarter’s sales were on plan except for the final two weeks.
"As we enter our key spring and summer selling season, we are optimistic about our future. We believe we have the right initiatives in place to meet and exceed our customer's expectations. We remain committed to our disciplined approach of growing operating earnings while efficiently utilizing our capital," Rhodes said.
Sales for the second quarter increased 2.8% to $1.9 billion, net income increased 5.6% to $176 million and earnings per share increased 15.1% to $4.78. Gross margins expanded to 51.9% from 51.3% as the company reduce product acquisition costs.
The company opened 32 new stores in the U.S. and nine new locations in Mexico during the quarter to ended the period with a total of 5,070 stores