AutoZone (AZO) 22 Sep 202020 Q4 Earnings call transcript

Good morning. And welcome to the AutoZone Conference Call.

Your line has been placed on listen-only until the question-and-answer session of the conference. Please be advised, today’s call is being recorded.

If you have any objections, please disconnect at this time. discuss quarter will release. call conference AutoZone’s earnings fourth This CEO Chairman, making highlights Bill company’s and of will quarter. the Rhodes, the on President be presentation a the short end XX call properly conference will a.m. The at a.m. Central Time, XX Time. Eastern

Mr. the statement to begins, you statements. following company requested regarding has Before that Rhodes listen forward-looking the

Certain XXXX. of that Securities the subject statements Litigation presentation the to Reform statements in forward-looking this of Private Safe contained Act constitute are Harbor provisions

the estimate, and future are energy These should, statements position, and cash statements typically product These such access that and words to may, perception plan, limitation, due or origin risks health to of our confidentiality, the our market of information XX, and and trends, conditions, markets, Certain train including believe Form inflation, debt rate and strategy, international in delays, epidemics regulations, project, the of Part of Forward-looking of disruption by be of conditions, should war, terrorist Factors of the ended expect, report material and levels, and could and August anticipated otherwise, as the believe, Risk X our under seek, factors credit XX-K for new prospect financing, construction retain challenges these downgrade public current these and integrity chain raw in number read we in of to management section XXXX, discussed cost damages expected intend, ratings, are in credit will, activity, accounting repurchases, technology impact of forward-looking subject including, factors risks information, or tariffs, hire, more anticipate, availability of available in based assessments of to employees, laws interruption use flows, similar compromising developments ability be XA war including supply of our carefully. contained changes future and without in experience the uncertainties, other historic sustainability, appropriate. our historical light expressions. on failure, made to assumptions or business recessionary in conditions, year detail a systems, interruptions. stock prices, Item to suppliers, the standards uncertainties are annual consumer of risk competition, of impact impact weather, qualified demand, feasible cyberattacks, reputation, on and

And materially and business Forward-looking performance from our actual those statements may in events risk described factors the could guarantees statements. and and decisions are not of contemplated differ business. future developments above such forward-looking results, affect by adversely

as statements forward-looking Forward-looking we new Except future date as statements whether to law, undertake speak applicable obligation may Actual results. otherwise. materially differ or events required results result update only from anticipated no information, as by made. publicly a of the of any

And now Bill Rhodes. to I’d to like turn Mr. the over call

Tax; thank And Officer; today President, and and XXXX morning. today you Conference Bill for President are for Brian Good Giles, Vice Chief joining Treasurer, Investor With me Fourth AutoZone’s Financial Vice Executive Jackson, team. Call. last him have Campbell, Quarter Relations Vice glad our us and Executive be joined and week of here who Jamere Chief just part Jamere so to today, and only President our Officer-Elect. us are we observing great but will Financial

its short-term has evaluate release Investor the under on trying of our If Conference this our long-term on May, have been complementing the slides click an the release, Quarterly along please link, implications COVID-XX, not, quarter’s and website, had read the press learn you opportunity today, fourth are the hope to results. late about and current Relations I ramifications www.autozone.com, to to quarter, see release of world’s Since them. Calls our pandemic. Earnings in earnings last attention much and press available Regarding the comments our on with

During periods. the over the during our and same-store distinct increased our then comps the where and third QX’s XX% were with last was unemployment Wednesday. a the the performance quarter, stay-at-home one the sales we our shared shared Monday down to at from checks three We midst XX% that performance benefits. the we the of our where incredible quarter very stimulus so, experienced in X% volatility Pre-COVID, then following or beginning four retail orders conference weeks where incredible and of were a call, week low-teens enhanced the up last sales an about

consistently, This quarter’s strong. and very, story sales quite consistent was was very It very different.

experienced, most remarkable was -- quarter its enjoyed challenges. sales XX% public ever XXXX, same-store XX% same-store introduced in quarterly marked While another and growth, quarter have going quarter unfamiliar performance new I the this that sales last largest milestone. AutoZone since

With team. of our in and part creativity of the the ensuring safety customer intensely on amount a the retail our and in had of significant sales, and AutoZoners, we increase took that traffic on focus tremendous commercial to customers our

specifically partners be Our centers, our and keep to we with surge last immense to were the continue demand in experienced operations months. five supply have and chain, their the up vendor our pressure distribution under over

our began enhanced retail very in happened money early were flow. built anxious performance very consistent said, after unemployment today both beginning our sales stimulus through in positions I have our usual quarter that that get for often XX% and May our benefits Well, pretty of the predictable to high band. high, standards subsided. in-stock to see further July. tight couldn’t diligently were up are and but a in since truth supply recover, what but commercial in are to That our from working sales August, aren’t the mentioned be excess staying We chain to Our we sales from wasn’t to capacity. our the

down XX.X%. were domestic sales to remarkable through some We up are happy while very from report that May our July in still August, same-store

temporarily? like about our certainly performance time, others it recessionary I typical. governments regions nothing, feel we pandemic when? for typically, environments, During performed permanently? is about benefit quarter we of hours very enhanced employment many would simply some will Based always too the have that our all so, long questions. sufficient. XXX There And federal the once am for but to have be and were sales changed this are ‘XX. many, Which How in sales both well. for than us geographic if performed global will remaining many but remains an and some effective quarter, there unemployment, elevated sure they better regions consumer be thinking on Will did you predict. where difficult and post-enhanced of remain vaccine, as first to It know last? are how changed nothing we is fiscal are, our well, many our What behaviors more it unknowns,

ensure an to our focus on exceptional of AutoZoners, providing Beyond the safety provide is our our customers AutoZoners experience. with our customers to our need primary and they with the objective resources

growth recessions. early current outside these we maintaining by business, it sales customers recessionary coming more in followed do will of AutoZoners. you, I from believe last to ‘XX, really been as reminded to-date, behavior. continue believe We never organization Every have our desires new and the team and is Last I these that long-term to of the continue every team we recessionary to by the has and be years follow. on Paulo economy periods. from delivered that have especially to want the equivalent of exceptional. of they our couldn’t been more and AutoZoner, periods have for they each remain our ‘XX, AutoZoners. new challenge our to substantially shift allowing three ‘XX, new in periods, Interestingly, every if those that And each courage, facility of over on has ways this out enters thanking out on needs quarter, see last monitor in work, have experience I after our ways enterprise have periods, benefit customers, bullish applaud months strongest the our the exceptional meet across retail consumer customers. and the begin As continues years Most our for South us always labels What many a industry store been customers that they don’t We alongside. follow. every AutoZoners to view but it recessionary we optimistic thrown DataZone working and ingenuity, we curveballs to call Hawaii behalf people calls to extraordinary been changes environment, growth changed the the our declines in continued Mexico. and challenge. deep and we XXXXs, many, protracted of exceed an importantly, our passion. learn anything embraced AutoZoners why of the met These the has and six I outsized the innovation folks, those and particular, behaviors and of showcase AutoZoners. has and customers, distribution to to ALLDATA and many proud experienced the had have our focus wants, last sales to ‘XX, Thank during center This must decades we our with ‘XX to the their met, recognize skills honor our service in I in retain and three year. everyone industry, on on capabilities all tremendous and consumer deliver upcoming entire phenomenal have will

cultural be everything deliver and you an our single means promises and embody You on it AutoZoner day. every to service

into quarter. were move fourth quarter. the last let’s XX.X% our sales Same-store Now versus performance year’s for up

million a our last net and Our $XXX XX.X% EPS $XX.XX year. was above income was share,

quarter, extra up XX.X%. fourth was year’s amazing week in the last EPS Excluding an our

of our was the outlier sales consistency from the business predictable, while was week-to-week the volume quarter. this performance, Regarding

beginning than were fiscal we sustained they than forecasted much in higher levels the have at on we last call year would sales higher our the of have May. could and Our predicted

sales our stronger was performance. had both consistent business retail our commercial businesses week-to-week business, than While

same-store DIY were Our up XX%. sales approximately

information have before our shows on share broadest in than available Our retail more in we the both dollars. for units and been much, we gaining competitors share detailed any set of four last much have over months time at growth the that

that our million commercial sales, basis. most we for records was are averaged came both of over our up over to in sales up values per we to XX% were highlight to week, program new when XX-week approximately stated continue business which total care Our to taking in Candidly, it proud live AutoZoners. on commercial, In us. $XX weekly a sales per $XX,XXX we

on receive weeks time-off at with use hours that part-timers provided We additional During eligible Remember providing in and benefits to the all calendar back them two time-off immediately. those would our our AutoZoners part-time third XX AutoZoners didn’t the will We and to hours. don’t available with mandates first announced our the AutoZoner choices. U.S. time-off any if was additional be now act up with we January. emergency desires, time, on to be it to the our to including as quarter, for We or would paid wait we in government. it time, used can across This eligible doing others frontlines. imperative time of history, by that in hourly, and full and pay provide year-end, AutoZoners were we they it for wait support that swiftly this the see them what between felt did time-off, of

populations and the simply coming had Others work. in to comfortable vulnerable were Others more are anxious. issues. childcare Some weren’t

be store the emergency providing a We customers on our whom days, This to be to couple honored and majority and extended irresponsible so to a this quarter, the work fourth our and make field their leading our the literally for have is were need. we of record of manage the through many was would job simply in these continue continue customers managing into we Overall, quarter recognition and have to frontline, was managers values. of to service these it made organization benefits and going do they forward. with which While With center organization. to the able their fall, extraordinary investments but these results variables season. impossible us, vast aligned to In extrapolate comfortable of week-to-week the each and in AutoZoners to our teams continues heading from great to been advisors, were what in supporting distribution an decision, this our continuing business. in and do were sales to our time business come our done for time-off outstanding

demand and our during our As sure these in products call, expect thing team But their said change. are have last resources to customers services We about, we shown every moderate on believe to they our has to over economic providing and will quarter’s our pledge, we react we our times. and continue sales be that we our more they on remain will high One ready time. growth are resiliency that to to support remain quickly the up focused put definitely first. live continue team and They and with nimble. our single to need difficult AutoZoners

story across the merchandise weren’t retail be our this While quarter, specifically continued interesting significant a to in trends geographic business. differences categories there

at off. even while been motor We on and that winter We store. of working lines oil, same as continue we hobbyists average. their of constantly spending benefits, their than often and to project levels to weather pre-COVID or in I certain from these categories discretionary specifically, some entertainment-type Merchandise believe categories making believe slower were people severe rate enhancement the up that lack overall year. more same car grew job are a have that before chain These more categories decrease hands customers project the the surprisingly the doing categories lack upgrade or or time quote, rotors We they on last categories, call product putting see time, something. making having will to or having the for want maybe categories, with the enhanced people impacted aren’t At compared are a more strong who on the that growing in rate to money they the many categories. brakes, miles brake by due like at unemployment noted driven

focus Now to our P&L. turn of let’s the the balance

our points expenses. due this quarter unrest of civil a For margin in the down headwind cost quarter, was basis our of basis X Included gross was goods of mix XX shift points. to and

compete store less which operations that these to that team to our more In our are non-traditional addition, be we categories more expenses, lowered well. also select upon On dependent based, are volumes. during have effectively identified our have order manage operating commercial our service competitors times increase to in expenses continue and we commodity teams prices particularly with

drastically a the very time, desired until period As labels we available didn’t have our of the labor our sales staffing accelerated later short in quarter. achieve in to

better customer spent an So experience. wish on have could we we more labor provide to even

we COVID-related due strong very were basis year’s the Our XXX extra QX leverage emergency quarter’s in up were operating to X.X% time-off expenses to last able were points. versus Included expenses excluding approximately related week this and our to sales expenses. results, other expenses $XX million

unique this will expenses the While talk We two distribution there powerful lasting and show and our centers COVID to this already this our as decision last have that team, and talk. walks been significant, organization benefits believe stores quarters to and the be culture, strengthen long from visit related we decision.

billion increasing in to over bit the Regarding and cash as up levels, $X.X We balance a XXX-day liquidity which have credit was dramatically. significant a line billion balance were now purposeful, sheet, maximize of debt our $X.X excess our due we up new on cash were cash equivalents cash. and position our is sheet, and cash wanted of Increasing our to adding debt our uncertainty. excess the

months We growth also year. liquidity position increased into allows repurchase reinstituting per program. managed inventory thoughtfully X.X% flexibility when the feel felt fall to last share immense We store QX heading as versus comes we our well it strong our our our inventory us

business as part program As March. of stock too allocation a our world, so. much decision. the previously, uncertainty share was program the has very will continue there in It to strategy our was we capital been and At repurchase in temporarily the I it important be mentioned our buyback the and certainly paused right time, in

flow we restart We of balance We excess stock expect our to to the begin during buy intend quarter. utilizing on gradually methodically our the of on utilize our program cash view sheet. some our buyback first the back have and free cash ongoing based currently future, to

March, a have program returning of is benefits suspend in we of which approach can we did repurchase one concerns significant share repurchases capital the we if a and shareholders. dividend to will versus about again, of the As temporarily near-term,

this of CapEx during to maintain throughout In year. the We the level expect stores. our orders, open most an to the We spent ability paused year. year We complete cash new spend and of to last on elevated new construction during equivalents cash slowed regard than fiscal development our stores our less and quarter. depths of which this many stay-at-home

Brazil we and stores with of XX we As this the last result, a finished all year. XXX XXX stores and only Mexico for U.S. across year new opened year versus

our we our XXX on stores stores. retail XXXX, domestic to I would expect international roughly moment approximately For new a XX back efforts. of and spend cadence to get usual will integrated

shop shopping consumer’s our customers out we we in ship DIY in in-store shop. do how when, and percentage our As ramped COVID’s effect options. This ship-to-home experience of see our buy ability pickup they very online enhance get to meeting continued to our to the still very particular, store, online growth the online and buy strategy below to past up remind quarter delivery offering pickup very, small to on wanted to rate customer grew, business, want a the channels, rapidly the listeners strong represent where shopping at and growth by substantially sales grew that X I of In home. next-day X%. times online,

a experience to our experience remain come a for they for improving to in quicker to order tremendous us, is help identify the out shopping purchasing tool our to online the marketing them pickup. traffic need customers stores the While what for once in We in-store and smaller online committed is a website business allow and they business.

talk and confident and you. thank our thank Giles you again results, promise unprecedented these efforts about to our discussion I I’d you enough too, financial am that AutoZoners, truly to I extraordinary pass of say, like AutoZoners thank I provide during the over I on to our Before customer shareholders for their service. to on AutoZone’s cannot exceptional behalf times. Bill speak delivered

I turn will Bill Now it Bill? to Giles. over

start Thanks, about more international a Bill, take few both talk and domestic good our moments morning, specifically let morning results. this and everyone. To to me

domestic, quarter, increased the sales, includes auto and parts For XX.X%. stores our Brazil which total Mexico

$XX,XXX million increased an X trailing several amazing XX.X% the were In for $X.XXX year. compares this million, customers total sales, basis sales on XX-week an a week, QX. us. year’s Total total that program they For and were through last sales $XX,XXX to last sales last This to $X.XXX sales $XXX reached DIFM the were XX.X% from represented our million the quarters store Last XX.X% QX of ended, $XXX.X have week AutoZone of ending approximately per average million. quarter basis our DIFM our number year million, at quarter did records versus sales an extra for increase excluding per year. program were a on week weekly our $XX and up up

year amazing Not total higher. were to has open we finishing per an was able only in our weekly never fewer been XXX accomplishment. at XXXX week commercial store average program sales, efficacy this programs, us, sales record million for As we with total $XX $XX,XXX but a

currently, a remain to and our industry materially moment real sales of four again FY’XX. repeating that for believe the commercial. the on comes will are should I us discuss know While this on right remain it path. we better major to are focused us increases making the overall This a than things were take difference industry when of year, we in comfortably we past know we many ahead participants

these in compared been example when hub in from more lift These day multiple the to SKUs inventory now major able they our of and XX market this XX,XXX this is to hub. are materially local mega open. have markets even Mega we substantially to per continue our or hub and numbering of five we number a noticeably day than to over markets, XX,XXX where First, times opened initiative. more adding With say, increased to stores yes, total same from quarter One expand XX,XXX carrying mega locations. availability. sales the availability hubs available SKUs

service. are Second, we improving our

recently supporting the technology We are needs customers. better rolling delivering faster that out our and that commitments our and than to are before. we accuracy of with customers delivery their times improve our will we new the significantly began We make overall

And sales our have to managers Third, calls the stores our now in XX% X,XXX business in with. us much sales commercial our but own rollout we improving not to commercial domestic They to customers. are involved got initiatives. we We make have commercial the only with store. that our business easier commercial they onboard or fully buy continue our stores. their They to fourth, initiatives are our driving effort service to stores of program in do now and commercial with

to pandemic continue stores the impacted quarter. Mexico by past be this Our

pressure addition dollar quarter. weakness results. foreign impacting year’s at than quarter the sales, The our exchange on XX% to fourth the to and exchange was last rate currency In XX.XX roughly in the additional finished put the rate higher

total our As versus last the U.S. quarter devaluation, of dollar sales were year. down for a the result

During we quarter and with stores. XX new XXX opened the finished stores

was foreseeable While to for believe committed impacts the short-term Mexico our negative in challenging, schedules We future. quarter remain in opening nature. the are store we the

new in and U.S., to the stores with XX finished we quarter. Regarding challenges stores. opened COVID-XX Brazil Similar Brazil, the five stay-at-home We with mandates. immense faced

stores markets, creative were our focused many weeks and of in In contact closed fact, were Puerto drive-through service. or very quickly like forced our stores to our AutoZoners Brazil in for both no implemented be In Rico.

of Currently, to COVID You the well. seen our as stores the have nature Brazil be cars. for should in short-term impact lines view we

a civil points gross basis Brazilian The to This basis. approximately our quarter damage margin decrease attributable was to -- growing last is in XX.X% $X XX-week to commitment in unrest. increase primarily gross was in related on by included shift driven the margin charges sales, lower merchandise not million quarter from mix. the a down and past margins quarter’s business of Gross fourth versus gross year’s margin wavered. Our XX for

quarter dollars XX.X% absolute to for will XX-week in focus SG&A growing was leveraging XXX last primary basis on Our be fourth quarter basis. parts auto profit sales, total year’s to the points of gross segment. a continue

over fourth SG&A last quarter. year’s grew X.X% Our

As in accordance in offering COVID our volumes. in time-off additional morning, we manage sales and release a net emergency related $XX.X our with we SG&A charges will discussed something press incurred we this expenses. direct million to remain

would sales spend in our haven’t we labor the levels As times, pick-up, to increase we mentioned, was so staffing staff expect able increased as $X.XX increase, to rate previously the as will and quarter to volume, our have adequately been at the cost. EBIT for million.

XX.X%. facility, Our higher expense issuance quarter $XXX EBIT The for margin was QX from to a XXX-day third completed was ago. billion the XX% and related million, million the quarter. the $XX.X Interest credit year in up a both $X.XX expenses bond

interest ‘XX quarter first in versus are $XX year’s fiscal million quarter. of million the We planning for $XX.X last at

end last Our Debt forecast $X.XXX was than the XXX-day billion. the the X again ending by facility. new of $X.XXX last is costs at higher above billion year outstanding quarter driven, million year’s the or issuance associated and credit of QX with $XXX bond balance

Our level quarter finished metric adjusted debt EBITDA. at times X.X the

metric suspension program. of repurchase credit share Our temporary the lower-than-normal reflects

long conditions, may While allocation in remain are and metric important -- the In based strategy. an to grade in regarding capital long-term, decrease management’s repurchases increase our rating our our any share and we given both debt leverage or strategy. our investment opinion quarter, committed of on that element we equity

XX.X% in fourth year’s rate was versus tax our last For XX.X% the quarter, quarter.

it points XXX options rate and ultimately basis year affect points. quarter’s Stock last income aren’t rate predictable stock and net benefited option benefited such exercised, while basis our EPS. as This and from they tax will exercises our XX

report to income to stock million, quarter any quarter suggest cannot XX.X% the us approximately investors week. when was option of on committed before predict remain XX.X% Because a For for we exercises. rate. we credits assumptions effectively excluding on to this due year’s we was option FY’XX, activity, the tax versus quarter at first the XXth the model $XXX impact fourth last up Net stock

fourth $X.XXX to for reflected X.X% prior the XX.X% excluding year’s combination year’s required factors week. was from billion generated of statement last up the year’s new million Net last expenditures these share this flow cash the expenditures and XX.X hub share year. Relating the development earnings cash open of the quarter the operating or up over the by fourth per million mega Our approximately were openings, totaled stores count up The quarter of investments. work stores quarter, extra quarter. and diluted on quarters lower drove for QX for extra net with quarter $XXX.X of an over additional million stores, technology was flow. we XX capital This $XXX to existing fourth expenditures versus to week. quarter, information on upcoming assets X.X% last Capital remodels for and hub new fixed $XX.XX,

we a X,XXX. stores the $XXX.X This we for With in last year’s versus new opened, $XXX.X and of million. count Depreciation XXX AutoZone is U.S., times. expense the We quarter had the under growth quarter stores for generally and quarter store share with line $XXX versus finished stock end, our Brazil authorization XX rates. any buyback in in last this X.X At line million total past was $XXX in Mexico with of did metric remaining recent generally X,XXX is our not million million quarter stores in repurchase year. totaled the leverage in

each cash investing terrific a our to in to we flexible flow our our continue our current cash a to earlier, tool model, and As remain buying be the is business a quarter in mentioned start utilizing and to of opportunistically appropriately conditions our we expect economy will share generated cash At business, flow after way on our as based evaluate to core flow and this shareholders. the we Bill our program we -- free whole. stage, back repurchase program, believe strength as order back remains generation had up. to as suspended It return it excess

Net to inventory, negative quarter. Inventory total. I’d defined as $XXX,XXX you $XXX,XXX product inventory our The $XXX,XXX $XX,XXX quarter. year, a a driven last period accounts increased versus inventories stores same on per negative placement. negative a per and versus payable in location Next last $XXX,XXX increased basis less like last and new levels was update inventory on by a company’s over last the last year was year and $XX,XXX location merchandized X.X%

result, versus a a XXX.X%. finished the inventory at percent QX year’s payable gross of of As last accounts quarter XXX.X% a as

XX.X%. disciplined the approach capital for trailing management in of our return Finally, four capital resulted invested on continued quarters

We have will cost make that returns and will exceed believe our capital. continue investments that we generate of significantly to

Rhodes. Now, Bill I back will to turn it

and look things us many unique manner. Thank you, Board customers, but to proud I across doing a the business These public, servicing our day-to-day. commitment so to at differently Bill. required their unprecedented safe and to manage very am in to be our continue team motoring the times extraordinarily our for of they have

are the fiscal we U.S. uncertainty While we prepared of operate to volatility don’t can volatility of more the wary at ahead but of how times, in start this in know what year, that were feel We this exist, both lies today remain international and the pandemic. effectively learning we are new than these much for us for our markets. we we

into go customers we have for quarter before, conservatively that with We our to families, close are wide I extraordinary on drive But cost upcoming I clarity fiscal you of unknowns. spot clear. new servicing year. people on a to and vacation see as year. stated appropriately. the our environments get our to But who crystal first will all economic practical expectations variety isn’t helping wish structure in more back us the want manage for be school them order get to business trends with plan the provide our We ready for to and or work, be a and committed could their I we

Our ultimately understand domestic past tremendous was will trends retail for surprise this slow. quarter. business us a We

feel continued While this to times opportunities during how a can domestic, quarter. are and AutoZoners what do for we future we or do we position the matters their safe bullish I to while our we are industry, things, needs. bullish share had extraordinary new our year really start our and outstanding quarter, we in our and two isn’t but customers today, and continue have even appreciate We be new What these fiscal particular, gain work our company. company in as on happens segments. Frankly, keeping focus a doing on an providing we are year. now our for well-positioned Its, customer both greater we future commercial success. retail more with is And automotive we on from to importantly, these what

a impossible announcements Before few plan of to we that the organization talented and year. have missed. and for weeks us each our of on will had have tremendous two state ahead our end would Bill Bill with at sharing We They Hackney, in own the come. long-term we It announced leaders they tremendous teams. to made exciting a Giles our proceed and some business, to of is interest typical company’s fashion, impact the culture calendar their retire them questions, put this But inevitably that long the their time been be always sorely they day ago.

addition the our and team. are we to prepared two fabulous of teams leaders announced As new simultaneously such, their

President new with Seong Our today will Jackson as Vice us Merchandising. Ohm CFO, is our joining of Jamere be new Senior soon us EVP, and

perspectives enormous to so and Bill our of thoughts, It Jamere add will look Bill. excited to our forward these inject contributions and two to seasoned to are tactics. future ideas, into the and strategies We and highly We leaders celebrating and accomplished their Seong, welcome we be terrific team.

to the Now, call we’d up for questions. like open

is [Operator queue Instructions] Michael in First UBS. question Lasser the from with

is now line Your open.

their for Thanks questions roles new my retirement. on a and good and morning. everyone luck Bill Good lot your just Rhodes… taking to congratulations on

Michael. you, Thank

you Thank from about on think of about you how extraordinary the AutoZone’s you is opine as sales experiencing the you. forward, project to Bill industry Rhodes, right that necessarily categorized -- growth moving think trends want to period now you those to don’t want items. recognizing but related that as what

As forward? structurally that industry’s that the vehicle assumptions levels miles are driven are moving sales even saying, return pre-COVID to under if operating you can the lower

Yeah.

Michael. wouldn’t will our I call, And that to, months for continue those on I four levels, elevated think go back right sales to now, to are one if is me told have -- have really that other that I of would at thought that would additional those you our enhanced months last But questions that say not four of the be and still it. did. biggest but same. driven, August all What post-economic the are me the same-store element was stimulus happens And the to true, being sales news are growth XX.X% a unemployment they had lot driven miles be an miles will fact of they benefits. that hard with

it’s miles customer generally work home. -- it’s When Our from are still our you higher that socioeconomic declined, are driven going think core groups working every have habits customer, about day. They that -- their changed. the to haven’t

just haven’t at Our worked and haven’t worked AutoZoners. store they AutoZoners They core day. home, customers, like a D.C. home at our

new difficult hang and What don’t generally I any think their and times and So going not they their to driven upgrade economic get people piece to XX because prioritize vehicle they the level vehicle on Frankly, very that are when miles same. tough I change a we period, is, are it’s very, the predict. different to on to in short-term at months? in hang a us vehicles. maintenance for next are all therefore, their The happens

I earlier, the point. those -- out the best best the decades, recessionary this the been we same that as recessionary be coming that’s environments. periods? at for analogy over But of the this of So, us environment Will don’t as performance I three last last have have other all know. periods said

prices share on gross gain your side a over That’s that the of to the have within effect impact quarters in helpful. commercial margin on have strategy push the this the And commodity business will much any my of it gross couple quarter? seemingly did is follow-up lingering next and How ability your continue that further expect items gross question the Did margin? impact the margin. lowering you on do to to on

start Yeah. shift. I would product It’s good of by question, a Michael. mix impact first gross margin most the saying, was

and those lower quarter had the have quarter. typically they typically have than we an average. as our like example, Batteries underperformed slightly and outperformed the margins categories some brakes and average higher that during lighting So margins than the

we what to be a did us where during of adding for lot that’s market yes, lower bit. provide quarter. like it’s select service and are it -- But, little categories many opportunities gain more did of commodities, did drove us those competitive. really share not the to we opportunity So for And in categories find we we an a

long-term So we But help to right profit. it the help a drive impact. basis dimensionalize and drive think it will gross it was probably decision sales single-digit was point and ultimately

That’s of Thank you. luck. helpful and best

you. Thank

Morgan from with Gutman Stanley. is question Next Simeon

line open. is Your now

a there a I My question question margin. we short-term sorry, and ultimately sales towards and through have if sales times you I everyone. the on back. end on XX.X% so to sales, on Bill on August question you revert of your Is CARES couple can anything September, talk X… morning, Good think about will and mentioned, first prepared then more you Thanks. remarks, Rhodes, the a said, get be

Yeah.

you …do impact think see DIY bigger or will commercial? we a in

Okay.

a year So focusing of earnings end and of the history you of so want comp on see that clear a two end did about the August. That’s want were the don’t crystal because a people what and long much within attention so XX.X% happened we year short don’t half after year quarter. trends of in we September, I in to know a of I period quarters is, and our why go half at because such in about just August, the we that this, time. talk just Usually report quickly three our weeks. weeks we three

at to So desire extrapolating three I weeks I but want weeks. two don’t I hear it Simeon. leave to your more that, or us want understand

in don’t I commercial -- more, DIY Fair past, enough. follow-up have be if a the then, CARES points given maybe margin year. market thought will Is has it so and have is your or the up thumb or guess, algorithm could in also XXXX? framework, you mean X that if And back the or in will gross little bit follow-up down gross if up you the lower on be but and a on price that a was is a it provided right typical then AutoZone know then, of than a if I on Does average the I fair a that know XXXX. to invest more the from throw don’t of little rule help the sort could a XX-ish there idea margin. And reserve I basis threshold for still or in

Okay.

then, Bill, answer your me first the follow-up and CARES Act margin will take question Let on gross the one.

think, CARES, a benefits. X CARES now unemployment the enhanced as we I and provided far As it’s Act, there if was additional

the of customers you the more think where financially side fragile because the of on the see I business, DIY that’s benefit are. most

to both but picks happens when they DIY the the DIY come what look business pick up year tax you refunds business, it’s back more. If every up, and even out

on it I the be So think Bill? on would more side. beneficial sides, DIY both beneficial

by look side, we gross On the just dollars growth I that, XX%. profit would say grew

again on is dollars. focus Our driving gross profit

conditions. we going prices over retail up based that, we on And find and back will business, can to so and to down where are market time, the do commercial and in opportunities invest go

right standpoint about so opportunities to cost category-by-category we our margin us we some again, good basis, through got our for mix great and be lower So, and a have place now is, lower look, healthy margin always in is. a that’s going sales acquisition have to margin. really opportunities the product There’s in we impact our -- to on where going feel shift is really

it. Got

and Bill congratulations. Thanks Okay.

Thank you, Simeon.

Thanks, Simeon.

is from Sigman question with Next Suisse. Credit Seth

Your line is now open.

believe your moved commercial second talk And on wanted Can delayed exit quarter? Great. pulled very have about Giles, the from Bill the sales little the you that guys, forward on being a discuss Congrats is trends been you are of DIY of are rate, it I as a strong obviously, that as more through then good had any you you in retirement you quarter, Hey, on that year? the what you is, that you morning. just bit concerns whether that trend. and part about to well. you earlier the see are and saw you types projects thinking focus done do if getting that can that? the projects you have congrats announced seen How or and largely XX.X%

Yeah.

there. questions in terrific Some

we projects them, did they they those would period the because a income been our to of, jumps. I project reasons think some. time very, had been and of lot thought it’s pull people forward? incremental they as lot battery are category. extended is kind for do time, park doing tackled is it, Once question it of had some people battery Bill time I never therefore, their I some that said, they restarted when vehicle work we discharged believe the of of, last has been that the do the time. as A far do the but had strong. never now business, strong had disposable -- and the projects As call some they These the they very

your this some pull-forward. if was So piece we What wonder that the I a are those see bit of of winter will failures year. That’s might have coming question? the a got might that happened But that part it only when get first when we cold? into have next

through move the Just as versus DIY the commercial trends you quarter?

it XX% methodically the but went over two ramped of commercial I Yeah. quarter. to the lagged mentioned it, and DIY build very back course days business started, it so The it, in continued up really quickly. April in

got down when businesses enhanced took a bit unemployment a step we August, As of benefit away. little that went into both

trend the frame how estate reflects a in That update the most particularly given the have point, you about and for the important network? Thanks. are a you sense. in doing that of this perform that up? the been may markets you then in when add come hub you thinking Okay. couple locations commercial, real of a last hub makes do commercial, Can opportunities us obviously, disruption retail the strength on And at how over to strategy, quarter us all lot saw of I just the the the follow-up things just on growth years. And think was hub you then

Yeah. opportunity. continued think that Seth. there’s Great question, We

expand we before, mentioned going are to continue we mega As to hubs. our

said, today. have we XX open As we

We have hubs XX-plus future. mega targeted in the

on to over next couple that way are We of years. well the our accomplishing

on XXX we think almost double about term got have number. We could a We basis today. that hubs longer

and introduce about from when And well sales and we you The boxes place return are markets move that are is are for do are so certainly the excited that. and be hopefully excited just So, the They volume there an are perform about forward. we have marketplace opportunity in more the more will be marketplace. an we available that we right those that generated the us, in getting to as and adequate it. right hubs into

question Horvers from is Christopher Next with JPMorgan.

now Your line is open.

Thanks. Good morning, guys.

So follow-ups. a couple of

the impacted hurricane, hurricane it moderate August, me for that do -- -- did and did to how XX.X%, much what the that On in actually perhaps, post-stimulus? hurricane you degree as peel back,

Okay.

impacted. So this the directly for were hurricane, that people the not was except a massive hurricane

So was pretty it small a was that hit. area

softer sales were softer week, but they in in disproportionately Our that Charles, not softer. last Lake were did Louisiana. We store a lose

or ago. a that significantly no know result half week that a and happen impacted, the we AutoZoners one hurricane that of as were Fortunately,

moderated just both XX.X% a But they bit. the moderating, what were, to period stepped little August. comps August They we commercial death as in far with tickled frankly, saw. of down we That’s in As time.

change you your areas And some that acceleration? hit regionality the spring, you Northeast, harder the Really any And any the as -- Yeah. over perform as COVID the example, the for those some around about or how the of a strong. then, in saw COVID summer, flare see of you did deceleration from over of business, do think areas ups perspective, earlier, quarter?

COVID. the a that was to the there spring, hardest the little there you attribute rest in summer and clear very differentiation, certainly, Back This delineation and country. could areas hit between of was little the differentiation

see weather in unremarkable. the do. I But we always say, would that patterns would summertime You the impact as was COVID some

And the Northeast? then on

sorry? am I

Northeast.

did as The there, the that hasn’t of Northeast, less marked more country improvement? that has miles part gotten a worse seeing driven

the rebounded of back more with the normal being rest has It to markets.

to all. congratulations Understood. Thanks very much and

you. Thank

Thank you, Chris.

Appreciate it, Chris.

Next Wells question Fargo. is Zach Fadem with from

is open. line Your now

Thanks Hi. for my This David questions. is Zack. for Lance taking on

as double-digit sustainable how the just you as comment this of and I the on has you would on whether commercial was the could side, forward? you continue going take view business changed a result if curious pandemic to So share growth is

our running it everybody in pandemic, things in thing how think, we of have, last on of one, that But the is questions case us stand talked I like do liquidity. ask call would asking the I did in my said, run invested questions two Well, that We thought midst were never were do the happened saying, we we costs included, operating is a people depths things, our started business, crazy. was pandemic the we that we important most like of the -- I about I down the AutoZoners. scenarios, the the how in which gap ourselves, for Other that one we AutoZoners. ourselves cut

benefit. that We have provided them with time off emergency

sophisticated, the go, many the The pandemic and hours was people very they didn’t other cut that kept furlough thing and we was and Yes, possible. about our store one we single less business, or well-capitalized normal on we as it. the as swiftly very as we side one, their Other of our let people, they back not of less people, lay-off did strongly a operations cut operation. But that commercial result back particularly which service of person, were of they reacted the level.

period from certainly And a view. so serve an provided to opportunity of customers time, us of point competitive it that during our over

in grow foreseeable the winning marketplace. anybody’s XX% the not know I I longstanding that’s future, or guess. think we has What commercial are that, can that a impact, is we into whether

landscape most If and is been many significantly versus where feel we what X XX of X periods about industry are. rate times, growth you has look better, we or the at times our our over the -- good times over the growth the growth last competitive years, really

miles in then parts Great. the do And the when cars the out suburbs? think you demand a think through just us, one from moving from higher used to you work-from-home, extended shift how more but also population plays around driven

It to obviously, this at if in is point. the XX% close look would I feels better in back miles driven the at miles that it down though down month, digits maybe it as was sales, each you fuel getting to imply low-single mid- is the But mean, July. driven current

going to workers able that’s number Bill’s to relative and to their their to essential customer, likely it’s not And to earlier, get back miles than operate work likely improve. that very not to driven negative. to a our point be that’s necessarily are cars. that is expectation needing is able continue our They to that more So

expectation better and a already our is it for our little is, get So that probably, better customer. continue will it bit to

that time in was period of back want everybody when Can to miles of ‘XX on remind the ‘XX, jump to and just driven and that as well, correlation time, during go And broken. I were I miles was performance between to sales dipped the driven period we the people industry that with employment. lot fact there sales of with -- our our -- on more to trends going was were the that what aligned and a performance attribute and

good not I recessionary miles these breaks. tough But And in environments. short-term correlation so definitely times. together normal driven between in think, comes It times, more economic in the back it is a contributor

Great. Thanks so much.

Davidson. question from Michael Next is with D.A. Baker

open. now is line Your

it question we a understand have sales ask to wanted trying about up, week. SG&A, that I the probably SG&A SG&A so to am are understated extra the X% the on think growth again which because you going foot slow, I labor Thanks. What didn’t when means Hi. earlier adjust was maybe per to you for you is, but growth maybe the was that then in slow, would quarter. needed

for level, forward, about next does low- continue to the in that comp going per quarter? if you go So in how foot up the that think instance, do to we mid-teen SG&A

is, good the that in are our environment in. going that question, And we as is know, Yeah. we are you a It’s Michael. plan game to play

strong, So if sales going be are that. back into continue are invest we to continued to to

reasonably the the of we we service, to in trying certainly, catch before, good beginning mentioned labor of at the ended the and little Bill As were bit. but shape standpoint probably quarter quarter, a from up

our as I labor able an sales to the investments opportunities find on to about strong commercial in customers and going all and it’s be our a business when be are and environment about the other our our are expect to creating we overall us really future great that make and Because, on is continue retail we service it’s to continue long-term side. basis for side again, the So, to to both all growth would us invest ensuring for strong.

Okay.

that sense. makes So

on end something remain the more and look forward pretty if as be basis we August think foot was were lines, of month-by-month the So to are just going to or at we to follow-up sales that SG&A as X% the that quarter should we it assume about that, presumably in strong. those along to trajectory the up towards fair? able a on than that’s Is going maybe per long

say relative it progressed, would I increased quarter on basis, the would just a yes. have as

Okay. Understood. Thanks. Appreciate that.

Thank you, Michael.

question Stephens, from Next Daniel Inc. Imbro is with

now is open. line Your

Thanks Yeah. and congrats welcome questions. I taking for my morning guys. Good Giles to Jamere to my add the team. Bill

Thank you.

Thank you.

margins, department, then direct Bill, to hire your about global about stands? forward? she that of been I the kind in something Starting last adds initiative. on Can has talk XX Ohm, Seong going you of months you a where can and growing experienced capability sourcing that on on the us talked And how recent guys in gross think, update that sourcing obviously, have focus you

question. Great Yeah.

lot costs. foreign and where sourcing in our in office to find able to be areas fact, office lot China spent a In time we continue different buying a over reduce in us of can to opportunities -- find acquisition energy for we our categories building, we of so

us to and to world want on of be continuing world opportunities able that geographic also too the product. taught other the order that so that, throughout area ensure to pandemic be things the particular us to going the we find dependent source in is One other any are team of to we was for not

Seong think, will a So on well. that her have and come will our opportunities in reduce our able risk find already value a joining also but with acquisition us of overseas be built of other significant product this to a lot lower the long-term basis that area actually, Seong day, I us cost. amount for as to experience and area excited to in the team and buying we helping great we organization will are that about every add should

obviously, a industry it for independent Thanks and follow-up a from coming the you much maybe are color. I like differences of operators. then sounds mean some on so it’s higher the question. gaining discussed great. level That’s why Rhodes, share, Bill just And the you

independents start as that of what how think share longer of how you that the that As through that, impacts of keep long-term losing long impacts independent think more from base? are store keep closures the term, before Thanks. see we the pace do can we gaining maybe or the you to rapid a share

that’s and Well, significant I a participant over through seen ‘XXs this it in the years I all XXXX terrific XX a of question. way been the for AutoZone industry happen the have in and so. have was consolidation or late

is side, challenging. more the On much commercial this consolidation

the the side everybody geographic retail and same size we boxes and of into our prototypes. was business, them over reasonably the expansion looking for all time standard On could take turn

have learned We over of us. step team ways time. inventory. marketplace don’t us their it’s winning the with customers We We and need for side, out get is customers more time. approach locations. that believe need acquisition We wholesaler’s don’t very wholesale approach work to the there did distribution. our We in for what in their didn’t don’t the need we On efficient not as the by to IMC strategy market into well great their and our easy. water will our and over We the win is toe need their --

competitors, look done to our years. of substantially over we have you in we have years five If the last assortments changed all our some at what XX close-in inventory

sales the differentiation was the competitive we in forces really at chip away of have and to strong We built are some that all marketplace. continuing

are the other many not so companies, share of on for their what over They power that happening what’s These them independents, a time. return think for salaries working than time, happens have that’s enterprises and they I the over capital staying they with working though. longer I are think, would.

today side up. going So time it commercial will I this independent that’s to take pressure of the business but lot do there’s think in and operators on think a of not let I that

the luck. Great. and for Thanks best color so of much

you. Thank bet. You

like I Bill to Rhodes. back call now to over Mr. the would turn

Okay.

conclude solid. we very the call, business our we model our reiterate is I that take Before to want moment to industry a is believe and strong

have as to understand alternatives we our granted We will for nothing take customers shopping with us.

basics in you great our Thank safe We time value XXXX. and to strive will the thank as to for FY your continue focus you be your well. for shareholder and we in on optimize interest company. Stay

your This concludes today’s call. Thank participation. you for

disconnect may at You this time.