AutoZone (AZO) 24 May 222022 Q3 Earnings call transcript

Good day, ladies and gentlemen and welcome to AutoZone’s 2022 Third Quarter Earnings Release Conference Call. [Operator Instructions] Before we begin, the company would like to read some forward-looking statements.

Before we begin, please note that today’s call includes forward-looking statements that are subject the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not guarantees of future performance. Please refer to this morning’s press release and the company’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission for a discussion of important risks and uncertainties that could cause actual results to differ materially from expectations.

as obligation date to only company and speak no undertakes update statements of made the the Forward-looking such statements. also will call include measures. non-GAAP Today’s certain A be measures release. reconciliation GAAP in our press of can to non-GAAP found financial

you. over your CEO floor of Thank turn Sir, the President Rhodes, to is pleasure host, now to It floor the Chairman, AutoZone. Bill and my is yours.

call. and Jackson, you for Brian President, AutoZone’s Financial quarter conference for Executive and joining XXXX Jamere are President today thank With us and Campbell, today morning Treasurer, Chief and Good Officer; Investor Vice me Tax. third Vice Relations

Regarding the If www.autozone.com comments available on third learn Relations opportunity the them. you on with the quarter, release the today, our are quarterly Investor conference earnings about along have our not, to had to and I calls under see link. complementing website, press an our Please press hope results. click quarter’s release read slides

want remains seriously across our and that continues to we am Everyone, continues stress everyone take to the to and begin, of proud variants. very COVID-XX customers I AutoZoners, respond team our responsibility this safety subsequent we of to the to As and continue priority and organization highest how our well-being

times. distribution stores the these abated, Since meant continue face the especially have as recognized of pandemic, our has us. challenges AutoZoners giving in the shopping mandates and and the mass COVID-XX of for centers, While our of exceptional we consistently in all have are for for AutoZoners in to start environments all make we are service sure the our our customers in safe working are possible as

again performance to categories their exceptional our of overall start discrepancies. while the merchandise and our our customer providing their AutoZoners DIFM quarter, with same-store over morning, will for trends, our drove XX sales we review regional thanking that quarter, customers versus the will DIY sales, our the cadence weeks This service, helping same, needs. we automotive by any This dedication

think We impact costs is business fiscal the how we for affecting will they will how the and share our our of also inflation year. and retails remainder

were and our quarter, on very X-year comp X.X% Our top X-year sales domestic a strong solid of accelerated. year’s stack On XX.X%. both basis, same-store sales last trends this a

at Our and high team, the once again, despite exceptionally amazing comparisons. results level executed an delivered difficult

for commercial a growth under an versus Our Commercial up this sales, north a commercial commercial than QX basis, four-quarter set with sales our are growth in trailing strong, third record domestic year. rates generated We more quarter sales quarter $X retail in both of just accomplishment. On with XX%. year and billion a $XXX $X.XXX million just billion XX%. were ago, of last billion in incredible $X.X

We at compared year. versus sales of represented a a another sales sales, basis, also last auto us weekly just from our accelerated to parts record year. sales X-year quarter $XX,XXX last any XX% set our $XX,XXX record for per in XX.X% quarter. store average for last On Domestic commercial domestic

initiatives. driven Our commercial by continues host a of sales key growth be to

satellite store sales business for pledge improved massive strength our us and with, to We easier living proposition deliver. the hub have mega by availability, times, brand, make coverage, value technology do we right enhancing Duralast years, improve effectiveness with the being the last in for been delivery improvements on better several consistent the our and to working hub of force priced

in extremely and our execute commercial we We proud and continue very to of performance. their team well are

domestic in of DIY. are also We performance our organization’s proud very

top comp ran of year’s quarter XX.X%. a was negative this the it As comps that U.S. on year’s of that payments stimulus QX a consumers massive in the reminder, last were record to X.X% last had distributed positive We

we X-year DIY the we perhaps slightly tough X-year results proud comp comparison is DIY accelerate. such DIY have comp, units gains those had the we were which modestly the the us, initial We from more considering but share built From during did we gains. QX’s X-year continue comp, and our the DIY relevant year. last available a stages to decelerated to of the to data of retain While very dollars comp not build pandemic, in only on our enormous

massive Our continued ending exceeded levels substantially gives elevated the and enhanced beginning have conviction experienced since we amount of the last the the about and of the benefits, the performance, considering the of expectations us has stimulus from time our sustainability of unemployment the pandemic. sales

Now, let’s cadence. focus on the sales

Our quarter XX-week period. spans at

weeks, But XX.X%. time remember, payments this over X the last were X%. increased weeks same-store our first were we middle then sales and over the up Our down comping X Then made during over the accelerated last year they materially sales against stimulus up weeks, X X.X%. same-store by the

really going All is last the much of comparisons these to on year-over-year year are and us so difficult interpret before. year even

X-week respectively. was XX.X% XX.X%, for X-year QX’s XX% quarter comp X-year X accelerated for comparison. periods and our For periods quarter increased increased our and quarter and was X-week XX.X% comp the and What XX.X%, and to X-year I X-year want that But QX, the is XX.X% the our the for X-year and respectively. comp the from XX.X% XX.X% stress

of by gains. the encouraged enormous We sustainability these are sales

April, performance. weather a little feel however, weather sales we and than experienced and February across our not normal role a wetter the a material March, was Overall, normal. little in cooler in weather, country. did Regarding trends we play

look anticipate the normal summer weather months, As we patterns. to we forward

hot parts accelerated or As historically, weather, maintenance. and a failure extreme cold, reminder, drives

roughly ticket X.X%, the quarter’s X%. up in traffic retail, Regarding ticket our was growth versus was traffic our while down

transaction traffic QX XX% count to Our meaningful year’s correlated last decline increase. count was

to in transaction a beginning on quarter, exceed our quarter transactions the decline assumptions While expected of we declines. we were this had count pleased

the unit our market We are ongoing pleased share we also with quite seeing are in data. share in growth

customers. the and extensively new the quarter have the We and we are of hear sales tone growth to customers our from we The customers existing I and years is as and sales encouraging execute experience over our meaningfully transaction by commercial. has find last to and Most stores our growth the few acceleration continue very trends from on comments positive this in to very commercial strategy. comprehensive encouraged AutoZoners visited changed our offerings. sales our coming from it implement calls continue of commercial

start heading our of final year, months. to As the seeing fiscal the we the quarter with both are we businesses continue summer we momentum domestic pleased be in into

regions are. did During were always than the others there there as geographic quarter, that some better

This XX difference Midwest quarter, saw the Midwest and Northeast balance with Northeast to a lower. the the basis between points country, compared of performing the and we

cooler April, minimal and last not and below on were there Northeast the in weather. quarter, into sales. their summer wetter to year’s the on Northeast a fourth will continue the We will do were results. Midwest As effect cooler due sales we the lasting Heading believe effects be in to have performance April slightly believe Midwest and sales weather

more into for let’s the our move Now, on quarter. specifics performance

same-store were X.X% Our versus last sales up year’s quarter. third

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

Regarding in our but there outperformed hard the business, retail X% sales than between categories our parts them. was difference a merchandise our less floor categories,

in which This categories is floor recently, jumped gas prices performed were sales the categories, As results below unlike sales plan. certain parts plan. our hard on our

year rates hard that the of like quarter. customers assumptions We driving to categories and with strengthen exceeded in believe growth our our our will parts have for more. left planned as batteries successfully return been easily especially We have performance very many business pleased our last our strong

Let me inflation address also pricing. and

quarter X.X% saw at cost inflation, of a quarter’s on we which similarly We both be by could quarter, than in basis. increases. goods This line our higher sales was from numbers believe this up the X.X% slightly inflation, fourth increase with for the past like-for-like

raw aftermarket material space. been inflation impacting all are in the rising and pricing, costs our transportation As suppliers, prevalent labor and has us

It no following say but last, higher our of is pricing to ultimate expect been how will that has decades reflect pricing we not have has to to We way also for that notable cost. historically inflation, reduced industry and lower our periods disciplined industry this about long continue.

with have current is comp near past previously continue for sales. a both sales it sales quarter a X-year basis. on the we consistent said forecast mid-term stacked basis X-year and remains that the all encouraged What to While been to I us have comp difficult to be five environment, stacked

absolute the to growth environment, while believe levels sales in And exceptional about sectors. we Currently, both the difficult macro for remains and long-term. our initiatives, tremendous we that execution going industry forward, predict over even our that industry. our favorable share an we trends near-term for uncertain, the growth if have solid achieved are excited team’s fade, it’s in While is we gains positioned are these

executing the initiatives. fourth on led For continued we our differentiating be to our our we business strength sales performance as expect continue by in our commercial quarter,

and seeing are as We always, our will, what and emerge. on we be markets trends outlook about transparent color as provide

are to to the over call sure those. the know our make the business give like the listeners handing priorities and remainder what fiscal for on year some color Before of I’d Jamere, key

chain. focusing First, our we are on supply

place We will placing yes to markets We continued frequently and ability rollouts. performance. in lead say believe drive our have intelligently inventory to drive to more hub availability. and in our mega customers improved in hub is initiatives turn two One expanded our continue sales local to more our to to

by they, times us the are opening reduced new additional Secondly, to Mexico. to These expanding one announced DCs We ordered SKUs distribution our in DC relied new DCs, country. we and carry only allow vendor allow being but these markets center will slower stores our We larger domestic and demand than drive them serviced footprint. two yet DCs, by community across DCs not will stores. is turning in us to once on our the that inventory previous the shipped carry and to previously

SKUs U.S. on all that and in inventory Brazil. available was Our plan refine states. chain DC on continuing is have accelerating And will we XX the lastly, not stocked many supply product leveraging our smartly focused we learnings while to business, more we across offerings previously. expand in Brazil and in the our Mexico carrying These are strategy in grow our to growth of Mexico our

will to over Jamere? Jamere Jackson. Now, turn call I the

Bill. everyone. Thanks, morning, Good

on As increase a comp a third a growth, with remarkable X% Bill mentioned, year, X.X% quarter quarter, EBIT third we strong X.X% had EPS. and stacked decline of a last in top in

robust and for been our initiatives in results on our continue continued growth the morning, P&L as fiscal have to our have to the AutoZoners us incredibly a quarters few this results our stores To minutes take to enable specifics let of deliver year me to first of advantage and efforts take conditions. for the centers QX. market strong distribution start in Our the three great of elaborate

total domestic X.X%. and under total just Brazil $X.X auto quarter, our For sales, and billion, parts sales were up Mexico up which $X.X stores, the billion, includes X.X% were

our color with little a quarter. more give starting sales commercial third me business on Let the our and growth for initiatives,

$X over XX.X% sales sales. on our and Sales to and DIFM XX% Our parts company to domestic our total auto of domestic increased DIFM represented billion stack were XX% basis. sales customers of a XX% X-year up our

sales weekly national Once performed we were internal local up total was XX% just as expectations averaged again, very exceeded program both broad-based over as well per sales. for $XX XX% growth and at commercial $XX,XXX, the million weekly our Our accounts in and quarter.

results for grow chain. quarter as our existing the of share to better weekly business represented of share for winning our we quarter wallet sales increasing that highest Our and any results the customers. new delivering volume on expected acceleration initiatives reiterate history with I our the is commercial want execution by the than in

leverages we which national, and accounts. our stores, commercial and in with building XX% infrastructure business DIY We of program have regional our domestic are local approximately our our

opened new net with programs, programs. total X,XXX XX finishing quarter, This we

service believe said reflect third FY way the we in strategy and and parts, brand, quarter lead with seven commercial sales As confident will our pricing and growth ‘XX in year-to-date the in will drive this for enabled outset improved Duralast growth share. year, double-digit the have execution since Delivering exceptional us assortments, gaining to quarters. past dynamic. has particularly remain and We our the I the and of results competitive quality continue providing our

strong mega hub businesses. Our our growth accelerating the brighter And our is in driving notably, marketplace. and performance an future us for strategy even initiatives and our position positioning us core commercial and well in are retail

a me color on our Let add progress little here.

our open expect and As remainder year. XX has mega of We last we given locations to the the have strategy several us tremendous have Mega-Hub quarters, discussed over now hub more approximately we XX over fiscal momentum. the

$XX,XXX was mentioned XX commercial I balance than commercial moment While per sales average sales ago, significantly averaged footprint. the and growing weekly a higher are program much mega the program, faster of per hubs the the

parts store box to and a and deliver source and meaningful SKUs of The mega expansion sales lift inside continues our commercial an XXX,XXX well to sales as over reminder, assortment other typically as as DIY coverage carry a expanded drive As hubs the both our availability tremendous stores. business. for serve lift

performing one improving where learning visited markets target sophisticated have it’s is closer innings, by density. XXX leveraging our hub we delivery regular are of down greater key I and with This are analytics, testing early availability with quarter, of although thrilled And mega driving the am This by assets our XXX approximately individually, lifts product that What from and additional I levels of a capability the availability we AutoZone proximity doubling of the plan market thousands stores soon. well to only locations, to these expanding not total are are working we Yes, surrounding the hub network. mega fulfillment By hubs, results. of gives parts are to entire our our XXX customers reach, we total significantly our customers new our raising strategy near-term access XXX and mega we and our for is parts times. to hubs. supplemented objective higher expanded and but

excited Our competitive meaningful are customers a and building our advantage. excited, AutoZoners are are we

was On start business since The a resilient business, down significant maintained on we side been the stack. share the has as our but and remarkably market XX.X% pending. business the up of retail our retail domestic of gained have X-year X.X%,

were traffic down stimulus. Bill fueled last As traffic levels from we saw year’s mentioned, government by X.X% that record

we raise in methodically prices saw continue ticket environment. growth to also However, an inflationary as a we X%

for in and which new a basis, and DIY to park a market customers, initiatives has favorable macro strengthen business. providing car macro experiencing a for environment. a are continued is used Our tailwind our growth a growing behind market On our aging business sales strong the challenging car our and

improve a challenging to needs. merchandising below able and as while We’ve meet our product logistics chain to supply supply navigate have positions, customers’ supply made chain norms, environment. in-stock our still to historic have Our continue teams and progress in great and constraints been available

fundamentals remains teams. Our AutoZoners, market that key thrive give are us that who We macro for customers, to confident us, and enables great conditions are the by taking of remain we’ve environment. our a favorable advantage care our in business us strong, of our this had competitive execution DIY

international Now a words business. few our say I’ll regarding

Mexico be We we’re continue with Brazil. progress and pleased to the in making

future to outside total continue meaningful to schedules international and growth growth. earnings now in be in way, in disciplined with countries, new saw significant constant store future. both contributors stores During and committed the the overall. quarter, store three an than XXX accelerated sales base ending sales with saw opening Mexico be AutoZone’s Brazil, fact, stores, rates XX% expect finish and we in growth XX. opened and attractive both in contributor to countries and both three a on remain markets new our of With in to at higher stores And We a growth in we currency our growth we to commitment will the to our U.S., basis, expansion

Now the spend minutes margins. P&L few let on me gross and a

For was positive the primarily by business. welcome mix dollars business, driven drove growth margin where net margin the accelerated basis a XX pressure, quarter, but is our our in gross a for increased down our total points, that trade-off X.X%, profit our gross commercial

and see to cost inflation call, product Bill rising continuing mentioned center categories, we’re in earlier distribution the certain along with As transportation costs. in

continuing to We cycles, prior inflation, actions consistent remains take the to inflationary industry rational. pricing are offset with and pricing

Moving to operating expenses.

and payroll staff sales than year’s we of where as comp versus SG&A, last were year as a XXX on The leverage historic Our points. accelerated driven percentage DIY more sales, the last deleverage SG&A, drove appropriate deleveraged simply up by to as enough. basis couldn’t X.X% significant QX growth was expenses fast

our to an experience, accelerated investments and and continue underpin user in invest will also at initiatives, these pay pace We to IT speed dividends productivity. and growth

expenses move We to as forward we and in continue sales manage growth with will growth line over disciplined SG&A on time. be

the for million performance million, the Interest quarter last a sales down strong was and was X% was rest by the our $XX.X quarter for year’s EBIT year. the Moving DIY. driven versus year’s in although outstanding debt $X.X of quarter, $X.X the billion to versus quarter down from beginning ago, the expense year QX in P&L. $XXX QX at last the prior million, of X.X%

We’re planning for interest fiscal million in range the quarter $XX XXXX year’s million the versus of $XX.X fourth last quarter. fourth in

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

basis XXX options stock points. rate quarter’s basis year, benefited from exercised, while benefited This points it XXX last

any exercises. investors due before of suggest For credits option fiscal on XX.X% we XXXX, approximately quarter the to us assumptions fourth at model year stock

Moving income quarter. versus was quarter the last $XXX for year’s EPS. to Net million, X.X% net down income and third

was share count to The lower than offset the $XX.XX, net drove share X.X% quarter diluted million prior quarter. quarter. by up lower for income third year’s third $XX.X share X.X% of Our of count year’s combination lower last over per the earnings

Now cash for our flow QX. talk free let me about

we operating free the generate free million expenditures, spent quarter, in Year-to-date, generated cash For $XXX in of cash year flow decline capital primary and the inventories of cash third billion year. year. versus flow. versus million merchandise we’ve $X.X cash generated us $XXX million flow, last reason XX% and in the year payments down is to The the allowing $XXX in prior this last free timing flow versus for

forward. to expect committed cash our remain We free flow returning cash being amounts shareholders. We to continue meaningful strong generator to an going of incredibly

ratios remains our liquidity norms. very historic remain Regarding strong leverage our position our and balance our sheet, below

initiatives. growth $XXX,XXX versus store basis, last Net on as year. up per $XXX,XXX inventories last last store quarter. Our and by payable negative Total a versus accounts a $XXX,XXX negative negative and QX over inventory year was XX.X% the inventory, driven period less year, same increased our merchandise XX.X% per last was inflation inventory primarily defined

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

our balance moment repurchased on million repurchase the powerful outstanding we buyback Lastly, allowed I’ll the over this quarter. sheet the our of free inception and We had of committed in just that and program. business. our has allocation the capital to we our buyback business over share We $XXX below The allocation shares year. under this back stock to X% our invest strong remaining the back fiscal our authorization. spend earnings, since flow AutoZone XXXX, shareholders. a since billion under us $X.X X.Xx shares QX At of quarter disciplined share We’ve and buy remain XX% generated capital cash of existing amounts end, beginning in to at while bought EBITDA. We and assets growing approach outstanding the will us of stock finished cash our of to historical in investing enable of return which X.Xx EBITDA, objective in meaningful is year

and objective, remain expect we X.Xx quarter. to appropriate. this another However, we wrap we up, return To to the committed target had to successful when very

driving initiatives, cash robust value long-term driving growth We’re returning cash and our excess earnings by our shareholders. to in and shareholder investing

continues strategy work. to Our

positioning share shareholders. competitive market drive a and improving have disciplined our our growing and our in significant We’re tremendous continue confidence for our ability value way. to I ongoing to in

Now back I’ll to turn it Bill.

remain on in had superior fiscal so very execution Jamere. solid you, Thank far service. We focused and and customer ‘XX, results we

our rapidly materially indicated sales retail growth we very of into looking predict permanently And Our experienced the start to it the continue has We by difficult not and how built growth. the over perspective competitive is commercial But next meaningfully to On to positioning this the We was last last is pandemic the customer well on what will have since share months. success quarters. may of as the culture morphed call, X and exceptional XX sustainable. our to was improved, significant gains sales all, our was define we future. two discussed accelerated providing still most, believe our the service, changed. behavior quarter’s believed if in future, we

it to society growth to without the years pre-pandemic significant material and or continue holds true, the back all last We in be through will If and have believe our the in been time acceleration economy today. levels. this that a profits this decline Xth in leading shocks, of corresponding XX to sales pre-recessionary

characteristics. a unique is track high record has return and flow cash Our strong it very long with industry and performance of

have As the at now measurements all Remember, of will recently the sales our performance we radically. pandemic, become of have measure skewed. the pandemic, anniversary the of to lapped second beginning used dropped some the we our

but rebounded Our retail months. and quickly lagged sales stimulus, took with commercials XXXX the April several rebound

of forward year comparable. That fourth half to light the performance the for won’t to encourage comps in look studying quarter said, comparison to you We migrate returning comparisons. back solely X-year would amazing overall to QX, we of For our the be soon, performance. in X-year comps on gauge focusing X XXXX, to

and, We and be own bullish backdrop near for our favor We long-term. XXXX. our is the continue to on opportunities macro in believe for particular, in on industry our

Our customers drive, helpful we and they across need the Americas, when they here advice. want to are get out and

job worked done that diligently for And our very team challenges a enormous with dealing they collaboratively Our together, everyone. good exist chain has and supply with suppliers. the have

We It to I season are with we better for belief. like our the most earnings to and our noisy about retailers, and a I’d stock that want been environment. business in I support clear has clear, crystal rather results to share points and few a obviously you. retailers, other than continue believe think be

retails believe I along that Historically, higher disciplined can industry AutoZone increases has manage is effectively this true inflationary and been cost environment. passing with about our today. through First, rational and

we expenses store can, sales staffing environment. and either appropriately appropriate, we our Second, manage for or feel stronger and are we levels will weaker

has industry frankly, resilient been our and, and robust. remarkably business Our

on investments a centers learned more to to begin in in ‘XX, fuel in the pandemic, would For new have the excess two quarter, open of in we in the capacity. DCs these new as meaningful doing growth, a to we our as Expected profitable during we historic are further on we distribution continued we’ve very and one share, Mexico. centers announced U.S. need on fiscal represent acceleration construction remainder growing Last ‘XX, three fiscal basis. so always, focused but distribution

open targeting support enhance are mega QX. we Secondly, U.S. These our businesses. and more in and retail quarter, new this both in in domestic commercial to mega XX growth hub availability the our hubs will

As at of our they that is times our before, our inventory we and materially working. the are have mentioned strategy mega show improving many core availability, hub results

to year, more For Americas open throughout business. the new to we Brazil than XXX with expect in continue fiscal stores our the acceleration notable

Our fourth quarter our busy own store from development will our our one and These investments a capacity be reflect industry on a bullishness expansion standpoint. growth prospects.

We are being disciplined, yet we are being aggressive.

want am to to our proud stores reiterate AutoZoners I in manner. centers, across their Lastly, how for distribution I very in and of customers so the our doing particular, servicing a commitment safe and

customers will foremost, to and and years And First investors safe and secondly, position bullish that our during future X particular, much from providing focus company very like cash AutoZoners these I we keeping now, be times X challenge future look customers know flows on what extraordinary continuously for our welcome to greater even with our to will and, automotive ourselves on AutoZone. needs. our be that by must while their continue we in on our our We ultimately us measure challenge. industry success.

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

today coming from is is with Your live. Bret Instructions] you first Jordan [Operator Jefferies. line question for Bret,

Good morning, guys.

Good morning, Bret.

that the geographic hubs, how mean they reach? about mega is maybe the You in could I their stores support the On markets. noted geographically? DIFM far smaller accelerating talk you can

remarkable stores radius them. uncommon supporting built so were smaller first stores of be to continuing. than performance because really them and they itself. hub, did hub the geography we that Xx them That’s smaller for mega When we supporting today it many time they are getting them, and four just open biggest they was Bret, them, cannibalizing expectations. of of were day. of before Every hubs not get an frankly, is, we continue it, real we But and time they open Well, do would. we we it are we every XXX to X, and lot can of miles is from the away or XX look when thought like part are stores the The performed hub times, some The the is of A are basis. away. call the well. in, a not X, that even And walls mega the be mega maybe how overnight of outperform they the service at how crux close-in get miles we one on would XX more, our that things mega

on mega we as hubs, talked said when the we remember we last would XX. to launched call, the So first we XX have

We’re now power hubs. headed just and XXX. you show in mega XXs, That to we’re these the goes of the to

Great. one follow-up. And then quick

some fuel higher you on any given noted down, correlated to Do-It-For-Me inflationary consumer? prices hard Are maybe on impact the seeing parts DIY to You it going the or year-to-date. space, trade the in in whether be what’s

Yes. Sure.

I mean, think it of business, about lot to a that. hearing It We’re I the parts comparisons. to with hard Our I don’t I about during on very is get said going difficult want are what’s questions on overstate clarity X% was now the that. low-end consumer, off people trading right down?

talking some about – are people remember Let’s weather.

from X story. a up That March business. was We’re the we of for year What stimulus lasted meaningful saying we don’t that to weeks. really X think on weather against meaningful went was, last was impact is our

are to They say amount hard it’s massive are. so of their the consumer, low-end And a pocket. in last down sure of stimulus had purchases course their versus year, they

see happens the comment Absolutely. to also to it the the you I what will fourth we want low-end made consumer? happens with I what at I be remind But end. that quarter. the watching over think interesting Are

step our think all and gone those a our made the shocks, the is shocks, performance that four our and years, – up, recessions there up has it’s If four over back stepped of meaningful never industry’s been pandemics you last significant economy. down. In about XX performance during business those has shocks and the to

Thank Great. you.

Yes. Bret. Thank you,

line coming from live. Hoover is your Christopher, today is with Your Christopher next for question JPMorgan.

you. Thank

So questions a front. on few margin gross the

in As product commercial there’re And terms some fuel expense about you ahead, pressures do seem to success look headwinds then and side. obviously on on pricing cost fuel you pricing? that the margin your How be gross in think of some rate. has emerging

given the that quarter think couple that those type of you two to continues factors, the see margin past the in quarters? and headwinds of gross So current year-over-year saw would you

Yes.

of I mean, categories. part there your question, cost first the On in inflation question, certain we’re is no seeing

costs. seeing also We’re higher transportation

fuel We’re costs. seeing higher

on However, rational, those pricing is done call, actually and the we’re to past. as we’ve reiterated industry recover just impacts, pricing the inflationary of we all in as the

So seen prices move up. us you’ve retail

has inflation mid-single has pricing As our up moved moved. digits,

has as terms in been retail entire we And I of think pricing. our what see terms done industry said inflation our before, friend of little of I’ve that. has a bit in

Now our clear. want be as to we it to business, relates commercial crystal

faster goal growing ultimately, a value. margin to our Our for is with us a higher grow shareholder business more and, This cash much sustainable is way to dollars. create

domestic business mix XX%. a commercial headwind. grew Our It’s

domestic expect we outgrow business our business, DIY our that and trade-off to continue that’s a to We commercial welcome.

will We on business. continue we’re and playbook cost fact strong accretive opportunities all doing of our that that our the very a across prices a things expenses margin business overall business, we’ve raising like got to managing is the we with disciplined very that our margins to But expansion a includes which accordingly. run commercial from standpoint, operating

question great. somewhat That’s And is Understood. my then technical. other

the and about Because or the the should that trucks the look mechanics, impact as the from in that gas that the up clearly, price item? that that does Is forward. SG&A about think your As you think offset – going maybe fuel an to ability store you quarter, and shops diesel the to of the how cars and over be bigger and accelerated And do P&L? where impact impact? your show you in

Yes.

up in particular, SG&A up a ago. If does in you at our it’s show diesel That expenses. probably versus year XX% look

So things into going take we and we look our running impacts, those to business inflationary that all we’re said have And our cost playbook the retails in I maintain at of all forward. pricing we’re as to running the we’re our look structure sure of we playbook, accordingly make before, account. and our pricing as at total, when margin

Yes.

folks. our – profit. we fleets our is gross the there both commercial is of one majority margin field clarity, costs, then and in light-duty largest for in The the gross Just pressure management and have the warehouse distribution of in in SG&A. diesel which and is And

And in lot so a pressure there is SG&A well. as of

Right. expense to And in SG&A? help offset pricing manage the going is the light-duty you’re that idea pressure then to

right. That’s

Both and of heavy-duty. light-duty them, the both the

luck. Best Thanks of Got it. much. very

Thanks, Chris.

Simeon Your today from is coming next Morgan Gutman Stanley. for with question

growth My Good is some question made. margin and everyone. morning just of the on first comments Jamere

detriment success and quicker detriment to you the margin much can you then bigger in is are even in you margin Given grow meaning you how have as the you seeing grow dilution? this trade-offs commercial? to And making margin maybe quicker and between happening expansion less or are can a DIFM,

X clear. mid-teens. operating basis No, business. for margins years. not will we upon it we are gross margin lower it and in I growth incremental DIFM operates at grows crystal margins it say of margins. set it We characteristics million the way But DIFM on operates it the constraining in the lower generally our based the look at – today an operating

humanly tomorrow. possible. amount another capital we it limited billion incremental as do that that of view, DIY we forward, the that grow are how have to in doing would We just operating as with all were doing business very tomorrow, comes profit gross look that I $X the fast and If and in are dollars. you could encourage from would will focused at our we income deploy, we We with business margin a sales point commercial. we in to look corresponding add how And as on operating we of

over gross increase those it the to and and we overall Our that on business do at goals XX% If grows pressure so marginally commercial margin, gross – puts and puts be be it. time. that the will margins

was by rate some business permanent Bill, comments resilient some how about historically? or Fair at of to a underscoring made maybe it has you grow Were you industry. the industry the you And intrigued than I or can that also changes the thinking the is, the enough. business faster are

think I Yes. that that so the it competitors business it from in then understand But flat business have our and I faster I maybe clearly a is can, grow resilient industry when rate and business of and don’t because goes close-in remarkably And goes commercial don’t grow why, that line seems to ever the the say can of some point is a part our know fragmented. faster to still It’s my would down. we most grow out bigger we of recession, itself. can seen. the business there. have come we and me. is never I this our amazing up It at I

Okay. Thanks. Good luck.

Yes. Thank you, Simeon.

Your next with from Lasser coming question Michael for today is UBS.

recessionary maintain has drivers topic is fact sales the as impact that it’s interested need past? more depressed Thank their existing new the been away cars those my the of question. for shift buying time aftermarket new that that in boost auto the that on taking car it the dynamic of a be from seen you could as and to one during periods the environments on supply The are cars? countercyclical might of the industry morning. much cars and all might Good And have so people and the see around constraints, because influenced this the by so not of used roads

Yes.

that I of that cars I us sales their happens, over going exactly elevation is. of pricing, we to the you, you lack that been gains sense, happened. But Michael. than of tell said we and if of the the makes ago that pricing how vehicle the tell new of they it. has perfect would have much that’s customers years that there on longer view I it normally had had I evidence asked all were what’s will year happened. has wish kind think have of we could retain long cars. me first to cars grown other they pandemic, to a that of our the X I if going radical also empirical When seem are to changing used take pressures of better care elevation the have Clearly, doubt

also industry traffic significant year. was That but that’s ability in the that against are of demand envision declines, business. pass impact up of probably unparalleled. take about inflation key we X-year inflation all is X.X% the is seeing. talked And – I retail we sector helped on didn’t the traffic long, the of last That’s day this inelasticity will some declines, retail traffic think some us. inflation clearly, comp I I XX% this traffic in of that growth to a has element another X.X% and

as us so come through this get And through, inflation it’s helped as that well. has period of time

your on My as of gained you is you pretty recently compare the a follow-up DIFM obvious. have investments that one clearly variety side. seem many initially does factors, market And different result If of that some it’s to made of messaging is, the side, share. indicators, that’s a which results have on to your question we be more price DIY

on One DIFM competitors vocal similar the of making has been – investments your price side. on about especially

do on So, that side, investments, all on years? you this either effort further in the commercial you. point, or maintain the either either make last need at price side couple to the gained have share you to – in feel the DIY grow or Thank an of the

price is the business. short on retail investments marginal longer answer The made very no. answer The absolutely is, we

I versus this very in six completed That’s targeted changes we is many probably There and over focused commercial couple on of months the other in in brand. We pricing the They we We those years have last in made have year, The our annualized to They it. Duralast past. mass. and clear. be the or far ago. comparisons time commercial the we About pricing business. hubs, are not that mega-hubs element. lapped last highly-visible items, investments now the alone. fact, want we elements, so specific to out rolling our saw result Again, are commodity-related crystal is were a that growth an of

on deliveries. and – in largest the We commercial investment technology have rolled focused single the out we had commercial company’s history

Our dropping. are times delivery

our we different any We to our lot in along nor really, believe we in we and retail on have do very are that inflation actions happy that worked prices has well. additional set. and commercial versus time, costs today they done pricing have things, were worked with we tested At that make need lowered sure pass pricings point a All competitive we except being different we and So, of really this in. as not come considered. focused being to a together has pricing

be very same but will comes in we on the need pass kinds costs. the focused We as to keep inflation us competitive through of to on it trying positioning,

luck. much very and you Thank good

Mike. you, Thank Yes.

with Your Baker next for coming today question is Davidson. from Mike

weather why all your impact you competitors’ on I over-index a businesses. businesses didn’t seasonal know don’t you your but your I business? business which guys. bit particularly just Thanks different, probably have impact would if answer an as DIY, is can had an weather-sensitive commercial and Okay. this, business? curious, many you on think more be Why to do think other little the than It

was, It’s real The very as was, XX% that fair you quarter wetter. or don’t point comps said, were X.X when X-year information about dynamics change of the know cooler – talking discussion was question And are out a a weather point question. have slightly not driven I have X how this stimulus. it weather you fared in stimulus. by and was The or I we it real slightly for

to XX% comp. long-term trends. the our help the drivers, can’t will make what the drivers communicate focus marginally you we was that sure I to and So, major understand real are ferret X-year trying we we different in out on and and are frankly, elements weather you it The a think

then Okay. That’s And fair follow-up. other enough. one

You XXX you points. did hard say parts said only are down, basis

you want of to big don’t thought you was of you deal So, too of but make gas did it, it say because a prices.

better, prices? that prices better are driving less again, said did do And make when then implying to don’t or you you – you are there think higher people we…? deal, you only but just come the So, back – get should big does on it get should want I gas gas a down,

that I had happened. two elements think you

miles happened to elements that two had You driven.

driven. of We miles are pandemic from still rebounding decrease the

in would there prices work. a direct be where a Obviously, be those you the gas when change has elevated $X they but may decline not. or have can gas they said This change And in past, people driven and saying, behavior. things, to whatever watch They Mike, we they see if and got time. with over miles in miles pretty live, when work different have the we seen could implications. with we the today, gets $X equivalent then is I lot A remote those driven. to of hit a nuances true. change be of that’s happened back need case this gallon, time. correlation the think kind What historically it prices as to short you they Now prices a people levels, historically don’t I have that where $X to we happens order. What are gallon their know yes, seen those what

about been we phenomenon, will has As it like just in it, the a past. think short-term be it

impact and And focus, at go, think quarter focus years. or about driving even do I we flow we really Our next and the business out will isn’t about quarter after manage think X drive and our long-term cash Gas rates return how years it that. really said, business this doesn’t as to come day-to-day. is the have high to prices X how

enough. Fair color. Thank I appreciate you. the

Yes. Thank you.

for Securities. Your with is today Truist next coming from Ciccarelli Scot question

guys. morning Good

positive your sales Is that the sales. see a on you that way quantify lift to potentially a mega-hubs obviously, mega-hub? when you you a have times the you impact the market experienced few mentioned, a in quite there So, open and

us. to things Yes. out A stand couple of

the we said, the we dynamics. on mega-hub the inside As we what are build based plan two greater density, four business justifies is we seeing have usually as One tested happens that walls.

are so And those seeing incremental, mentioned. Bill largely we as sales be

as We lift in and tremendously are benefiting the they because those seeing tested we mega-hubs jam parts mega-hubs, overall market, are have the the more more the market satellite from not seeing and leveraging are into stores and we as What they are inventory an well. put availability cannibalization. those the is

our given from quantification XXX likely confidence in continue learn haven’t us test But I and specifically more is. take about to it’s honestly, as go future. quite and the target what’s we will we beyond significant, to can it that And We you XXX. talked is to the what tell that

type as mature, they store follow mega-hubs maturity the do a And new Jim, curve? of kind

been seen than now, the that mentioned experiencing we our And commercial are They do. that is in things put for ever the Bill than acceleration in But is we are additional one commercial right the parts we while our on have the we ramp past. anticipated. growth has particularly are initiatives, into what faster because of work mega-hubs that business, all have with marketplace, those faster that the those the ramping doing we up as the mega-hubs

you. Thank helpful. Very

Your next Imbro question for today is coming from Daniel Stephens. with

higher-level question Hey. on I wanted a on Bill, quarter. the and guys Good morning to congrats Do-It-For-Me ask the side.

business, not So, you you standpoint, share. is there not you customers obviously, you share you But any consistent that where an are gain need more winning or to have business? can gaining a the winning been where when from operational from improve are you feedback hear to that consistent learnings when improve, area of are still seeing you

availability, now, I how a of have or Duralast out with three of, to was I Duralast Yes. has at the call, conversations it It’s question. a conversations conversation question a it shops, old can brand the more been last you changed. versus And things in the, the and has of with customers, negative be give has I level about The senior commercial in the the And it – the turned business just tenor field national that brand. of from tone changed. have the leader accounts was commercial it age significant our the in in months. a mentioned our It’s about the really availability, lot meaningfully positive. whole a our great

hearing on slow. why if you anybody delivering giving really are better we are actual times. they wants Well, now that business, we easy have delivery can too to you am you tell get one. not very data are says, I always a And right, that not to we So, that’s you

Your for average deliveries we are and XX minutes apologize seconds, that. and XX

better. We that are work going to to get

at got tools have disposal. we so And our new

amazing. assortments. much have inventory got is The brand Duralast We better

years than X conversations And ago. or so different is X just they years of really radically were the tenor those

coming XX just maybe about online inherent new helpful. mega-hubs from expect? DCs SG&A I DCs. talked then deleverage Got financial I three near-term, the there And and should of of with just mega they you we guess what more the and it. in know and preopening then Jamere, assume curve question, But costs I as pressure is That’s kind ramp. hubs, the would maturity

anticipate kind kind SG&A So, of puts the over on what line headwinds the coming should of we that quarters?

we associated we expenses. in our kind disciplined support able frankly, clearly to make we But I number growth, do continue over they the invest will on mean in associated very say SG&A we it P&L for to time, de-lever we but paybacks one, in thing done if great because and way a to very the And to we that. I payers have that and with number to quite SG&A been to not bill when have But is, investments, have what pressure them. have that business. long-term, these about – disciplined what be SG&A, right afraid look growth, are for be to, is will payoffs our do go we it’s we what some of will need two, the managing elsewhere in

will going and IT it talked in the that to sales from it up in to our the see short-term, done our that But a we So, may us the capacity over we time, plan manage have we time spike you And not investments done over support line SG&A about, with we only continue to investments growth. in forward. that do have you have with time-to-time with expenses growth.

it. Got luck guys. Best so Thanks much. of

Thank you.

Suzuki is Liz America. next of coming Your question with Bank from

question. for Great. Thank taking you my

hyper up made impacts and margin we comment see that will show how can about about in that margin and in you we gross Like on categories? tracking each improvements margin. gross mix How Regarding focus in your the where a think overall metrics? of just your

Yes.

are those all down two And we margin, we taking will very that us in still the tactics in faster margin gross be gross that a that the significantly positive It’s see to playbook costs gross see. And on it’s will there. time just actions going we continue fact have you managing than categories, our certain because categories, But profit will margin. is that’s be and we welcome in that in over environment improvements historically be all play. pricing make growing business run a business an where driving things going Number starting associated we nature one, our forward. to you pressure with and our see off transparent I commercial will of overall business we the will think have dollars. commercial what mix about of pressure the growing DIY,

So, we it we forward, will be we trade-off welcome. very that transparent about it’s as move a and

is a gross there think the should margin makes rule retail differential thumb general? That And sense. in commercial between mean as and Yes. about in that I we of

will depend grows. actually on the business how fast commercial it Well,

But got this If apples-to-apples margin would significant, you mix which at seen was rate, gross differential drove the quarter. that you you a we an say this we basis trade-off quarter. in if have actually headwind have welcome actually What gross on margin delivering. are be and positive of this growth there. I look the quarter, deleverage were terms would It’s it

you. it. Got Thank

you. Thank

next Fargo. from Wells coming Your is for question Fadem with today Zach

Hey, good morning.

come inevitably back start or back to think industry? what extent where think do to down, environment cars vehicle with With lack be on, that’s new market? a an you scrap you extent cars headwind prices that pricing as And of would rates just to what back new we the out elevated the to curious have used your come impacted addressable and vehicle go there how customers? for available, used your declined And

used have you are dynamic where, used what – mean park. new associated look associated I the up is with think The our on data cars up dynamic with if the in pre-pandemic. is you cars clearly, similar. a cars, year-over-year, impact has significant at – here got I on car Well, seeing you environment XX% XX% the are macro a they

with lots probably they If were that about third the you they pre-pandemic. look of right dealer happening carrying a are at inventory what’s now,

hanging driver. So, People the car longer. that are is you on though seeing significant are What the park is it vehicles a to aging. actually is

morning ticked those a all up are is that average the this on that for now it’s fact to road. producing XX.X vehicle tailwind In came the data shows things the And age us. of a out years

go focused business assortment business I sure And that are technology, car we have that park, think associated changes good our our manage over as are there to in deal with operations, the is, and a the that in in behavior, us. historically we there that. a consumer it’s we on just are making are one, changes managing outcome and as the are business changes with what vehicles have there in accordingly, we for been time, done

And through fiscal commercial then in able step-up newer to business maybe mega-hub is customers the norm you density, more your been serve your about to it customers expanding ahead with you double-digit getting that the fair this opportunity denser And or point? existing at growth the to for assume with that ‘XX? reach do remains view haven’t

to the the the we growth. will are very to trend strong expect commercial with continue that for it’s done significant done have in assortment, we We us. things see we business those things have our that the initiatives things things have that with all and growth with whether about, continue doing have business, that commercial our are And talked driving technology, we we pricing, that of

for Thanks the time.

you. Thank Great.

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

will understand year, have about our the We as we alternatives. for prospects excited customers for are we our growth take nothing granted but

succeed plans this is a us should exciting I want a and have help not marathon to future, for sprint. stress We the that that but

on focus of the to ‘XX, successful. continue confident value continue can remainder strive be to the FY shareholder for we are we AutoZone basics As and to optimize

present. we owe celebrate next of for of country’s a and these great Thank as heroes, a Monday, day. past Lastly, call. in participating should gratitude. today’s We Have Memorial remember tremendous we both you Americans, all our debt Day

conclude Thank call. conference you. today’s gentlemen, and does Ladies this

at You for phone wonderful day. you participation. have lines a disconnect and may time, Thank your this your