AutoZone (AZO) 6 Dec 222023 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to AutoZone’s 2023 First Quarter Earnings Release Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be opened for questions and comments after the presentation.

Before we begin, the Company would like to read forward-looking statements.

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

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

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

my turn Rhodes, yours. AutoZone. It pleasure is Mr. CEO the to Bill, floor Bill now President of and to the is over floor Chairman,

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

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

continue get our we’d quarter day we back to deliver. of first begin, they ‘‘pandemic commitment year, to the It and to our to busy AutoZoners congratulate taking fiscal and has a of customers, our to to the mode’’. we exit as As like results strive strong care enterprise thank been across for their new which normal every led

improve our since pandemic full the and center had national sales West new our opened our This first quarter, we distribution import began. we on Coast, position, to in-stock meeting the continued direct

celebrate and they and Most to returned and we to meetings, ALLDATA. powerful culture. allow These our past inspire operate each the groundwork future are at our fact, in grow success. accomplishments importantly, other In our we for unique success, lay having critical national where to our and and country they meetings where every sales we us nurture

delivered led their year. top efforts For quarter, our of as sales our teams X.X% the overall exceptional on XX.X% last growing service, to

Our two-year of ever. the highest some growth rate marks

achieved organization. contributions without We phenomenal this success across the have from not could

AutoZoners’ positive same-store strong first customers led with quarter. commercial and Our this a putting generated comp always Thank to efforts along retail for AutoZoners, sales accelerating success. comp for another you, the which

any our ‘XX. This merchandise morning, how XX-week our same-store our our will review we will think share the inflation the discrepancies. inflation regional is how for affecting of business trends, FY impact and our drove also DIY QX cadence categories remainder versus quarter, DIFM retails over sales, We’ll that performance we and the our and sales costs

a XX.X% Our year’s of On on comp. XX.X% a domestic stacked sales a and solid on top XX.X%. same-store basis, X.X% delivered three-year last a comp, we quarter, comp this was two-year a basis,

once team difficult again delivered Our amazing these despite comparisons. results,

quarter. spend few me in growth dynamics on Let the moments a

amazing in generated commercial sales trailing than delivered year. $X.X billion under we $XXX QX last $X domestic we billion Our another growth We quarter both XX%. and over record retail first more up quarter in four million year. commercial set basis, quarter On sales, a with just growth sales in an commercial as strong rates for were last a and million commercial in of sales, annual over impressive $XXX

year. XX% store last versus of parts just our a weekly sales per XX,XXX year. QX represented $XX,XXX versus for set last at Domestic sales domestic XX% commercial sales also record auto We average

price Our quarter tickets sales transaction was by driven higher growth the we for along new growth from and customers with in existing inflation. as

sales of very of still plus broke growth. slow. six straight of well our and while industry impressive, did ahead quarters XX%, streak we XX% of growth And growth commercial Our unfortunately,

difficult years. comparison being from store of openings a growing While of for the enhancing resulted been we pace decline QX the mega could the X we Duralast the year’s delivery in counts effectiveness deliver. saw several us and last easier we with value to availability, easily QX technology pledge working pleased be to the Improved do with with better consistent business brand, times, for continue have and fiscal initiatives coverage, transaction nearly in living from force amazing sales key satellite proposition our priced XX.X%, results the of points improvements we right hub our growth make last our and by That we from said, to were also this strength explain we reduced hub the ‘XX. to on

offering from our our acceleration to proposition we things of customers about customers better ever, great to than our believe to continue customers execute is value hear as our commercial strength we strategy. We prospective continue the our and and

the Our both, operate. leader geography become commercial goal remains, every industry in to over we where time, DIY in and

us confidence move we give tremendous Our forward. strategy, momentum execution as and market

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

Our grew basis of X.X% tenure my growth experienced of last top versus on beginning on the been quarter Company. comp last three-year basis. representing a XX-year quarter’s delivered has this We we highest since remarkable, -- the on retail the And have growth pandemic in the with a in three-year year’s growth, and year’s two-year a DIY X%. positive

X%, built performance more during difficult we for we share, a lingering are stages encouraged last grow share our the the improved, unit the year. to gives us. And growth results trends to count initial continue our similar pandemic. continue considering stimulus importantly, retain success critical over just we From the our transaction for measurement of strong vast gains X%. recent conviction comparison, ticket effects year. are the we of by have driven continued And dollar data majority to about of the available, quarter, by was our fiscal that decreasing the of of These us we the sustainability last very enormous While

four-week trends sales range total periods. were same-store cadence, in very In the our consistent, each terms the mid-single-digit of increasing of sales for

two-year was XX.X% three-year four-week comp was QX, the our and addition, and our comp In consistent relatively XX.X% over periods. for

share We beginning of the we are sales since with of large gains generated and the very pandemic. incredibly the pleased sustainability the

not Weather material Southeast this winter similar the saw year. cooler very sooner. a a last But in this beginning we recently than materially. and were quarter. calls basis, results Regionally, experienced, This overall, On less as sales to trends last didn’t a rainfall weather forecast have feel West we impact colder weather we’ve our year. weather on winter’s drove did slightly our for with, national

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

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

the and saw by we and balance the points. our quarter, sales XXX was We basis these Midwestern this that of country underperform in weather the year. driven markets Northeastern underperformance wetter milder in This by markets about comp believe

quarter, our Four weather is second results. likely meaningfully to influence winter our

most At our moment, telling the As away key likely QX. can as of will outlook. last team we a forecasting reminder, by winter week-to-week. weather be positive year’s be happens, that than sales holidays have the vary us far greatly is our the And patterns a for colder our that fall that week. volatile would days QX quarter different and is historically And on if

million, sales into Now, was $XX.XX share was on were a net a and share, increasing let’s our our our Same-store move $XXX increase$X.XX up performance. EPS more X.X%. specifics income X.X%,

gas with business, hard DIY year. X% up approximately last approximately down categories remain our elevated discretionary the our The retail parts categories represented X.X% of our categories, Regarding sales them. floor categories XX% and X% our were outperformed With difference between discretionary prices, soft. in sales versus merchandise

very to as failures improve, this driven we well are general, and hard performed continue business miles our the driven performance parts expectations. our strong see believe well again to encouraged by our expect successfully categories lap that winter category exceed will results. In solid We are we year growth delivering were initiatives do to while last and our battery

we lap away, the inflation, especially pricing. slow experienced current of it do of also with as We me in inflation as we also onset pricing the expect last wage we believe will believe to which but But, a high XX% in numbers is line address begin slows. economy goods, inflation not going be decrease inflation cost to slightly Let the XX%. clear, quarter, inflation, bit year. and up QX, was both In to

costs also notable reduced highlight as industry have this our have decades margin has maintain period’s pricing of the Historically, and industry expect disciplined elasticity, Most been sell higher following pricing maintenance. historically industry commensurately price to costs. we inflation, that for that about that purchases routine to meaningfully want has margin It’s in pricing our reflect continue. has failure thereby products low increased we are or to the lower by rates, to not I because parts dollars. and driven increased, increasing industry

economy sales the six it three-year environment, sales near While to for impacts we What two-year the to mid-term previously challenging been comp a current both past I calls be the stack us have our to on said basis. forecast and with encouraged consistent sales customers. on is remains continue still quarterly as

growth While have it’s execution and sectors. we about achieved our sales forward, our share are both initiatives, difficult we tremendous excited predict gains team’s to the going in

our year environment inflationary growth the our past are macro we positioned favorable term. over that trends near-term that pressures industry the is customers. even we Over for for in a and has industry And fade, an despite these overall been believe if a half, for the solid long

the by we strength XXXX, with expect our our resilient continued as our execute business. DIY commercial sales For performance the we in differentiating of on be led second business, to initiatives combined our quarter

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

give new a of Jamere, I’d Before year. business to like our key a handing to the on for priorities over the brief call update fiscal few

drive supply our turn mega is in will we say lead to One drive in improved placing to rollouts. more in hub customers continue and sales. yes focusing We local to hub know on flight to First, markets frequently to initiatives that two intelligently with are availability. our chain more and our expanded continue inventory ability our

Secondly, center we distribution are footprint. our expanding

one expect didn’t is the that carry grow domestic turning not announced increase business as slower two but additional DCs to We and capacity. allow in XX%-plus Note These our to us we inventory reduce that development new our also will yet have, DC will to high and years drive only times Mexico. the three we of more stores, demand. capacity in DCs us enable not in to additional

I’m to handle flow This also a will DCs distribute that to announce them to products opened timelier and a we direct facility the safety productivity. West and ordered on stock on other import abroad excited drive product our to facility basis. Coast reduce

and retail strategy in place to is we have And our businesses. in our trajectories carrying growth more recent has commercial it continue commercial. initiatives customer. on to significant especially believe focused a Our in been our both, products we domestic supply the chain And contributor closer success, to

to XXX Additionally, we At stores continuing these to Brazilian again be this businesses combined, and continue contributors decades come. have growth almost businesses. sales Mexico plan performance on and grow to key and for should profit quarter impressive our to had

We targeting particular, we offerings in the and aggressively are leveraging we U.S. our years. next have the in many of significantly footprint Brazil. in over to Mexico store five refine Brazil our In expand learnings are to and the

our prospects excited very about are We internationally. growth

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

everyone. morning, Good Bill. Thanks

As Bill perspective, comp quarter X.X% had on quarter last growth. a strong first we stacked mentioned, from exceptionally an year top a sales with first of strong domestic

for X.X% EPS. few minutes P&L increase let the on decrease take to X.X% elaborate in start a a and in this in me QX. specifics had also a our EBIT morning, We To

under of just our For solid reflecting billion, were the quarter, strength total continued initiatives. industry up sales growth execution and our $X in X.X%,

give with on of business. some me our commercial our starting initiatives, more color a Let little growth

were two-year domestic nearly up sales our quarter, For increased to billion XX% of parts our sales. Sales auto XX.X% DIFM a our stack DIFM and to domestic XX% on represented the first domestic basis. $X customers

broad national sales were for both $XX,XXX, XX.X%. local well performed and was up our weekly accounts Our growth program the And quarter. per as based

sales for quarter the the quarter volume results the chain. the first Our a record of in highest for set weekly history

and business of continues on exceptionally to that initiatives share strong our winning wallet results grow our execution deliver as I want commercial our acceleration increasing to by customers. we with existing share new reiterate

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

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

we FYXX. As becoming deliver continue faster a will have lead previously, way the growth to in goal business. our growing And said I of on commercial

nine marketplace. sales quarters. the us Our particularly continue double-digit gains providing pricing past execution has the and to Delivering in assortments position brand, share enabled Duralast drive drive and market growth for and strategy local improved well availability, with parts, quality competitive to exceptional us our service and

we mega to are strong customers, the on retail us key another as an and market existing management, and addition, and brighter yet suite which gives our advantage. calls, is competitive In And strategy diagnostic future increasing repair new hub penetration commercial ALLDATA leading businesses. us commercial for shop and noted position our in of past performance I’ve even driving our software

Let progress. me our on add a little more color

we’ve several new have our us XX As with strategy quarters, ones over discussed open We the given in locations tremendous now momentum. two hub mega last QX. mega hub has

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

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

only What additional strategy is is AutoZone the we’re well that and fulfillment to but network. And reach XXX list to mega surrounding for parts entire to XXX by assets are our remain our hubs. hubs not working. objective the access capability regular learning individually, the stores thousands we customers of committed supplemented This performing these gives

We’re FYXX. new least targeting hubs XX in at mega

reach, delivery leverage our to times. our improving placing analytics expand market our sophisticated parts to continue closer We customers, to data more and

build We’re momentum. on determined strong to our

to rates continue resilient Our from positive we The domestic comp market and QX. managed underlying was headwinds. X.X% as business deliver in have count growth despite has to business been QX retail growth remarkably accelerated

down X% Bill last mentioned, traffic we levels. from saw As year’s

traffic However, QX, where from they improved X%. sequentially was down

inflationary as We an continue X% environment. saw also ticket we growth raise to in prices

competitively continue our initiatives. behind businesses strengthen DIY Our growth to

These comp from have In driven comparisons discretionary and car the overall new year’s growing ageing part a pricing, pressure economy. challenging, addition, from last macro on and car market macro in and sales a customers. a tough consumer stimulus growth market car for is positive basis, tailwinds inflation initiatives dynamics, still and and is the used experiencing injection, our part spending despite

sales Our a FYXX. steady forecasting we’re resilient business the through quarter, in were DIY and

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

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

schedules On we countries, both we opened growth XXX stores constant a stores overall. in quarter, accelerated be fact with at expect higher currency new in our to growth both both We countries sales with the earnings growth future. to in rates During and than in three in new remain markets and and Mexico basis, significant committed stores we opening store X the saw finish to contributors to Brazil saw ending in XX. sales

of to currently base disciplined and way, contributor future be an a expansion XX% store growth. to commitment AutoZone’s a outside our will the and in attractive growth total continue With U.S. meaningful international

the outside the Bill we next U.S. we this Mexico store earlier, occasion Bill growth AutoZoners. X,XXXth proud future. about forward And there mentioned this As internationally five over Leon, in to be In with store our of in spirit couldn’t significant week count team. excited historic our we’re celebrate of being our expect growth the event count the years. opening know to our with Mexico. more in I celebrate looks celebrate to chain’s this store We will

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

headwind, basis-point business. gross $XX for faster-growing points, a XX difference gross of margin a quarter, our was driven the quarter, down basis charge. XXX The stemming margin basis primarily primarily gross our by margin driven LIFO million points noncash a commercial decline was XXX by lower in For from the

$XX our With balance taken charge, credit LIFO LIFO this quarter’s million. we to have

and the the for freight charges. hyperinflation quarter, primary driver last costs mentioned I are As

through year, $XX we higher of second costs and freight charges the approximately in calendar anticipate end for the We are million during still the LIFO modeling quarter.

last first our the quarter have below the gave few Both quarter, second continued quarter the are costs abate to as actuals outlook and over outlook freight we past months.

the our contracts long-term have rates spot renegotiated lower have also reflected some are come of in costs our and As down, outlook. we

to we will abate, rebuild plan we see and point freight to quarterly to balance. everyone remind costs to these and reverse, begin we to charges the want we the far, gains expect continue LIFO balances that we have the only reverse and extent P&L fully reserve gains take expect have P&L our at we we charges after our to I expect reserve We of charges have thus taken We that LIFO taken historically. done to have incurred, some to rebuild

operating on Moving to expenses.

sales last versus a were flat as SG&A expenses were percentage QX with year. year’s last up Our of X.X% as

Our operating to are pay experience, IT to dividends initiatives. in investments and growth productivity. customer our expected an pace been at payroll speed expense growth we purposeful, in These continue and accelerated has underpin invest to as

are being SG&A manage growth in disciplined time. forward, as will sales We on and growth committed move over with we to line we expenses

the rest P&L, quarter. the of million, versus Moving was down the EBIT to $XXX quarter the for X.X% prior year’s

$XX LIFO $XX.X debt Excluding over rates a was EBIT of from our QX million increased quarter last versus expense was year million, last $X.X X.X% XX.X% quarter billion outstanding $X.X have quarter. ago year’s end have and up the up Interest for at the our year, would the billion charge, been the variable significantly. in QX at as

borrowing the million in million second quarter. Higher fiscal in last versus year’s curve We and are for driving of XXXX are increase. second planning costs range levels debt $XX.X this across quarter expected the higher the interest $XX

was last XX.X% the quarter, below year’s our For rate XX.X%. quarter first rate and tax of

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

before investors us at option due we approximately stock exercises. the to assumption credits For XXXX, second quarter XX.X% on FY of model any suggest

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

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

Excluding X.X% have EPS have growth been would the net LIFO our XX.X%. and would charge, income our increased

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

the quarter, in million operating us million $XXX CapEx, generated million $XXX fourth year $XXX in flow, For a we spent free flow cash allowing $XXX ago. to generate and of versus million cash

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

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

last by year, XX.X% and XX.X% last driven per store QX initiatives inflation, growth our same versus primarily inventory in-stock increased recoveries. inventory year, Our total was and over period up the

less defined a store basis inventory Net as last negative versus was merchandise inventories negative $XXX,XXX on and payable accounts last negative per a quarter. year, $XXX,XXX $XXX,XXX

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

a balance earnings, our our and buyback at Lastly, generated allocation the We end, I’ll million shares The of has fiscal strong stock $X.X and year. outstanding X% we share spend quarter program. sheet repurchase just the quarter us buyback moment to free remaining at of allowed billion start powerful we AutoZone authorization. share this on almost in the under cash the year and of capital $XXX repurchased had under

below times X.X historical to the at business remain meaningful capital disciplined EBITDAR, allocation back invest bought enable existing approach XX% while amounts objective over of our will We in well of investing growing XXXX, our have cash and inception our our We X.X business. outstanding stock assets committed of to buyback finished our times. and to this is the return since QX shares of We shareholders. that which in in us

‘XX. return However, during objective, FY X.X expect times target we to the and this remain committed we to to

shareholder driving growth value earnings cash to cash our to excess To wrap initiatives, driving by long-term shareholders. remain up, returning and committed our robust in and investing we

strategy Our work. continues to

improving our and shareholder prospects we’re business growing drive and and share business, we value. fast DIY are considerable commercial competitive and in that And our market to resilient way. as look I FY growth the our to disciplined a our growing growing long-term share. bullish international behind continue tremendous opportunity businesses our confidence a have forward positioning on to in ‘XX, We’re industry,

And I it turn celebrated the with to Bill’s say Xth, been Bill, a anniversary we I Before Company. ride. congratulations it’s December And to want remarkable on year you, to Bill. back XXth

Jamere. Thanks,

off to first must culture culture, start. on Execution flawless superior a and of execution. XXXX putting to always us. Fiscal the focused is we But is customer a service our what solid continue be defines customer and

a on own on Jamere our bullish As New ago, opportunities said moment continue Year. for to our be and particular we the industry in

work And norms. hundred good historical to our a continues we’ve suppliers. points But team with together, our job of in-stock below position. Our are done still improving we couple collaboratively our a basis

We’re inventory also adding coverage. about being smart new

ever-growing say, requirement. our by the customers, meeting got customers, needs It’s it. yes, a We’re able we’ve being commercial of to especially our

more both, For be retail the we’ll driving on the and some And launching hubs of only remainder focused place opening across fiscal strong in Not Brazil, initiatives. we we XXX stores will mega our to exciting Mexico initiatives ‘XX, performance we’re but are and and roughly hub be businesses. stores. very in continue U.S., opening commercial

of XXXX, For are remainder keenly relentless the focused execution. fiscal on we

not accept shortcuts. will We

has to right every must and vendors return Every Our of time. right, correctly, be to at right us merchandise always. to processes our need store day, hour of function providing every the amount staffed the

focus have meet goals for our for us timelines. a opening exceptional made Simply decades. We put, to and on we It to execution. has have store difference

like to very what in future that investors on be our and us look ultimately particular by now, I know continue challenge. three to and we will industry five on our cash flows We much measure bullish that welcome from years AutoZone.

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

this Nagel Please from question Brian, go coming morning is is live. [Operator first Instructions] And your Oppenheimer. the from line Brian ahead.

quarter. Hi. Nice Good morning.

I question the even pre-pandemic? maybe it question become aside, talked seeing, at margins, P&L? starts point this But now could freight versus is are you and freight just and LIFO through putting think the the as And your now what you’re accounting with to respect of we your some work really gross have, you tailwind in where Jamere what say, a noise tracking the this about about comments, you I and first issues. have costs as mentioned to guess I the So, costs, to then,

of things to notion Yes. Brian. one the was are during pre-pandemic that of contracts. secure rates the call some into on discussed And last we freight back levels. longer-term pandemic capacity, this we International that quarter’s at height entered Thanks, the

We’re down, some contracts. come where the as now of we’ve in a have spot those position renegotiated rates

going have be the balance outlook are where pretty the We for rates to of year. a bullish on international freight

are still bit rates than a to what Domestically, still year, way little work bit. as But bit are the a And little high. those our to domestically, anticipated. start higher expect we abate rates a little the we through we would have

saw As $XX our you it charge. lowered as LIFO, have that year relates a we outlook to you second be of back quarter, to could the completely. in abating And in about million half the the see

I that flip that or last the And see date P&L about take back the P&L. back could all But rolling four quarters before rolls we won’t quarter, we’ll said charges the gains when taken. it equivalent we’ve the the offset it be as through gains see we through come three certain of to this through.

the So, business managing our outlook positive, is and accordingly. we’re

in add of element, a freight are the jump I on not other cost. one LIFO, as Many cost? little those on part inventory costs normal but Can capitalized and product being our of color on

case LIFO year, or times for to abate. those cost a product X.X elevated outside a freight be, in nine the for whatever we’re business that’s -- once months a costs have So, of turning may going year

period extended to time. continue for of pressure we’ll -- cost So, for have product an on foreseeable

comments respect I -- in the And how also said follow-up, traffic into to so we the That’s appreciate traffic, comments down as And here? stores, the the -- was you about what ‘XX had there. to back the going continue color with through move a and very improved maybe the through it’s to quick you QX, quarter? are thinking think trajectory you while helpful. still I traffic QX, then in progress as on any that then made, from

Yes, Brian.

this meaningfully talking talking for than time, X%, you’ve I we’re believe talking first will long that following our was than we about was in when predominantly expected, DIY Remember counts been stronger are to on a And down you there yes, counts we’re was we a QX DIY expected. XX-years. -- strength our about our stronger traffic that have about QX. been but is So, in be are than we traffic, X% business. it tell considerably I -- DIY that for traffic happening and better natural drag industry --

better better technology on products the they the inflation longer. product inherent as know, you we so there’s and last in are As But products. sell, that has added and also gotten those to costs technologies

the three a the decline in we’ve X% see abnormal was And normal seen growth not the in So, traffic after that encouraging us. X% it times. business is to down DIY over last years very to

next is Stanley. question from Morgan coming Simeon Gutman Your from

anniversary. don’t we to if And of call single-year negative the It like, and look mentioned. would everyone, you you We probably we guess curious to improved numbers that to the is traffic a have and I it say on are clear -- in know X% and synonymous. stacks units. all underlying don’t such morning, this rebasing stacks the units units, actually terms the reverting what in on it also improving think, they’re the Good try Bill, congratulations follow-up a looked what that Bill. see just on are at traffic question like you is or are I normalizing that back mentioned, The done My look that or did sequentially if basis. I we negative will

strong a clear. that’s all statement, in Simeon, the Well,

what were up expectations next -- our going were same-store last our were growth look coming didn’t. over They so sales like year anxiety still that considerably, we of year, three on I off sales think and is call or on the last would DIY. they level have in we to we unprecedented positive had a this and of decline, they the years. If

with positive comping we another number. Here are DIY positive off again, DIY number a

it from So, that I pandemic we the “all as business, have during we up think in are the we characterize That picked get the said, gains the and we sustainable. resiliency away see I the pandemic that DIY more confidence farther wouldn’t more clear”. the the

we trends Yes. to actually a our we The strong, discretionary that Bill us that And our and business maintenance of were itself, bread at if about where today as X.X%. where that our categories, of our inelasticity consumers demand failure down when I’d business. relative lot and are pressure itself discretionary think prepared confidence in volume comments. thing is in butter and his add been The in it mentioned only look But in you there gives feeling manifests pressure the about purchases. most categories, have manifests

fact a trends the volatility and business to business lot lot continue improved quarter-over-quarter, still give of manage That Bill our of actually confidence said, there’s uncertainty, as our that future. being about discretionary We’ll a so, mentioned. the And accordingly. us

follow-up And now a so, on it surge? empirical And car tail not is it tied Are on know way The that you minds? Do the headwind that from if And then is there’s it to the the a seen. been then, benefiting from the benefiting like off? down? we’ve my finding or like industry’s speaking. becomes certainly I if your feel does don’t sensitivity statistically industry you evidence has But isn’t still when still we’re And great, benefit. surge prices. the growth used feels in

the in look macro Yes. way. pretty a broad at I

an ageing XX% the to You’ve abate, couple of two car you still One, started last dynamics prices, have growing years. car part. used over a they’ve got almost going. they’re up while And and

you’re have an made in you up New rising environment where XX%. interest closer challenging. more car financing to that have rates prices And are

tailwind believe still our it a do of So a business. is little we that for bit

we robust to And we’ve and just our the more is been importantly, advantage of all of portion market that take this that. one managing business have, opportunities of

business our we’ve strength, our as talked helped our inflation just seeing, that has prices, us been up friend and under extent, and both in to have I it’s higher not the faster-growing we’re about DIFM. that but And initiatives growth DIY macro volumes think a those some business held growth create dynamics. driving

will, macro soup, from seeing work in of what with inflation, our So, in those take and when terms and the the from that this you are the the hubs from you initiatives, our of things that combination growing. how you’re mega-hubs done are all is strength, if we’ve business growth

Kate is McShane Goldman question coming next from from Your Sachs.

your the at ‘XX from talk I call And and a that end by if wondered beginning second my question. improving had with I’ll Thank you little mentioned bit where follow the an position? see the in-stock about more in-stock you position. then, up of You of about you. could yourself

Sure, Kate. Yes.

We basis position It’s year are. bit about are resolved to continue points -- in-stock are QX, last a in sources well, still to little are and little competitively. resolve? categories in about those categories Our where get certain and been new than now. last When we us It this still below that today time bit new meaningfully good time we find it is our to ago. had it about XX up have where historical product at will from would But some a was It’s there those of up frankly, still we year. past months this experiences. by very Kate, and feel expectations XXX it but help geographies it. we’re pretty feel from looking a we’re good thought challenge, better I some categories But -- of

And sourcing meaningful to you points where it XXX expectation pre-pandemic? better basis that the of expectations? been since changed, source below do than in used an want those is where terms how much And you’ll to has are you there has your

Yes.

basically changed in not every objectives diversify category. a geographies with amount at has sourcing have to do time. this point in which source some Our significant the We we

basis higher in-stock, having where we’d of reached right as historically. was expectations for ahead all-time far were XXX As the an we which pandemic, points high, before

our chain -- higher. XXX supply remind basis which points to high, that to team old we break our need was them need So,

right XXX that ahead basis And would we they’ll get now. be of where may are points It So, about time. more take a little think there. I

from JP is coming question from next Your Morgan. Horvers Chris

being on So, first check question LIFO just is to the the my quarter. math, in the the headwinds second halved

roughly being So quarter? I your margin second experienced gross you headwind guess, of directionally, in in half what should we about quarter first think the the

somewhere Yes. you to we the in LIFO the quarter $XX mean, range, if millionish expect charge I be second will. in

will less that standpoint. a so And from be significantly gross margin pressure

SG&A dollar on SG&A quarters. is side, of is then cost how leverage than margin, there context SG&A X% and is then, inflation XX% SG&A else And forward, are to four past this to your I the Got about point? that of in the a Do-It-For-Me thinking the in running over overall it. mean, been headwinds -- year-over-year benefit gross wage -- and the there the good follow-up that question growth the you investing a during side, then to then in range How is on wages much And inflation versus going and mix has other times? as anything of and consider? And

Yes.

SG&A So, I continue grow we’re mean, in as to create to standpoint, a from faster-growing disciplined we business. a way an SG&A going

been quarter. we the and underpinned business, many and growth a of we’ve by side said, sales been both to past in percentage flat we’ve been investing I were levels of of investing, customer As commercial because as the of high investing service. maintain our are IT. But And on we’ve initiatives, retail our this investments

from So particular, to what IT a growth standpoint. in enabler doing an investments, we’re are

As you and is code. running X% Historically, to been market X%. haven’t to the in know, it, immune wage macro dynamics. wages ZIP have issue, those call labor the, certainly been It’s we closer pressure our a run

on pressure we what that’s so it top time And continue SG&A over about us. some But manage say with that line will I’ll is to the in line. put

the pace your continue of the again? we’ll of business We’ve levels about to I’m in sorry, what first in growth to maintain going support has some invest very-disciplined great to part business be as was at been service, areas And customer to question opportunistic accelerated forward. and our our grown and an it

the of commercial LIFO other of mix halved? DIY, in there that the than that context in here versus headwind are any quarter variables second is different the being Other

our that our on to margins. going points commercial gross is said points likely pressure We’ve faster-growing XX basis business to No. put basis of XX

grow you’ll that in we from move those see a continue headwinds our You kinds significantly of business quarter. And commercial we than expect business. the this saw to are faster And our DIY forward. to that as margin standpoint

question coming Lasser Michael UBS. next from Your is from

something underlying the where returns in AutoZone it commercial you tax consistent, diminishing happening your that’s out basis. Do but slow quite to of on one-year log the related did think is you’re such remains the Bill, it’s itself? that are on there generating similar a segment still amount of but taking something trend larger happening just commercial incremental in over the of more base, or a business sales,

I question, all the that, last business, It’s XX% that excited Michael growth and we of one I we’ve especially that off frankly, in coming about not will the years. are had of that, commercial a I’m start with answer. growth can couple factually our great sure in

we’ve not different So, we in general and street. are commercial seen pleased a the the down the We’ve not ProVantage customer customers. up widespread. is It’s not slight slowdown across performance It’s that bases with our It’s accounts. business. It’s our the experienced The board. geographies. and slowdown across national slowdown, across

that So, AutoZone. I it’s we’ve don’t that think done anything at

I think it’s grown with that. we very on grew we’ve XX% and it, of fast, -- pleased top and we’re

what emulating commercial this investments. what leading is achieving? call you price price auto maintain heels we And more And going of of XX% some a another your more bit that the comes on is still competition that double done that price to you part It trend, This had the realistic recently increased retail my make Is transparency one and this they’re make been At competitor to now digits? segment rate? investments. little to competitors have announced is a just sector? should will price point of and run follow-up the grow within hard it a

investments the Yes, in trying sure to close close the value value made to the I our we with the of were that’s it XX that proposition to months our trends guys proposition were can They competitors. tell want to focused about that pricing our ago you outside that in had and priced we competitors, to you market our you define right do. leave were I’ll make on XX% What that is do we for of we versus looking delivering. at nothing

pleased pleased by has We’ve that of from taking couple market. our the believing in years driven with last broader been share our share and that been very close from the with taking not outside growth by competitors over we’re

of anything very any by indications seeing I’m And competitors different. in not based either our upon anything that close we so see pricing

question Daniel next Your Imbro coming from is from Stephens.

we where wanted these of commercial tech in, guys. the Bill, to those tech rollout commercial -- talked inning are business I of terms more what side? detail the on investments Could it think you prepared you remarks, you do about are easier And start more then -- provide making make with you what on side. initiatives in I are? your on programs we in easier to to some you’re the said different

Sure, Daniel. you. Thank

everybody delivery down ensure over that And of devices that that things is years out exact and the we handheld a everybody right rolled it in since brought the that’s product, which customer. commercial helps have that XX% times, we of technology. delivering that’s about us our delivery helps we the deployed times to have manage One products store for the picking we’ve couple last the and us

take The we’re operate to more deployed. we making really the to the that trying other from to access that digitally way. -- we’ve one the them things different and big handheld a done doing how big other transaction a commercial part The of with out of make with invoices it interact along -- providing together, and is been and points But customers frictionless technology there’s lot us. seamless just us pieces to pressure have our

the We’re technology. refine continuing to

refinements to or And I suspect that those probably another so. take up will year

think I along. digital integration is far the less

We yet have more have with embark on, on our we that newer to customers. integration ideas digital the

years to three have to it. of that’s got legs or two so, And probably

LIFO. question earlier up And then to I on want Chris’ follow on

think that it. color offset helpful in you expected recognize So, LIFO your this on Jamere, in back I you of XQ. would some said a year benefits half remarks, prepared provided you But the to

for going $XXX now million that in guiding should expect just a would $XXX a of gross recognize we back LIFO XQ margin And if that $XX you’re the and the million about So benefit? flow to there’s you’d million to headwind, think then, line that’s through cadence be benefit about the LIFO what the year? the half of assume we

pace won’t of reversal that get impact the that we anticipate down will as that which happens. be And date out with take. I of things we’re we actually that lots when but one, certain before, there see as the mentioned, we that is charges actually are of we biggest we about when said Well, some Yes. in. and we contracts comes happens, do The freight of the the

So, other all it expect it’s have moving in to to it, it call through given at, And for you turns see the that to their take inventory of two and the worked us quarters turn right way. us or way times, direction should for X.X potentially three our costs us. those

on give seeing. as next more call. said update very we’re transparent quarter our be I before, about we’ll what fulsome And a we’ll So,

from Your question is next coming Partners. from David MKM Bellinger

The bit first been one this like maybe quarter. on commercial. It slower transaction have seems a the counts

commercial or So, play? is some would And what customer Just there counts Is seeing? to the anything be activity into that? read consumer helpful? any there details you of around type are deferral type into of coming other

Yes.

inflation studying seen single if of commercial think digits. I because I’ve lower digits in and retail it, lot our pretty the double on upper and a know We’re you doing environment. never customers rates a both unprecedented this is about

particular customer paying are behaviors to we’re So, happening. attention what

four have than the economic the the has last a outperformed normal the reminder -- time. periods certainly last do more in and business, experience U.S., DIY we business business in significantly our in shocks, the we commercial of As in shocks economic

that sure consumer. we understand, going on with So, low-end make what’s the we’re particularly to monitoring

And at evidence the but customer jobs be expectation think we don’t done then, time, here would I or have and I that some the point normally DIY the a customers this trade that down can some there’s commercial sector. expectation commercial into that an -- believe near DIFM, in

us. watching to see kind yet of those trends, anything we don’t is alarming we’re but so, that And

darn continue the monitor business. again, We pretty pleased it. with to And our in commercial we’re growth XX%

all accelerated that us hub gain a progress it years and are QX. in programs ramp-up, just to given little now up program Got then, maturing? business still to seeing traction, step growth, in X% how five on the something like some commercial it. Can update you those was units an year-over-year. Is to about seemed give an It mega those the strategy? you or three And just the are pace commercial for on material in the

program openings But to commercial anywhere vision Sure. to first no our we’re Well, There’s today. we close that. quarter. that stepped remember, have about stores at up or the of we’re the be in certainly XXX% XX% going

over As couple meaningfully. of commercial you would and economics last the per imagine, of years our the have store business per program changed pretty

want So, there to be that open service are programs might program. two years sense make that from now ago, we to them another

I So, massive that’s rates growth or We what expect may seeing. so, in but you’re XXX for wouldn’t another commercial open openings.

to And you’re four mature. programs exactly those for years five right. or It typically takes

I think place The used very to mature, we amazing box before. the higher mega them of mature And different, coming don’t see one what as stronger, did do out as it lasts volumes that to. hub. the long to for we’ll as -- we takes they the hubs. higher long we’ve gotten much out they It’s is it come of if come maturity than one a they but gates our they out how almost know day that of mega see -- the

the trip to Enjoy Thank, Bill. Mexico.

look it. to I Thanks. right. All forward

The Mike question from Baker Davidson. D.A. at next coming is

you Just a items? are going is quarter. Remind color less X Okay. down inflation Is percentage last in it Thanks, of us, -- trade points is versus the any on couple guys. seeing per growth A fewer little questions. now X spread and bit. transaction? what’s I between think It’s expensive widened units The it on that a there? ticket to it -- retail was --

that’s primarily It’s basket that. impacting Yes. mix

very cost what about about entire we One This transparent we’re as is of we’re seeing very we’ve been industry. about there been and the is what see doing. very retails, disciplined and the things moving disciplined we’ve been

mix, label? what does basket more you mean that to So, down basket points when private entry-level exactly you lower do mix? by price say or Just trading people mean

in relative the to mean actually saw that being the of previous products period. could purchased we It are what types

strapped, that a random the of situation? is do And kind being of or sort would guess? What any consumer cause Okay. see sign you I that, as of it just

pressures the about think categories we a feeling not standpoint, where quite it our talked the overall. we see you multiple our failure butter demand about the in consumer and I pinch a the actions maintenance way, inflation mean, on of so. macro as And impacted erode meaningful in and pricing primary bread volume has going And business, standpoint Again, categories, taken But the from inflation that from clearly, frankly, there. a is have fronts. spending to in the consumer and we’ve discretionary been is our consumer, if

thing The pitched. a consumers they’re and I’ll about is other to way lower a upper the meaningful and two-speed general balance is in end just spend world. continuing clearly The it’s have middle in say end consumer consumer stronger the and sheets,

they to what our again they that. things anything standpoint we’ve quite over have we’re that that related. is what is kinds I into DIY X of consumers into most frankly trade time. mix from opportunity, an point wouldn’t And X or that consumers, of things, potentially do as we’d below to Bill seen expect seeing read are So, are from the fact will business mentioned, tickets certain But historically, DIFM do when for these the

relief to those opposite were the your and that much about? essentially Well, how that if year-over-year. not, flat Gas it about one or believe some you now? Russia-Ukraine talked the can customers? And pressures lower ask how to now more, Historically, offset prior that I help us does are you provide they could of situation prices, just can remind than

No For sure, about it. Mike. question

you -- year. us followed for If you a recall

something just is really get last said that the with be today. going of a XX that particularly a they seems when there said there’s matter that $X gas level to that takes one that below we years, But prices, gallon. a and Obviously, are that So, special the We’ve to puts lot does thing for and now. on our about $X customer we’re over gallon. customer

kind We’ve of never combination. this seen

double-digit near got You inflation.

up the You’ve across got low-end X% wage X%, inflation that’s marketplace.

prices back came then You’ve got down. went quickly gas up that and exponentially

on the it. these not kind -- we while it we’re at we’re DIY because better, customer time best any to unprecedented in paying see point of this of spectrum, the on looking stratus factors So, we’re into different seeing spending some significant into time. And that attention particularly our going trading of good, underlying people of side. lot bases, moves down But obviously lot at are are a a

all And today. for have is that the back now the like floor questions Mr. time to Bill turn to for Rhodes would remarks. I closing we

Great. Thank you.

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

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

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

we the will As on optimize to basics the focus are to very to continue we be continue confident for value AutoZone shareholder strive future, successful. and

day. for I your interest great happy and holiday today’s want wish and our company. participating a thank in a for healthy to Have everyone And call season. you in

call. conclude does This gentlemen. and conference today’s ladies you, Thank

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