AutoZone (AZO) 27 Feb 242024 Q2 Earnings call transcript

Greetings. Welcome to the AutoZone's 2024 Q2 Earnings Release Conference Call. [Operator Instructions] Please note, this conference is being recorded.

Before we begin, the company would like to announce the following 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.

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

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

Good joining me Relations XXXX today AutoZone's thank Vice Officer; morning, With Jackson, and Second Tax. Jamere Campbell, and Investor Financial Chief you us today Treasurer, are Call. and for Quarter Conference Brian for President,

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

on we XXX,XXX of As morning, to you like how our I this am with talk more I'd honored than AutoZoners. to say begin behalf

call As priority At service. AutoZone, and call is we as today our to first marks Chief my conference customer WOW first President AutoZone's Executive Officer. provide what

sales on AutoZoners grew double-digit our X.X% profit of and total same-store share earnings operating sales company our Both per very efforts by increased the quarter, This impressive constant by and currency our rates. X.X% total a a basis. by

who the our last the this phenomenal on to we helped several everywhere us Congratulations years. growth. achieve to over had amazing AutoZoners continue build We performance

year. New the year, is It as sales second meaningful and volume This my variable. comments the both and quarter. on and timing to always as last severity Day is to begin predict reminder, a holidays Monday this lowest Year's also fell I our quarter winter of is Christmas most compared volatile quarter weather our Before sales, Sunday regarding a our

mattered. sales best. For a Monday this low is of the is commercial really very sales, while Sunday day one

very in While first X polar snow last of mild weeks. for weather a the U.S. vortex the we quarter, weeks the and experienced across X was the

over helped This stayed stronger our hard for snow sales but weather ground to United part period propel extreme in on Eastern in maintenance extremes accelerate DIY, the cold, States, to of commercial results of us either drive in the failures time. an or muted hot Again, much weather time. extended as and

company basis. on For sales second quarter, constant X.X% total same-store a were currency our the

As we area international has continue become a story increasingly an growth more our will deploying are we capital, international our performance. important on part reporting of where in

focus quarter, the again, same-store We XX.X%. encourage on you sales, up a currency where number to had strong International, constant

internationally, excited short- the very years. are over We prospects growth and we about long-term several next plan new and to accelerate the openings store

X weeks, domestic into Our X.X% this see our then X the holiday the compared of of shift you the Breaking up QX impact and can last first weeks quarter the last weeks XX year. last weather in quarter X.X% to X.X% volatility. same-store sales of and sales and the were

This Domestically, up between X positive frames the and time we more first a X.X% negative these the was X.X% splitting comp X and across when ran weeks last a in pronounced weeks. commercial comp DIY. even

strong very sales against XX.X%. year X.X% grew business last of commercial Our

weeks. down weeks, results finished over second XX-week started, than business below our the first the X-week the segment X.X% up up were expectations. last X we stronger then Although Across we and the over X.X% for our X.X% were commercial quarter, our X

were of in customers, last down mid-south. the depressed the many the our quarter, particularly the segment, to in commercial better shutting due Although winter sales X weeks storms

material the quarter. the this driven quarter growth for negatively weather with to high-quality business the we volatility hub encouraged The we in Duralast commercial strength by combined sales, in and intense to Mega-Hub the the enhancements holiday sales shift Despite initiatives have been of store and continues roughly Commercial time. on are an key finished satellite our working over brand all and stronger. X% impacted products make easier with coverage, inventory focus be improvements by Improved that to us sales availability, on we technology with. do

are execution, We programs encouraged customer In ticket. In we auto stores. new sales see get XX and in times commercial service represented parts the in-stock customer business improve. domestic will opened We our our of of growth and availability XX% higher half initial part with delivery results. comparisons QX, XX% early, very commercial commercial as recently rates while initiatives faster focused commercial, our for commercial, the now continue by relative in back levels for on believe we improving We we to times, launched and easier in of will programs. growth through sales year. growth our net to year the continue rates delivery get QX. commercial improve traffic we stronger to sales have the move domestic Domestic

time weeks had X.X% year, winter X.X% Regarding the the negative segment. X.X% positive to last this second The DIY of last vortex the a the X-week second accelerated comp we a X-week as polar X.X%. weeks. the the quarter positive versus ran X.X% in the domestic X-week weather, of was across hit due comp reminder, over comp first across quarter, segment negative and last DIY, year's segment X X a last a

the underperformed swing to points overperformance the well. The XXX like segment, color and performance basis Midwest points basis add last only to segment. the some I'd middle a positive country X-week to regional of on X-week in by X,XXX our markets for the the remainder as Northeast

saw For country. the the the Northeast versus basis quarter, the XXX in the point remainder of we performance favorable and Midwest a

now. the extreme more persistently winter Although where more years the the would markets, mild some along been see we has Coast cold, Midwest had for weather to frankly like X than winter East

performed will big a we Headed third weather for favorably. story, the quarter, normal one West into quarter, way planning play least we Overall, are the a or other. not for the feel more meaning pattern, the weather

is always contingent refund to similar we performance year. be season this and tax last to year QX on normalized a Our expect

Regarding underperformed we floor our hard parts our categories pullback, sales business, consumer. merchandise more categories from as low-end and discretionary saw DIY particularly the

traffic quarter's DIY this traffic versus growth, ticket down our our while Regarding ticket average up X.X%, X.X%. was was

to pre-pandemic in-stock driven our range levels higher normalized productivity store, centers. our year. service ticket expect improve we We to X% in growth the levels to distribution attribute from We improved in X% return inflation our customer in more share further by as get removed gains our will levels nearing and our last

progress. best While made making ensuring from progress. From we believe the many organization. ago, particularly execution are down across the and we a execution exceptionally many in changes is strong are against processes, that up hiring we reducing are on of long-term our same-store turnover, making commercial, AutoZoners we doubling steady sales our we're and We've year improving,

fiscal base, robust performance should the I'd on some continue or store had like XXX at to handing to a total pace our internationally last of give and international to Jamere, color highlight XX% of quarter XXXX. Before business our call At and the impressive stores remainder the grow for business. opened

in of leveraging markets. refine the are to U.S. have in international learnings we our many We the our offerings

you discusses before Jamere for like to financial XXXX. objectives overarching fiscal of remind results, I'd our finally, our And

domestic growing on continued commercial focused service sales are and believe will We growth. levels business lead improved our our to

We our availability. drive and also continue on are improved initiatives focus to that with two chain supply in flight

we're making And our secondly, expanded rollouts. and network. distribution our good Mega-Hub hub is First transforming on progress

the Chowchilla, under have two We California U.S. domestic in Kent, centers distribution Virginia. New and construction currently

are nearing Tepeji of We distribution Mexico completion our also the expanded center.

Monterrey broken center. our larger a have that on we will ground house Additionally, facility distribution relocated

leveraging the is efficiency. more customer. expanded and to network inventory sales improved entire availability the focusing driving with to on improved carry parts speed strategy Our growth and closer

the turn Now I'd Jackson. Jamere to like over call to

good and Thanks, Phil, everyone. morning,

previously we has sequential a had solid discussed, second our quarter Phil EPS fifth quarter, double-digit marking growth. of As

company a a EPS. a a comp This EBIT in XX.X% a comp, XX.X% with increase currency domestic in and sales X.X% X.X% total we quarter, increase XX.X% basis, international growth on constant delivered

continue We me to way. To start a on continue take results in let in elaborate P&L efforts a in growth solid specifics and deliver drive stores to our enable moments to distribution the the morning, QX. for this meaningful our to of AutoZoners few centers and our us

X.X% For with starting the billion, let me quarter, our up a total and give initiatives, $X.X sales little color on sales commercial were -- up business. growth were our our and domestic

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

a QX of the the year-over-year again, Our sales significant comparisons last averages programs per fiscal were and immature comparisons impacted were the versus of also our QX Once weekly the that year. our X.X% to somewhat fiscal last $XX,XXX, easier by our year I'll quarters. addition in half average of of down be toughest weekly sales number are couple over remind expect program and year. back you we this

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

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

make customers. to winning our new share progress continue by wallet seek with initiatives and acceleration commercial grow business existing we share Our of increasing as to

our opportunities we will which growth largest single locations. in in us opportunity. now pursue support have commercial of is and lot we aggressively Importantly, our runway a growth, front Mega-Hub believe XXX of growth have to we commercial, To we continue

rate sales QX. average and in to Xx the grew than commercial the commercial of more continue the of higher our overall than Mega-Hubs programs business significantly Our balance

XXX,XXX inside drive fulfillment as source other and Our stores. expanded SKUs Mega-Hubs roughly store tremendous lift serve typically an box carry for sales the

These giving of surrounding individually, stores fulfillment performing entire parts of thousands the and additional AutoZone lifting is capability access assets customers for the well the and our network. to tens are

and We open Mega-Hubs full have of future, to will buildout. we XXX the foreseeable at continue expect Mega-Hubs to aggressively north for

our quarter, growth. retail negative domestic traffic comp was down of On ticket the as X.X% by business, for offset our mentioned, the Phil saw X.X%, we X.X% side

growth to counts, the business, we trends of the for mid-single-digit long-term As slightly durability see parts. the we by historical move line declining transaction technology by with would and offset to changes driven low forward, expect in ticket in new

continue While a to vehicles. car a is their car likely challenging park, DIY aging continue see that growing we discretionary consumer to a existing and to new challenged sales in and invest market and purchases were QX, used in

addition, driven In to are miles levels. pre-pandemic back

believe DIY 'XX. we of such, for the business our resilient will remainder FY remain As

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

we're to continue progress the constant internationally, XX.X% and a on on an currency basis pleased XX.X% be grew our We basis. same-store sales with making impressive actual an

contributor meaningful stores to committed on international we remain AutoZone's During Mexico and growth. and X the being with X our an attractive to international in XXX. and we're stores Brazil, opened XXX We given with to bullish in stores finish quarter, success, future ending

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

For points, in gross year. the in credit from significant points quarter, our versus basis our margin million last XX LIFO and business driven primarily this $XX margins XX.X%, core improvement XXX basis up charge a quarter noncash gross million $XX LIFO year's a a was by

years, basis margin in Excluding LIFO very point from XX both quarter's increased last basis we a points which improvement XX improvement. gross from had strong

margin to We've gross at had we QX QX's yet point in P&L, QX had out million $XX FY in XXXX. a gross LIFO exceptional QX. based in over rate since we've margin million highest QX. $X now credit this means in charges we'll margin expect QX reverse have modeling we to credit reversed of our to million which improvement. that balance currently year, have the of on million gross and the $XX LIFO for through in I'll fact, $XX the gross And compares be in net cumulative LIFO and QX deflation had we We're last This credits profit headwind experienced LIFO was time.

P&L, $XX the reserve. As previously, and will more take any we credits, not back we rebuild unrecorded we will I've an to once said credit to million LIFO begin through

to operating expenses. Moving

we are experience, underpin expenses productivity. to customer paying sales invest over will disciplined Our expenses The has of and in as were growth accelerated up manage and to time. purposeful committed points. investments with and SG&A on deleveraged dividends SG&A and SG&A growth X.X% versus sales We're in as line These percentage growth to we store XX being growth as we IT payroll basis as in been forward, initiatives. our a last year's continue speed QX move

the versus a rest $XXX Moving $XXX.X expense QX range of of the sales quarter the the at EBIT year year quarter debt million by and $X.X same-store as quarter the year. was We're our million for for was the ago interest billion versus end the $XX.X billion up from was FY driven the planning $XXX up of for growth the outstanding XX.X% to million, margin P&L. $X positive 'XX QX million, in our at year. XX% third improvements. end versus last gross Interest quarter last prior

and borrowing curve are this levels debt rates Higher the driving increase. across

from year, For the exercised, quarter's points. XXX this it XX.X% benefited and quarter, from last of stock our tax year's basis XX.X%, second down while last rate was points options rate quarter basis XXX benefited

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

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

$XX.XX, second share combination XX.X% higher diluted last share count than Our $XX.X income for quarter the earnings million share to of for quarter. The year's drove per quarter. was count X.X% lower and lower up of net the

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

$XXX complete we million of versus expansion billion addition ago, free free in a cash as to we half year. For the remind cash spending to expect had second back that year this fiscal we of our capacity I'll in and quarter fiscal year distribution this spend flow. $X.X the ahead in of quarter, CapEx CapEx majority flow We generated of also a close we our our generate you schedule. the center higher

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

sheet, our at Regarding position our remains our very ratio EBITDA. and balance finished QX strong leverage X.Xx liquidity

negative X.X% quarter. increased new growth. negative $XXX,XXX by store year, per merchandise was versus and basis defined a inventory inventories on last inventory payable up X.X% $XXX,XXX total accounts Net less inventory, per driven Our $XXX,XXX negative as store while was store a last last versus year

accounts a year's as percentage last result, XXX.X%. finished a As the XXX.X% of inventory versus at payable quarter

capital our $X.X repurchased billion enable in since assets a a capital to share committed stock XXXX, of And spend We in stock remaining remain our growing X.Xx and million program. of under quarter to business leverage while and target return and in the share our over of of had We $XXX Lastly, invest disciplined buyback allocation in area over authorization. a quarter. meaningful in inception then end, existing we the shares to our shareholders. approach the the I'll at allocation We've back bought will our us business. moment and on amounts buyback investing AutoZone repurchase cash just that XXX% outstanding

and look our we remainder up, So on disciplined of remain driving to I positioning cash drive to a tremendous our and investing to growth should have domestic value as fiscal competitive our resilient 'XX, shareholder way. initiatives We're Phil. we market returning the of fast-growing initiatives, value and to expanding our our it by margins and in behind long-term sales forward improving bullish our to committed and grow wrap DIY growing a FY in driving back cash underpenetrated shareholders. to and significant we share, our robust business our excess And a strategy remain earnings our continue shareholders. the now to ability ongoing And the remains turn year. I'll and a half for in back business accelerate business, international that in commercial confidence to

been I in company I the have almost only we am how Thank the business. fifth as the you, XX proud years want to Jamere. to CEO over stress represent

from have to of We As AutoZoners great believe a the place you've continue take flight here. of in improve level. and lot us next heard, we truly we a initiatives we have in will to to team

commercial store grow retail are both international sales with and our bases domestic customers. We our to across positioned well and

for are future Our growth. margin expense structure margins our operating is solid, appropriate and gross

our where putting are it most. capital matters We expenditures

leveraging centers build customer say needs. able Our distribution stores, technology customers' experience where our our to we to are superior a and to yes

priority XXXX's Fiscal top is enhanced execution.

projects strategic Additionally, many we have stages completion. various of in

continue the will and facility. distribution opening We completing direct our new hubs, optimizing on import construction new and Mega-Hub new centers

our domestic of ramping stages early international the growth. in store also are up We and

years you domestic been constant teams now. much of for has on same-store higher a comps comps. our noticed, currency As XX.X%, basis sales International international strong several our than posted

these AutoZone's opportunity business. FY in in all our mentioned commercial I While growing remains XXXX, domestic investments biggest share

below While the we know over on a parts for to solid expectations, our we place remainder wow our and will QX focus believe sales growth lead have We of the additional was in customer year. plan availability growth. service

We accomplish are excited committed about what can we AutoZoners to and are delivering results. our

Now to for call I'd like open up the questions.

Chris Instructions] first Horvers for with [Operator today question is from Your JPMorgan.

Pro light you your mix? what competitor Obviously, much the of a most relevant especially question on sense growing, your of business, is, domestic the what's your has in smaller is largest for market accounts. mix of first actually and national My

think us from the to I obvious So that's outside. don't

of July? So relative that do how growing start side? accounts? to June think market the starting better? And performance the are to the we in lap to seeing that national how you have that Pro to get wait seeing Are Do on you and you you're

Yes.

So commercial if of growth under challenged more an been on area are been side the business, that you has on think the that's customer car. folks of I segmented kind more focused the

brakes, areas areas those tire, of more car, probably suspension, types have related challenged. four of corners been those of to the think So the the the that been have one

been to both have for the growth last for about the low share extensively most probably share well as for but we that commercial. talked the day, there's customers. as wallet we the to of end opportunity us pretty new of big have grow customer in continue terms the At and of So go a still suspension, challenged, like quite year. And the and that's I'll over opportunities been categories back brakes which in that's where us, we we've to share

are performance? know -- better were the and to you I Or So relative seeing the going if And I street down give the more you're breaking isolate of be does detail and up you and too but that to detail, out up mean, what mean down any reluctant guess, would much helpful. national account? I a business account of performance like gap like really more versus in account like between street that commentary the

segment. they I the I et on who have area for really would business they mature should say challenged on national or depending coming be challenged you XX or sales challenged positive of incredible months pretty up struggled that's Those Pay mentioned pandemic, been used as are, car accounts, another been had well and well. cetera. inventory. segment out the been the with here depending been has pretty as have They business, that's us Buy your the pick they've can here, the a in negative probably for segment last probably as as wildly

Got -- based seem tax data to it on be year. we on And you that mean, I this it. does to is mentioned year-over-year. normal track, lagging expected then the refund be the

seem So start can expectation mean plays you talk on a it quarter? like of of the later about versus headwinds the what some the terms refunds, inverted actually tax would where you get you quarter out it little benefit more at in this

weeks back should -- X pretty them of year effectively into And XX-week and our taxes of a week a expect weeks the over think the within it's the frame. to taxes couple vast pushed into But well majority be may quarter. similar XX-week the land be last to quarter, time our We're we our I quarter, or X.

meaningful the back to but little slightly bit, maybe not So quarter. a moved

be normal. We to expect it

is Jefferies. Bret with question from next Your Jordan

they to are competitive plateauing? on after pretty 'XX talk they better seem Or question the business? the improve? into a stable of guess could to sort up Is relates still environment? get you down street competitive landscape maybe Do 'XX it they the WD, a about that I and as

to your -- make the the on to Questions WDs just actual... on sure or the I'm sorry, relative question. to Well, clear

more like competitors. are. they for they bit they're raising WD they of were still after stable kind a the It still? becoming -- their whether they Yes, seemed pandemic and game where Are are competitive

Yes.

themselves, latter and business. we'll vast majority improve. you going But in of half in see for exactly The supply hard the think chain to from resolved have it's as it well. my had I the pandemic constraints most the of we still part, sense, tell what's in business to their our the continue on that

of In And back pandemic stocks part. in that would they that had the are improve not also were slightly. recovered of will the where vast previous for to quite the the the most they have I inventory the to WDs issues continue I probably suspect majority the latter to pandemic. think half

over I I I time. levels. don't period to think they're -- say than the short not slightly So better better everybody but going have they're think they're is lower going back to materially to pre-pandemic much pretty would next get of

a are secondarily and guess a question I seems sale then is really for on Is gone and has you And in think assets some it international. about acquired Great. there. Canada sort out Carquest there's -- and O'Reilly that Brazil? of like focused batt, or market Mexico

I would markets, expand we would we look mean, which solid Canada, competitive a have are have. we the never but moment -- it performance opportunities interesting. we -- the Canada we've a not I opportunities at does expansion up think both in we there. two for for have moment. internationally. us I base It got that today, would international us and our in I Brazil. markets like are just And say go in there's not is that but to at we're got current we we Canada, our at markets say say focus of it's would to trying we plenty like pretty never and Mexico where obviously mean in the doesn't We've better footprint. And

'XX? in Not

X months our in left 'XX. In 'XX You anyway. got

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

not? opportunity to see the over still You rate Why commercial growth double-digit or return time? back to business an why a

question. for comment let we our back to the have day, go end thanks share. of and me -- question, the At great the Michael, on

in share low very marketplace. have We this

would you grow here. growth? improve will back double-digit we're to from that we we to when going get Can think faster. exactly tell I No. I I expect would

back back accelerate it our the year, There's we do. think in and nail initiatives when have will of positive of the we'll continue We will in get we to particularly half that I sales to variables there. growth, number frankly date lot place is double-digit a to this tough think in a

I we were think time as long to share continue have expand hubs we're growth our consistent growth share, better market commercial for total assortments in a the business. of we'll -- same-store to and probably we we come, and commercial Mega-Hubs, and and for the we improve see a long-term growth consistent sales see than our side take trajectory the because

That's helpful, that you. invite follow-up does on the time such point AutoZone's is the question Phil. growing margin Got too My at especially gross for they nicely that what competition gross margin But side? get commercial has been sector, some really within high more the now.

with a Yes, our disciplined of when very don't challenged we're supply what period was wages over-earning been very And cost costs, at looked we that and freight very gross disciplined gross margins overall today in very come from been about was We've margin the a margin is actually standpoint inflation happening we're pricing. from expansion. I where costs. think about general. a in We gross we had seeing high base standpoint. you We've transportation what had out just

periods, negotiate same during we're we inflationary higher As opportunity to time, now the with pricing deflation it start we've those an us And retails. base. not supply giving past our those back gives periods, moved at to as took

what is of of sort natural a will. seeing So you actually if gross you're evolution margins,

was chain supply our this challenged that during is time you remind I'll frame. particularly thing other The

some chain. its margin and supply from improvement seeing And we're performance as gross its in chain efficiencies, improved our our cost supply has the

market this decades. margin very time. very So been for decades. and We that it's been disciplined to growing We'll to has a very, expansion disciplined be disciplined we're don't approach industry for over continue gross over believe and share earning

Scot from is question Ciccarelli with Truist. next Your

I follow just Can you said. on up something

deflation. So trying negotiate to you're

So is the but idea costs, to retails? drive fully down procurement hold

abate, literally cost Yes. you those to during retails. what's industry hyperinflation, as we've then And even I cover periods look we have raised not cost. retails high this is if this industry in lower basically does at where additions or inflation and pressures those for decades typically happened mean

a So this gives seeing an period margin what it will. you a standpoint from we're are gross been has progression about we've us deflationary, sort in that you're seen becoming the our we've now disciplined margins, industry doing the of entire things is And period. where very more expand bit as if time natural to over opportunity a as that little

-- just another add comment on that. -- me Let can I another

look if in think at chain of the was of the the the the had gross where margin you we back specifically stressed. go I some supply and -- pandemic half pressures most in latter

that on of costs those Some the overseas because costs U.S., those the got internal in logistics, not in of or all had either unit didn't to pushed kill we to demand. consumer we want

cost those industry the been retail having pricing price We point, we'll So very you're see over margin of some as that. pricing back rational think has and Jamere's down, because To took comes don't back to this Jamere's give we've hurdled point, logistics up underlying don't just we the basis come down. prices that We is decades. that to what seeing today.

clarify. to just So

costs, thinking rate be see kind is, a spike run we current the your number So where unless gross should forward should of? be should freight we the or in be of margin logistics of assumption

that only business would the that And Yes. expect is add we move thing to I our that we do commercial forward. grow as to faster

because have that more trade-off will, drag some And percentage, will will to gross opportunity gross you us dollars. we'll give on the take so if that margin margin it an naturally put

is of underlying chain we're sustainable seeing commercial in terms faster profile So something is But be as mix move the in of forward that gross there'll we we growing deflation, as fundamentals improving a with forward. pressure a in business. what supply margin move likely terms of

with Gutman Morgan question Simeon from is Your next Stanley.

back think are efforts to prescribe double Phil, in investments. if I your know Can labor us supply mentioned commercial faster you digit. totality way the innings it, the about I is some where give right chain to delivery a to sense, it's don't you know There's when comps get times, tricky normalizing.

So you want where to journey are to? where you get those, on that the collective to of

doing that we of business have and Yes. footing. it what get back your are the question a stable more helped part stabilize our there on is

hubs Our very pre-pandemic in-stocks levels. our back to to come We've close have Mega-Hubs. expanded our and

if go ultimate XXX commercial And in goals well. We get hard-to-find efforts significantly to place. helps also North longer of Mega-Hubs. long take we have just It up a can a of will the of and get to where us on customers, get in quite our But hubs. particular, get DIY. parts times. delivery to innings, They to few faster. in Those XXX our to parts way market that take to more our set put hubs those will, It than to improving more those is as you

we've -- some for invested this We've technology. quite in put been time. in talking We've about

to AutoZoners, continue leverage leveraging that by commercial delivery we've early times technology and technology. we're the some innings the able our better we hands got technology place show in to some in where and tests We in enabling of put better

So our to the that for AutoZoners out take change to will time time it and will take roll digest management.

in the soon the we'll we'll in of starts the rally baseball, number -- or the the this in ninth pretty going inning. innings, we're But -- which hopefully, So third maybe quarter of play to year, if inning. have in a we're fourth

EBIT performance a we now wanted since it it in And asked the of sector. to been think you, be has you're the you've to competitors question seems working wanted into to SG&A, because ask your and Good. joined, part is leading but he in bifurcation of one timely ask about and having growth margin. over, Jamere taken I I I when dollar versus

into process take SG&A a So balance that on of advantage your longer then over time period thought of leaning some to displacement. and

Yes.

and can we some in To and degree every would make grow CapEx, I dollars, all the invest sales that obviously investments have we day front, EBIT are day. those SG&A in some we'll the On SG&A. investments

should time, over us think EBIT. our see you I get

Our get SG&A wouldn't slightly. we I our sales -- would we down our we start get centers, gross think stores, our obviously rates growth expect on continue a bend to and things longer invest turnover as will a our dollars? in to investments maybe of start in part hold on AutoZoners But Jamere some margins. would efficiencies of is, kind your that change, should lower as a profit of reduce margin of in had down mentioned lot they question the nature, of we've bringing I distribution to mix improve SG&A like a but take in as higher the and commercial we radical operational tenured of

Absolutely.

I do our Yes. that margins think can slightly exchanges commercial dollars, in long. for and we EBIT both all And we'll DIY on expand an effort over are increase good to Those us. time? day

with is for next Sigman question from Your today Seth Barclays.

quarter, industry not has the couple been business I'd leg points step like some But more of growth, about then years, around commercial. there that right? if a I the wanted perspective particularly maybe that on in supply to significantly question Is has pre-XXXX guess real business perspective? other there back you momentum for central I'm is a options Are you slowed, love very next you've that about? think you noise lot strategy, to those you A what growth, and go-forward And of to of that I right on of Mega-Hubs was the up of strategy. this reverting lot the gives thought right? clearly get this multiple the follow that. confidence a back from the then outperformed is part this chain As sure.

Mega-Hub both and comments previous inning or North the extremely we use -- Yes. and both so larger I'll of of significantly hub third well the in growth We're strategy. Mega-Hub of our hub growth, our around have we'll And roughly hubs. excited think innings XXX about Mega-Hub We're in growth. our

that significantly those higher inventory feed harder help stores, to we stores, to what strategy kind the those markets those they growth close that stores, see that, for If in types satellite call of our We us. find of works you are and to said hubs.

yes, that we the So right believe strategy. is

its enhance our We our share. can sales stores market will and continue strategies the And way grow the we we will hubs both and relevant hard-to-find by to all our for the assortment faster on mega of to get we get better to finds modify more DIY satellite oh, add The way, inventory closer the to those inventory also that shop, the the in and commercial customer. customer into hubs customer. parts

year so. programs you've thinking guess the about last I over the that added Okay. or just

about the from newer talked You've of some programs. drag these

are different new and any the programs you've the ramping on in Just any past? that's perspective seen how if what than

of new is math we've the Yes. XXX on the or I added over couple almost that so, mean years last programs.

commercial several So didn't we have that stores retrofitted and back went programs.

over If you is last number remember, historically, really of XX%. XX% our the That to we ran over up We sort of program. XX% several quarters. a accelerated stores have now that commercial

to efficiency ramping sales XXX XXX terms in now, and So we've performance. commercial that got of immature are right up programs and probably

to And business. a certainly as those our tailwind will mature, it programs provide

of we that been we talks only the quarters. only also business Phil this improving maturing for standpoint, execution when of couple operation our an that these So last have working favor, from in commercial but programs in our have about notion not have

underpenetrated. if we this to us business so that the grounding commercial very keep And about I think just notion broadly, we're back

put of up then we're the all bit a X I'll forward, And of you us. We think move deck hands commercial we for we about back we're and the delivered the adding exceedingly is you XX% a footprints half thing this a delivering like Mega-Hub on get just and last say things improving half year, inside approaching our as priority or with year, well we have And front have year, against comp, in of with just the if commercial company, programs. had there. and competitive execution growth a what's the about half that billion we little of as We've the number is comps #X growing with a share a XX% X hand that $XXX this more the back think It's comp are market. place in easier. the have

comments we initiative back easier. the or confidence a as favor, gives of earlier little about working notion of lot all And have get So standpoint, that comparisons our things it our in bit prepared from we these our comments made just us an along in that the the a half execution.

on Let maybe to stores, a new I'll that, history too, take here. me add bit a and a around of specifically lesson little little bit

store productivity back been our new diet decided, per have types FY of a store, openings you trying or for opening of range. per up our we perspective, programs. strategy drive from on years, the then, and store heavy Back really go to a we to per then XXXX $X,XXX start number of we And productivity. slow If those would commercial store our pretty to down new productivity was $X,XXX in

that. earlier Jamere we're as quoted higher prepared comments, than the significantly Today, in

is environment programs that's open maturing to plateaued get we versus The more rate. happened new years thing faster today's a other higher, ago, they in are up and as rate at a

stores will recent and we versus, the So come we like That XX like box open or that that stores the But have so next XXXX we not we up 'XX. frankly, curves to XXX slow X bit. new in maturity like or years little a or get math. history. probably the the of We're the going probably the out way over

from Forbes Securities. The next question is Steven Guggenheim with

morning. strategy sort of or contextualization to any maturity Good we the potential look us. how way what of the a the as for or on question. think ROI contribution of just sort is of where curve initiatives? And there contextualize numeric years? follow-up in any a trending maybe we of be Mega-Hub should investments a Seth's the way out of Like the few Is couple versus through Maybe maybe discuss behind just are these growth to to sort

Yes.

of stand couple things to a think I us. out

are commercial perspective, Xx overall the see a than that what And business is we it's significantly total our first stores. domestic over from from perspective Mega-Hubs on satellite and basis. a faster growing an The

lift very we're box, been the inside both the getting we've commercial tremendous So on DIY sales with pleased side. the the that of and

more we of mega so. us over And we've and second more this Mega-Hubs markets. metro major talked experienced a years market actually about was would done idea is time to multiple I we what anticipated, a the cannibalization that operate that frame lot gives could really And think parts see testing we of significantly see in jam that last high. closer the we notion was that to thing hubs there few the that which have the is higher. And jam the didn't kind that how of that or high customer of number was the in Mega-Hubs to we fact the in confidence suggested

North And if targets very short a time. recall, Mega-Hub over that of XXX we XXX you'll period from of went had to

source not inside what fact the it's also we We important we're standpoint. what the these seeing stores. we what surrounding standpoint. see from only satellite X for we we So see like walls, but an from are like earnings it's Mega-Hubs sales a and the And fulfillment that an --

fast put And that I us in mean, of both attractive story you can we all for So possibly investments. to as going sales and and we're the in when earnings return mix, pretty go together it's a terms to as on accelerate.

quick follow-up a just expense for growth. the Maybe on outlook

acceleration looking think and it 'XX how have obviously, we growth beyond. you mentioned I should at the store But the downward. plan, curve also

into just margin that And is of any more of sort accelerated of a in the a growth? store take as EBIT maybe mean I why on or disconnect there clarity provide maybe ramp sort risk there's back should could ramp help leaning so business period? additional sort in of growth for step the investment no cycle a ahead you

that in the we've should line. several or And mean last terms Yes. a very invested over in growth line I time, fashion SG&A we the we've disciplined be what of so. SG&A what with in always over is see in years top said

us there Now opportunities your growth go we of will to an won't hesitate And invested initiatives, technology, for growth in historically. do pace To for SG&A that to done to are we've at us. in term, our to point, extent that. near-term payroll, to the near all do accelerated behind things those the drive we've behind we invest that store as drive

but store be SG&A, and look growth, to framework our within should drag there manage able I talked be that some on we move we accelerate about. that to out As will that

Melich Your is with Evercore Greg next from ISI. question

I just inflation. on like to would up follow

did basket is X.X%, say in out was if ticket So and sort same it cetera, that up to fair the of quarter? near number of was items and et SKU mix, -- inflation that that how

Yes.

right was And something the SKU growth same code, low same on seeing in in seen single that we're we've ticket somewhere So ZIP what inflation now. digits Greg.

recognize a That's inflation. higher thing of inflation is important the think came we from I off standpoint to an period some. tempered significantly

freight. driven was by that of Most inflation

have So disciplined seen I And some we'll there be about that we're as of the costs us down point for for to in do cost to come will to overarching do down, inflation as to as we've drive there's very we well. retail is continuing opportunity as to gross get think that start freight are come us where pricing, margin, so where opportunity an deflation take and our well. that

so. ticket of that the to inflation the drive last have growth expecting of in year or sort not levels we same We're

on to And back should mid-single-digit range so DIY normalize some to point that at in expect ticket naturally we the from see to the you offset side that low transactions. decline

bit Got presumably, items up, of SKU? that mix from same in basket of comes But ticking a little and -- inflation acceleration ticket rather it. than

there even I mean, a standpoint. it's an I pretty think business. about and that's We'll how we environment And forward, close manage move disciplined right. stay inflation as our very we out be dynamic from to

had one. to in and parts to unit have $XX of Used great and on slight has units think in average, technology transactions belts on $X range and they changes in today in and it's or retails And -- $X the car it better ticket average X% of time, predominantly X% mean, decline long periods this decades, -- used to that a average $XX. to four the maybe somewhere back have I today, increase used between a car. because belts about some Go belt to be or an about average over on industry

stores a we -- line technology that in and understandable beauty units pretty of very retail that's and our change of this decline in it's to It's term So to product and good development in sight And a, lower frankly, been stay years. continue. that's generally the unit takes is item predictable. XX having been because business the have probably going for a pretty years may an a average change

think pilots is now at follow to us Jamere, a sounds about that wage maybe these inflation the investment faster more, for the on what that level But like there. next you delivery love a could little as people understand Just -- is on you there. the it up are on lot if bit there reacceleration and you're there it's looking quarters? of set and running us I'd tech investment. few commercial delivery, just SG&A you're of And what help doing well?

Yes.

that from see wage handle we're So versus we're average that thrilled so. standpoint, years with a last an we've starting two now a four to three or few over wages average seen the or

we've some of hyperinflation away go back normalized have down, more you sort inflation, to wage seen as will. in the So of now things the We're cooled labor markets. if

the making, that's technology. Now side commercial of terms changes in nearly investments are by standpoint to looking we're initiatives by technology. side, on we the acceleration every do that growth with changes investment some underpinned is the that of from on underpinned some that our with have in are we're Whether making in of initiative we're growth those some a initiatives commercial nearly retail all what

in in invest doing a a Our technology a cost-efficient continue move that very as we teams we'll to disciplined way forward. forward, have -- move as job very way. done and we And we tremendous

of time, assets meaningful the change very been of in and in of terms over deployed vehicles mean people In labor and how commercial manage and business I terms we've a there terms we're to business we've commercial what hasn't of our been delivery. physical how efficient we doing in there. that improve our assets in terms

Your is Cowen. with Max from TD question next Rakhlenko

stores levels, that versus DIFM the just and you're ready quarters? how these go to those are scaling thinking over then how improve about how your be and services where think when going that initiatives expectations? And internal own initiatives the piloting So lighter? speed curious to you early Just could coming are is the in you they

got some There's the see, you we've what pauses couple figure for that work use our that process great to stuff, best stores. a and be We've data need technology and some and we had we out. we're our the it's like that and that you data years, we management and some the in see, in and then last little and AutoZoners customer in rolling and to with move see, -- pause evaluate we and to the because change and to use been And ways robust to But how There's to customer handhelds comfortable do we a in the our assets, we Yes. we've out of parts assets, improve the and had service? It fastest thank the how technology early what drive innings changes a want operations It's we've like AutoZoners where to some changes evaluate we we service have are what can further through. we efficient lot human is, little but customer what our we're in with a set of is car of faster where further, the the we improve and both to and and part enhancements having without look get over happy will be shop, think if think customer inventory move early of it safe. the about the the get faster we'll to any we our and but now the some trucks testing the to question. that. -- made most our innings, pretty

retention in you And can those speak then How staff in then pro And that's helpful. those better And in-store very translating just demand into are It's trends your it. improvements satisfaction? if ultimately, stores. trending? Got rates? to

to we've a two the be our you pre-pandemic but times. it's we're happened. and was in we'd to we is things about it retention and down in seeing, stores whole, love think staffing and faster. and it mentioned turnover better although levels, that still centers, different than have the One couple trends distribution back work levels, say during We've it's if get to it back like to do not improving, our have pre-pandemic -- both I'll of We pandemic. but to in

we've opened in stores up couple commercial, slightly it and mentioned The other has thing over XXX times, a years. on X roughly did of Jamere we

TSMs some concentrated takes As and we that in the obviously, commercial nature, and things expanded pretty caliber we specialists your the those really were did that -- high of stores. people that quickly. that, [ ]

new learn really get their job relationships, So we new forward. got as that better promotions continue move ingrained and you got long-term to and will learn shops with and and to those people those get

of kind two it's So elements.

for one we call. last think I have time

with The question is from next Nagel Brian Oppenheimer.

of at So been commercial, there's this conversation. being guess of a a on list. with of for we has questions simplistic. kind But mechanic a of my trends. not moving key to in about parts an lot the question, the list each too I first know and I time your that individual commercial, we measure There's climbing that a talked We say, here as at lot the of near-term so In recognize look the ongoing long success risk of have been store climbing customer.

you your climb seeing to stalled? talk you're pull these the that I and some of lists stores, have are indications those lists So down question or as falling any you the up is, maybe further

Yes. we've to back be opportunities answer I have list. down a the under to we X% there is would mean, still share to always say yes. think that we're Is falling don't comments improve? good The Go our characterization. several share, that made I times up the in be. quicker shop. we The new new to and the to drive believe. we open mature And as internally parts we we better get better get in can and we'll stores, what better stores get parts those call availability time shop, relationships, and

bit particular call. that in that's all a -- a -- a misnomer part think every has They a a there's has And needed first I nobody this shop. of customer

for pretty many It's virtually all customer with nobody's impossible. all any of SKUs. their So that think and the in basket list call got we a the but rare one multiple that's for call. say larger to will gain a they continually customer people first call move you're up too share of There's always particular eggs to we will a parts. customer, wallet because put have customers, each

better. I will get continue So we think to

in and new I market gotten and continue take to were, got gain we've a to customers. front we from better think us of road share long where we've

as look component of I And a follow-up That's very saw talked you But QX. on some prepared guess quick key sales not weather, spring volatility say, weather, helpful. the weather, been your been through just in you was the then about at into I the normal has there question we have business it you summer? we're weather. driver obviously, in you as give winter winter and -- even the as comments, that. a but enough And look fiscal the yet, maybe that even the enough of so at through has is and head we weather to

Yes. as time said. will Great question, not weather, and through completely you We're tell. winter

But it haven't a got winter to New cold calendar of gone I heck like of on really year. those I and the think in It's lot lay you're I a the weather. if I lot I York, more was York, little D.C., New of a big weather in that said, than had could hours. this if the snow XX more you a to year love I'd bit cold last you've have extreme really mean out within eastern Philadelphia, would seaboard. have, got cities love really areas

did along half. and East for big Coast X more some just Midwest pretty got Northeast than the eastern now. really the metro I the western The cities cold of half weather. But or sorry, I'm haven't years the the

had share that more in the in company to can't of something going that's So love what. to We're control. our I those go we to there, no -- have but areas grow those country, do best would market matter

the question. for follow-up thanks So

like call, in we the is model believe position, our and conclude a to industry we solid. I'd and take that moment before reiterate our is business strong a So

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

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

confident we the value continue AutoZone to optimize focus shareholder on are we to participating be you today's will future, As the for drive for and basics call. Thank in successful.

this you This may your time. you. Thank participation. disconnect at you conference, for Thank concludes your and today's lines