Autozone FY 2Q15 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Happy with comps

“Due to last year’s very strong Q2 sales, up 4.3% on a same-store basis, the comparisons for this past quarter were challenging. We were quite pleased with our performance throughout the second quarter, especially in light of the difficult comparisons. And we ended the quarter with domestic same-store sales of 3.6%. This represents more than 200 basis points improvement on a two-year rolling same-store basis from last quarter.”

Lower gas prices helping economically challenged consumer

“our maintenance-related categories performed quite well in the quarter. Our belief is the Improvement and Maintenance category sales was driven by more conducive weather patterns, improved merchandise assortments due to the products we have added over the last year, and lower gas prices, which we believe is relieving some pressure, particularly on our most economically challenged customers.”

Overall trajectory of business was consistently positive

“The overall trajectory of our business was quite consistent throughout most of the quarter. That consistency was across all regions of the country. We believe we benefited from macro tailwinds, our work on inventory availability and on solid execution.”

Return on capital focus

“our primary focus has been and continues to be that we ensure every incremental dollar of capital that we deploy in this business provides an acceptable return, well in excess of our cost of capital. It is important to reinforce that we will always maintain our diligence regarding capital stewardship as the capital we invest is our investors’ capital.”

Gas prices have a real impact on our customers

‘We continue to believe gas prices have a real impact on our customers’ abilities to maintain their vehicles, and as cost reductions help all Americans, we hope to benefit from some increase in disposable income.”

Sales of 1.7m per box

” For the trailing four quarters, total sales per AutoZone store were $1.753 million. This statistic continues to set the pace for the rest of the industry.”

Hasn’t really been inflation

“We have not been the beneficiary of inflation over the last, almost at this point I’d say 18 plus months, maybe pushing 24 months, and it doesn’t appear as though there’s a lot of inflation in the horizon either. There’s a couple of categories here and there that have some inflation, but for the most part, we’ve been generating these sales out of a no inflation kind of environment. So it really is the strength of the customer, the strength of our offering that was really driving that.”