AutoZone (NYSE: AZO), a leading retailer of automotive replacement parts, reported better than expected earnings and sales for the third quarter of 2019, aided by strong comparable store sales. The company’s stock gained nearly 3% early Tuesday following the announcement.

AutoZone Q3 results beat estimates

At $2.78 billion, third-quarter net sales were higher by 4.6% compared to the year-ago period and slightly above analysts’ consensus forecast. There was a 3.9% increase in domestic same-store sales during the quarter.

The benefit of positive comparable store performance was partially offset by lower merchandise margins, primarily due to a shift in mix. Meanwhile, gross margin rose to 53.6%, supported by gains from the sale of two businesses last year.

The benefit of positive comparable store performance was partially offset by lower merchandise margins

The company posted net income of $405.9 million or $15.99 per share for the April quarter, compared to $366.7 million or $13.42 per share in the corresponding period of last year. The bottom-line benefitted from a decline in the effective income tax rate.

STORE OPENINGS

During the third quarter, AutoZone opened 35 new stores in the US, eight in Mexico and three in Brazil. The total number of stores at the end of the quarter was 6,287 – 5,686 in US states, the District of Columbia and Puerto Rico; 576 in Mexico and 25 in Brazil. The addition of new stores and improved product placement pushed up the company’s inventory by 8%.

“As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and utilizing our balance sheet and capital effectively,” Bill Rhodes, chief executive officer of AutoZone, said.

Related: AutoZone Q2 2019 Earnings Conference Call Transcript

AutoZone repurchased around 472,000 shares during the three-month period for $466 million at an average price of $987 per share. 

The company’s shares jumped to an all-time high last month, crossing the $1,000-mark for the first time. Since the beginning of the year, the stock has gained 17%. It moved up about 3% Tuesday after the earnings report.

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