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AutoZone Sales Shrink in the Fiscal Second Quarter

By Demitri Kalogeropoulos - Mar 3, 2020 at 8:48AM

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The auto parts retailer posted a rare sales decline but is optimistic about stronger growth ahead.

AutoZone (AZO 2.38%) announced fiscal second-quarter results on Tuesday that came in shy of Wall Street's expectations. The leading auto parts retailer posted a rare sales decline, in fact, as management blamed mild winter weather across much of the country for depressing demand for seasonal automotive maintenance products.

A man shops in the automotive aisle.

Image source: Getty Images.

What happened?

Comparable-store sales, or sales at existing locations, fell 0.8% after having climbed by about 3% through most of 2019. That result trailed management's target, and executives described a challenging sales environment for the wider industry. "Our sales performance ... did not meet our plans or expectations," CEO Bill Rhodes said in a press release. The company said mild winter weather was a "considerable headwind" that reduced demand for seasonal auto repair and maintenance parts across the industry.

What's ahead?

AutoZone has still managed to boost sales over the past six months, in part thanks to robust growth in its store footprint. Its profitability is ticking higher, too.

Investors have good reasons to expect more gains ahead on both scores. The retailer didn't issue specific guidance, but executives noted that the second half of the fiscal year is usually its strongest. "We are optimistic about our prospects," Rhodes said, "for the balance of the year."

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