Please ensure Javascript is enabled for purposes of website accessibility

AutoZone Confirms It's Keeping Stores Open as It Deploys Coronavirus Contingency Plans

By Asit Sharma - Mar 26, 2020 at 3:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The retail and commercial car parts supplier updated investors on current business conditions.

In an SEC filing on Thursday, auto parts retailer AutoZone (AZO 0.48%) informed investors that the duration of the COVID-19 pandemic remains a significant unknown impacting its business. The nationwide auto maintenance brand also stated that it has created contingency plans surrounding merchandise categories management deems to be at risk of supply disruption, including items sourced from China and other coronavirus-affected areas.

AutoZone provided clarity on its current store status following a wave of temporary store closures across the retail spectrum in recent days, stating: "Currently, substantially all of our stores, including stores located in jurisdictions where travel restrictions and 'stay-at-home' orders have been imposed, remain open, with most traditional non-hub stores temporarily operating on limited hours. Our online sales channel continues to operate as normal."

Assorted engine parts on a white background.

Image source: Getty Images.

The organization reported its latest earnings results on March 3, and though same-store sales decreased by 0.8% during the quarter ended Feb. 20, 2020, this was more a function of the weather crimping store traffic than any early COVID-19 headwinds.

Undoubtedly, the current quarter (fiscal third quarter of 2020) will look quite different. Just how much sales and margins will be impacted is difficult to model. Naturally, keeping stores running is beneficial to the top line, but as road traffic temporarily withers due to mass closures, quarantines, and shelter-in-place orders, vehicle maintenance may prove to be a low priority for a temporarily home-bound population.

Thus, management is preparing for at least some adversity: AutoZone also noted in its filing today that it's "contemplating" signing onto a new, 364-day revolving credit facility of up to $750 million. The company will report its next earnings results in early June.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AutoZone, Inc. Stock Quote
AutoZone, Inc.
$2,169.27 (0.48%) $10.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.