AutoZone reported net sales of $2.5 billion for its third quarter (12 weeks) ended May 9, 2015, an increase of 6.5% from the third quarter of fiscal 2014 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.3% for the quarter.
Net income for the quarter increased 8.4% over the same period last year to $309.1 million, while diluted earnings per share increased 13.1% to $9.57 per share from $8.46 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 52.3% (versus 52.0% for the same period last year). The improvement in gross margin was attributable to higher merchandise margins, partially offset by the impact from Interamerican Motor Corporation (IMC) which was acquired during September, 2014 (-26 bps). Operating expenses, as a percentage of sales, were 31.6% (versus 31.5% for the same period last year). The increase in operating expenses, as a percentage of sales, was primarily due to the impact of the IMC acquisition.
Under its share repurchase program, AutoZone repurchased 763,000 shares of its common stock for $515 million during the third quarter, at an average price of $675 per share. Year to date, the Company has repurchased 1.377 million shares of its common stock for $841 million, at an average price of $611 per share. At the end of the third quarter, the Company had $778 million remaining under its current share repurchase authorization.
The Company's inventory increased 10.7% over the same period last year, driven by increased product placement, new stores, and the acquisition of IMC. Inventory per location was $629 thousand versus $594 thousand last year and $631 thousand last quarter. The acquisition of IMC increased total inventory per location by $13 thousand this quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis was a negative $68 thousand versus negative $84 thousand last year and negative $47 thousand last quarter.
"We are pleased to report our thirty-fifth consecutive quarter of double digit earnings per share growth. AutoZoners across the company remain committed to providing superior service to our customers and that dedication has resulted in consistent, solid performance. We continued to diligently work on our inventory availability initiatives, including expanding our multi-deliveries per week to test stores and opening two additional mega hub store locations. Also, the expanded hard parts inventory we have deployed throughout our chain over the last year continues to be a contributor to our sales success. While we have continued to strategically invest in our business in order to support our growth, we remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended May 9, 2015, AutoZone opened 27 new stores and relocated one store in the U.S., opened seven new stores in Mexico, and opened two new stores in Brazil. IMC relocated its East Coast distribution center and related branch during the third quarter. As of May 9, 2015, the Company had 5,069 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 418 stores in Mexico, 18 IMC branches, and seven stores in Brazil for a total count of 5,512.
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