F4Q10 Earnings Call
September 21, 2010 10:00 a.m. ET
Bill Rhodes – Chairman, President and CEO
Bill Giles – CFO and EVP, Finance, Information Technology and Store Development
Brian Campbell – Vice President, Treasurer, Investment Relations and Tax
Alan Rifkin – Bank of America
Simeon Gutman - Credit Suisse
John Lawrence – Morgan Keegan
Ryan Brinkman - Goldman Sachs
Dan Wewer - Raymond James
Greg Melich - ISI
Kate McShane – Citi Investment Research
Michael Lasser - Barclays Capital
Previous Statements by AZO
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Good morning and welcome to the AutoZone conference call. [Operator instructions.] This conference call will discuss AutoZone's fourth quarter financial results. Mr. Bill Rhodes, the company's chairman, president, and CEO, will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10:00 a.m. Central time 11:00 a.m. Eastern time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements.
Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy, and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments, and other factors that we believe to be appropriate.
These forward-looking statements are subject to a number of risks and uncertainties including without limitation credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing and changes in laws or regulations.
Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 29, 2009 and these risk factors should be read carefully.
Mr. Rhodes, you may begin.
Good morning, and thank you for joining us today for AutoZone's fiscal 2010 fourth quarter conference call. With me today are Bill Giles, executive vice president and chief financial officer, store development and IT, and Brian Campbell, vice president, treasurer, investment relations, and tax.
Regarding the fourth quarter, I hope you've had an opportunity to read our press release and learn about the quarter's result. If not, the press release, along with slides complementing our comments today, is available on our Web site, www.autozoneinc.com. Please click on "quarterly earnings conference calls" to see them.
We are very pleased to announce for the quarter an EPS increase of 27.7% and a domestic same-store sales increase of 6.7%. This marks the seventh consecutive quarter of EPS growth in excess of 20% and the 16th consecutive quarter of double-digit EPS growth.
Back in May, on our third quarter conference call, we spoke cautiously about our sales potential heading into the new quarter. We were concerned about difficult comparisons and unsure of our customers' buying inclinations. What transpired, and how we executed, provides us encouragement heading into our new fiscal year.
While our industry remains strong, we were encouraged by our results for three reasons. According to NPD data, we gained both dollar and unit share across both of our customer segments, retail and commercial.
Our commercial business has demonstrated strong momentum by achieving accelerated growth each quarter during our fiscal year, ending with a 20% increase in sales for the fourth quarter, our highest increase in several years.
And lastly, we completed the remainder of our hub store conversions well ahead of schedule. Additionally, we did all of this while delivering exceptional customer service as evidenced by the continued improvement in customer satisfaction survey scores. While average ticket improved more than transactions, both showed solid positive trends for the quarter.
Last quarter, we mentioned items we felt contributed to our strong sales results. This quarter we believe our results benefitted from macro factors which included an extremely warm summer across most of the U.S., combined with cost-conscious consumers looking to save money. Those, supplemented by our company's specific initiatives, such as increased inventory availability through our hub store network, our customer service initiatives, and our commercial sales force continuing to build trust with their professional installer accounts, all resulted in our strong sales performance.
We are kicking off our new fiscal year with our 2011 national sales meeting here in Memphis this week. This year, consistent with prior years, we've invited our senior field leadership to Memphis to celebrate our very strong financial and operational performance, launch our theme for 2011, and reiterated the key priorities for our organization.
Let me say while I'm proud to share our results with you on the phone today, I'll be even more excited later today by being able to greet and thank the AutoZoners who delivered this from across North America for their efforts to deliver this exceptional year.
To be able to celebrate growing same-store sales 5.4% on top of a 4.4% increase last year, and growing EPS 27.7% on top of 20% last year, is an achievement I will enthusiastically celebrate with our AutoZoners. We simply continue to execute and we need to say thank you and congratulations to our organization. These results are their results, and they should take great pride in their performance.