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AutoZone Profit Crawls Higher

The results are short of Wall Street's expectation.
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(AZO) - Get AutoZone Inc. Report

eked out a 1.7% rise in second-quarter earnings despite a drop in same-store sales, but the profit missed Wall Street's expectation.

For the quarter ended Aug. 25, the Memphis, Tenn.-based car-parts retailer posted a profit of $217.2 million, up from $213.5 million a year earlier. On a per-share basis, earnings jumped 11% to $3.23 from $2.92 last year, as buybacks helped cut the number of shares outstanding.

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The per-share results, however, were below analysts' average estimate of $3.25, according to Thomson Financial.

Sales inched up to $2 billion from $1.94 billion, but were slightly shy of Wall Street's $2.03 billion target. Same-store sales, or sales at stores open at least a year, slipped 0.2%.

"While we experienced less sales traction from our ongoing initiatives than we had expected, our marketing research continues to tell us our service levels are improving, and that our customers are more inclined to return to our stores for their next purchase," said Bill Rhodes, president and chief executive.

For the quarter, gross profit as a percentage of sales improved to 50.1% from 49.7% last year. AutoZone attributed the better margin to category management and supply chain efficiencies.

Shares of AutoZone recently were up 83 cents, or 0.8%, to $109.45.