AutoZone, Inc. (AZO) Sales Drop Significantly As Consumers Go For New Cars

AutoZone, Inc. (AZO)

AutoZone, Inc. (NYSE:AZO), the largest auto parts seller in the U.S., has reported dissatisfying sales in the fourth quarter. The fall in sales is attributed to the fact that the economy is fast picking up, making it possible for consumers to afford new cars instead of repairing old ones.

The fourth quarter gave a disappointing low, delivering only 2.1% increase, almost half of the 4% realized in the third quarter. The effect of the report on AutoZone, Inc. (NYSE:AZO) in the stock market was equally devastating as it lost 5%.

General, the sale of new automobiles rose significantly in the past three months. August alone realized a healthy growth of 5.4% with the number of units going up to 1.58 million.

AutoZone, Inc. (AZO)

The Memphis based auto parts dealer only reported $3.05 billion for the fourth quarter, which is lower than the $3.07 billion that many analysts had expected, according to a research carried out by Zacks Investment Research.

AutoZone, Inc. (NYSE:AZO) net income however beat what Wall Street had expected as the company posted $373.7 million ($11.28 a share) against the $11.23 per share expected by Wall Street.

More auto parts dealers are resorting to selling to garages, service stations, and dealers as consumers go away from the DIY approach and preferring to take their vehicles to experts. This is more so because of the increased sophistication in motor vehicle parts and functions.

Advance Auto Parts Inc and O’Reilly Automotive Inc, AutoZone, Inc.’s main competitors, had balanced their focus to substantially include professional motor vehicle repairers, ending up scooping in excess of 40% of their income from such repairers.

The trend was the same for AutoZone, Inc. (NYSE:AZO), only that their sales to commercial repairers amounted to 17.5%. Still, this was a significant increase from the 16% realized from similar sales in 2013.

This article has been written by Victor Ochieng.

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