AutoZone (AZO 740.26, -0.59) is off 0.1% after reporting disappointing results for the second quarter.
The auto parts retailer reported below-consensus earnings of $8.08 per share on a 1.4% year-over-year increase in revenue to $2.29 billion, which was also shy of expectations.
The recent string of quarterly reports from automakers has pointed to a moderation of sales growth trends after years of steady gains. As for AutoZone, the company saw no year-over-year change in domestic same store sales during the second quarter.
Gross margin declined nine basis points to 52.7%. This was due to higher shrink expense and higher supply chain costs, which were partially offset by lower acquisition costs. Operating expenses accounted for 35.9% of sales, up slightly from 35.8% of sales one year ago.
Inventory increased 8.7% due to new stores and increased product placement. Inventory per location increased to $665,000 from $633,000.
The company opened 37 new stores during the second quarter, including 33 in the United States, three in Mexico, and one in Brazil. At the end of the quarter, the company had 5,346 stores in the United States, 491 stores in Mexico, 26 IMC branches, and nine stores in Brazil. One year ago, AutoZone operated 5,193 locations in the United States, 451 stores in Mexico, 24 IMC branches, and eight locations in Brazil.
Including today's downtick, AutoZone is down 6.3% so far in 2017 while peer O'Reilly Auto (ORLY 267.51, -0.74) is down 3.5% since the start of the year.