Empresas y finanzas

AutoZone sales disappoint as customers prefer new cars to repairs

By Ankit Ajmera

(Reuters) - AUTOZONE (AZO.NY)Inc reported weaker-than-expected quarterly revenue as a strengthening U.S. economy encouraged consumers to buy new vehicles instead of repairing existing ones, sending the auto parts retailer's shares down as much as 5 percent.

U.S. auto sales showed strong growth in each of the past three months. August sales rose 5.4 percent to about 1.58 million vehicles ? the highest for the month since 1.63 million vehicles were sold in August 2003. (http://reut.rs/1r1pqaV)

AutoZone reported a 2.1 percent rise in same-store sales for the fourth quarter ended Aug. 30 ? its smallest increase in three quarters.

Sales at the high-margin commercial repairs business, which sells parts to auto repair chains, increased only 5.3 percent, down from a 14 percent rise in the previous quarter.

"AutoZone's higher exposure to the slower-growing do-it-yourself (retail) segment and lower exposure to the higher-growth commercial delivery business was a bit of a competitive headwind," RBC Capital Markets analyst Scot Ciccarelli said.

Vehicle parts retailers have been increasing sales to garages, dealers and service stations as more Americans turn to them to repair their increasingly complex vehicles.

AutoZone's rivals Advance Auto Parts Inc and O'Reilly Automotive Inc got more than 40 percent of their 2013 revenue from commercial repairs.

Memphis, Tennessee-based AutoZone is still playing catch up in the commercial business market. The company's commercial repair accounted for only 17.5 percent of AutoZone's 2014 sales, up from 16 percent share in 2013.

Morningstar analyst Liang Feng estimates that the commercial repairs business in the United States was about $59 billion in size in 2013.

While AutoZone's share remains at about 2-2.5 percent, smaller rival Advance Auto Parts is expected to account for about 10 percent share by the end of the year, Feng said.

"It's (commercial business) nowhere near where we want it to be... We have not set any specific number because we don't want to maximize or put a threshold to where we're going," AutoZone Chief Executive Bill Rhodes said on a post-earnings call.

The company's fourth quarter revenue increased 4.5 percent to $3.05 billion. Analysts on average had expected revenue of $3.07 billion, according to Thomson Reuters I/B/E/S.

Net income increased to $373.7 million, or $11.28 per share, for the fourth quarter, from $347.8 million, or $9.76 per share, a year earlier. Analysts had expected $11.26 per share.

AutoZone's shares were down 4.7 percent at $501.61 in afternoon trading on the New York Stock Exchange. They have risen about 25 percent in the past 12 months, compared with an about 18 percent rise in the S&P 500 Index <.SPX>.

(Reporting by Ankit Ajmera in Bangalore; Editing by Joyjeet Das)

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