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The effects of last year’s warmer-than-usual winter have lingered; the unseasonably warm temperatures caused less car damage, diminishing the need to replace auto parts and slowing AutoZone’s (NYSE:AZO) quarterly sales.
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While total sales rose 5 percent in the fourth quarter, compared with last year’s 8 percent rise, fourth-quarter earnings rose 7.4 percent. The United States’ largest auto-parts retailer saw its earnings grow as a result of new stores in the U.S. and Mexico, its growing commercial business, and cost-conscious car owners keeping vehicles longer as the economy struggles to recover.
AutoZone, which operates in both the retail and commercial auto parts markets, reported that its same-stores sales performance for the quarter was lower than expected, but gross margins rose to 51.8 percent from 51.2 percent last year. The company, which competes with Advance Auto Parts (NYSE:AAP) and O’Reilly Automotive (NASDAQ:ORLY), finished the quarter with 5,006 stores in the U.S. and Mexico, four percent more than a year ago.
Following the results of the quarterly report, shares in the retail chain fell 4 percent in pre-market trading; the stock closed at $357.84 on Tuesday and opened this morning at $342.
However, the company’s quarterly results were better than Wall Street predicted. Analysts had expected earnings of $8.40 per share for the last quarter, on revenue of $2.8 billion, but when the quarter ended August 25, AutoZone reported that net income rose to $323.7 million, or $8.46 per share.
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