| AutoZone Hits Higher Gear With Commercial Business AutoZone and other aftermarket auto parts suppliers owe much of their success over the last few years to the cyclical nature of the business, which tends to do well when new-car sales plummet. ". In an April 24 report upgrading AutoZone's stock to "overweight" from "neutral," JPMorgan analyst Christopher Horvers said AutoZone is following an "invest when the top-line is there" strategy. AutoZone also has invested heavily in new sales staff and delivery trucks to serve its growing list of commercial clients. "This will allow AutoZone to harvest its (commercial) investments whenever the cyclical tail winds turn against it," Horvers noted. As recently as 2008, only 54 stores were converted to accommodate commercial programs. But AutoZone doesn't only rely upon the business of weekend mechanics and do-it-yourselfers for its growth. The company added 235 new commercial programs at its stores in fiscal 2011. In the DIFM business, AutoZone provides commercial credit lines and delivers parts and other gear to fix garages, auto dealers, service stations and government clients. This partly explains why Auto-Zone, the nation's largest auto parts supplier, keeps pumping out quarter after quarter of double-digit earnings growth. "In the case that the cycle is longer lasting than most anticipate, AutoZone will have a market share growth engine. 8 billion in commercial sales, up from $880 million the year before. One result was an aging fleet of cars on the road, boosting demand for auto replacement parts. AutoZone opened 92 new commercial programs during its fiscal second quarter, which ended in February. Sales remained historically low over the next couple of years. The company's commercial sales growth has accelerated to about 20 % a year. |
Tuesday, 8 May 2012
AutoZone Hits Higher Gear With Commercial Business
