AutoZone, Inc. (NYSE:AZO) disappointed investors with Q3 results far below expectations. Wall Street reacted by dragging AZO stock down almost 9% in pre-market trading this morning.
Earnings per share were 56 cents shy of analyst expectations, at $11.44 a share, according to a company press release. The year-ago quarter saw $10.77 per share. Net income increased 1.3% over the same period last year to $331.7 million.
The car-parts retailer said sales were $2.6 billion for the 12 weeks ended May 6. That’s 1% higher than last year’s Q3 but short of a Wall Street’s forecast of $2.71 billion. Domestic same store sales, or sales for stores open at least one year, declined 0.8% for the quarter.
Gross margins fell 21 bps to 52.6%, fueled by higher supply chain costs and higher inventory shrink.
“Our sales performance for the first five weeks of our quarter was significantly below our expectations, challenged by the well-publicized timing delays in IRS tax refunds,” said Bill Rhodes, president and CEO. “The last seven weeks of sales demonstrated improvement, but not enough to make up for our soft start.”