AutoZone, Inc. (AZO – Analyst Report) reported a 15.6% rise in earnings per share to $6.51 for the second quarter of fiscal 2015 (ended Feb 14, 2015) from $5.63 in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $6.37. Net income went up 9.8% to $211.7 million from $192.8 million in the year-ago quarter.

Autozone Inc. – Earnings Surprise | FindTheCompany

Quarterly revenues increased 7.7% year over year to $2.14 billion, marginally surpassing the Zacks Consensus Estimate of $2.12 billion. Domestic same-store sales (sales for stores open at least for one year) increased 3.6% in the reported quarter.

Gross profit increased to $1.12 billion (or 52.2% of sales) from $1.04 billion (or 52.1% of sales) in the year-ago quarter. The year-over-year improvement in margins resulted from increased merchandise margins, partially offset by the impact of the Interamerican Motor Corp. (“IMC”) acquisition.

Operating profit improved to $361.3 million from $337.3 million in the second quarter of fiscal 2014. Operating expenses, as a percentage of sales, increased to 35.4% from 35.2% a year ago due to higher incentive compensation, impact of the IMC acquisition and self-insured medical costs, which offset the impact of favorable credit card litigation settlement.

Store Opening and Inventory

AutoZone opened 37 stores in the U.S. and 5 stores in Mexico during the second quarter. Additionally, it closed one store and relocated one store in the U.S. Further, IMC opened one new branch during the quarter. As of Feb 14, 2015, the company had 5,042 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 411 stores in Mexico, 5 stores in Brazil and 18 IMC branches. Thus the total store count was 5,476 as of that date.

AutoZone's inventory grew 11.9% year over year in the quarter, driven by store openings, the IMC acquisition and higher product placement. Inventory per store increased to $631,000 from $589,000 in the corresponding quarter of fiscal 2014.