First it was supply chain problems, the pandemic and later inflation AutoZone (WKN: 881531 / ISIN: US0533321024). The US automotive spare parts retailer was able to demonstrate that it is resilient in particularly difficult economic times.
Special boom for AutoZone over?
Supply chain problems, especially around semiconductors, have slowed down production in the automotive industry in recent years. This meant, among other things, very long waiting times for new car customers. Accordingly, the old cars were held on for longer. However, older cars tend to increase the need for repairs.
During the pandemic, the “Do it Yourself” trend in general was strengthened. People stayed at home more often. During this phase, they had more time to beautify their own home, watch Netflix series, and also work on their own car. After the pandemic, it was inflation that strengthened the automotive aftermarket.
New cars became too expensive for many people, so they had to hold on to their old cars for this reason. The situation is now normalizing again, so that AutoZone shares have not been able to repeat the outperformance of previous years and the real test is only now coming. However, this does not mean that the company from Memphis, Tennessee, will be unemployed.
The future is electric
The electrification of the automotive industry is also opening up completely new opportunities in the automotive spare parts market. Companies like AutoZone also want to benefit from the changes in the market. Especially since buyers of electric cars tend to be more concerned about protecting the environment.
This works particularly well if you don’t buy a new car straight away, but rather hold on to your old car for a longer period of time and look after it. In addition, accessories such as windshield wiper blades, headlights, floor mats or similar must be purchased for electric cars, as well as for combustion engines. And of course there are various pieces of equipment such as charging ports and other special accessories for electric cars.
AutoZone can beat market expectations
AutoZone can already point to good business despite difficult economic conditions. In the fourth quarter of the 2022/23 financial year, which ended August 26, group-wide sales revenue was $5.7 billion.
An increase of 6.4 percent compared to the previous year. Adjusted earnings per share reached $46.46. Market expectations were slightly beaten both in terms of sales and results.
However, the slightly lower increase in comparable sales revenues, i.e. in branches that have been open for at least twelve months, in the USA compared to the third quarter caused some dismay among investors. However, AutoZone was again able to convince in terms of margins and satisfy investors with further share buybacks.
My conclusion
In recent years, AutoZone has benefited from some positive special effects. However, the automotive spare parts dealer has shown time and again that it can remain resilient in economically difficult phases and adapt to new market situations. Especially since a particularly big change is currently underway with the electrification of the automotive industry.
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