Finc314 Project 2

April 10th, 2013

Ju Xue and Pavel Alekseyev

FINC314

Project 2

Financial Analysis of AutoZone

AutoZone sells auto and light truck parts, chemicals and accessories through 4,735 AutoZone stores in 49 U.S. states plus the District of Columbia and Puerto Rico and 334 stores in Mexico and one store in Brazil for a total store count of 5,070. Recent statistics for the company; Net income for the quarter increased by $9.3 million, or 5.6%, over the same period last year to $176.2 million, while diluted earnings increased 15.1% to $4.78 per share from $4.15 per share in the year-ago quarter. One of the reasons for this improvement in earnings was primarily driven by lower acquisition costs.

1.

A. For the Porter 5 Forces analysis, the threat from new enemy within the industry in minimum. Auto parts industry is well developed and the biggest competitor to AutoZone Company is O’Reilly Automotive Inc. The bargains power of buyer is none existing. The threat of substitute products is range from low to moderate. On the other hand, the bargain power of suppliers is now uncertain. Finally, from our pervious analysis on Project 1, the rivalry among competing firm in industry is low because AutoZone is the leader in auto part industry.

B. As of April 1st, 2013, the chairman of AutoZone Company is Bill Rhodes and he is also the president and the CEO. In his letter to shareholder in 2012, he stated that the company will focus on the following retail initiatives: 1. Great People Providing Great Service. 2. Leveraging the Internet. 3. Hub Store Improvement. Among three of them, leveraging the internet is a worthwhile initiative because it’s low cost way to provide the end users with the AutoZone products.

C. The latest conference call of AutoZone Company is at March 12, 2013. In this conference call, Charlie Pleas - Principal Accounting Officer, Senior Vice President and Controller stated that the company have grown over a 10 and a 5 year period, an...