Autozone Inc (NYSE:AZO), the leading retailer and distributor of automotive replacement parts and accessories in the Americas, stock fell 0.73% (As on May 24, 11:39:53 AM UTC-4, Source: Google Finance) after the company missed expectations for third-quarter net sales, as increased prices of automobile parts led to a rise in inventories. Elevated material costs and supply chain woes have led to U.S. auto suppliers hiking prices for their products across the board. On the other hand, consumers weary of a looming recession have been tightening their purse strings and scaling back on discretionary spending. The auto parts supplier’s inventory rose 7.4% for the quarter ended May 6 from a year earlier. Domestic same store sales, however, grew merely 1.9%, from a rise of 2.6% in the year-ago period. For the quarter, gross profit, as a percentage of sales, was 52.5%, an increase of 56 basis points versus the prior year. The increase in gross margin was impacted by a 42 basis point ($17 million) non-cash LIFO benefit, with the remaining leverage primarily from higher merchandise margins. Operating expenses, as a percentage of sales, were 31.5% versus last year at 31.6%. Operating profit increased 9.3% to $858.5 million. Net income for the quarter increased 9.3% over the same period last year to $647.7 million. During the quarter ended May 6, 2023, AutoZone opened 22 new stores in the U.S., six in Mexico and two in Brazil. As of May 6, 2023, the Company had 6,248 stores in the U.S., 713 in Mexico and 83 in Brazil for a total store count of 7,044.

AZO in the third quarter of FY 23 has reported the adjusted earnings per share of $34.12, beating the analysts’ estimates for the adjusted earnings per share of $31.42. The company had reported the adjusted revenue growth of 5.8 percent to $4.09 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $4.12 billion. As of May 6, 2023, AutoZone had cash and cash equivalents of $274.9 million, up from $263 million as of May 7, 2022. The total debt amounted to $7,340.5 million as of May 6, marking an increase from $6,057.4 million as of May 7, 2022.

Under its share repurchase program, AutoZone repurchased 356 thousand shares of its common stock for $908.2 million during the third quarter, at an average price of $2,551 per share. At the end of the third quarter, the Company had $843.6 million remaining under its current share repurchase authorization.