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About Blue Ribbon Motoring, Llc

With more than 5,600 stores in the US and Puerto Rico, AutoZone is one of the nation's leading auto parts chains. It also has more than 550 stores in Mexico and about two dozen in Brazil. AutoZone stores sell hard parts (alternators, engines, batteries), maintenance items (oil, antifreeze), accessories (car stereos, floor mats), and non-automotive merchandise under brand names and private labels. AutoZone's commercial sales program distributes parts and other products to garages, dealerships, and other businesses. The company operates an electronic parts catalog, Z-net, that provide a wide range of information on parts for employees and customers.

Operations

AutoZone operates through one primary segment, Auto Parts Stores, which accounts for more than 95% of revenue. Leveraging a consistent store format, each AutoZone store boasts between 85% and 90% of selling space -- up to 40% to 45% of which is dedicated to hard parts inventory. Stores are outfitted with Z-net, AutoZone's proprietary electronic catalog that gives employees advice and information for customers' vehicles, down to the year, make, model, and engine type.

Other revenue is generated by e-commerce operations (autozone.com and autoanything.com) and diagnostic and other software (provided through the company's ALLDATA business) used in automotive repair. The company also has a smartphone app through which customers can find and buy parts.

One class of similar products accounted for about an eighth of AutoZone’s sales, and it depends on one vendor for about 12 percent of its purchases.

Geographic Reach

Based in Tennessee, AutoZone operates about 5,600 AutoZone stores in the 50 US states, the District of Columbia, and Puerto Rico. Texas, California, Florida, Ohio, and Illinois are the company's largest markets and together account for more than a third of locations. The company's fast-growing subsidiary in Mexico, AutoZone de México, operates more than 560 stores. AutoZone also has stores in Brazil.

AutoZone has distribution centers in the US (Arizona, California, Georgia, Illinois, Ohio, Pennsylvania, Tennessee, Texas, and Washington) and Mexico; store support centers are in Tennessee, as well as Mexico and Brazil. In addition, the company has operations in China which support the sourcing efforts in Asia.

Sales and Marketing

AutoZone sells to do-it-yourself (DIY) consumers, as well as repair garages, dealers, service stations, and other commercial customers.

The company relies on targeted advertising and promotions to build its brand, offer advice about the overall importance of vehicle maintenance, and position its business as a great value. To drive traffic to its stores, the retailer advertises on broadcast and Internet media. It works to educate consumers about which products they need through use of in-store signage and circulars, as well as creative product placement and promotions.

Advertising expense for the company runs about $95 million a year.

Financial Performance

New locations drive revenue growth for AutoZone, which has seen an average revenue increase of 5% per year since 2012 (similar to the 4% average location increase over the same period). Net income has also ticked up consistently since 2012 as the company keeps its net profit margin between 11%-12%.

In 2018 (ended August), the company reported revenue of $11.2 billion, a company record and a 3.1% increase from $10.9 billion in 2017. New stores in the US provided $196.5 million while domestic same store sales rose about 2%. Domestic commercial sales increased $151.4 million, about 7%, year-to-year while auto parts sales rose 4% in 2018 from 2017 throughout the company.

AutoZone’s net income increased 4% to about $1.3 billion in 2018 from 2017, boosted by a lower income tax bill due to the US Tax Cuts and Jobs Act. The company’s net profit margin climbed to 12% in 2018, its highest in at least five years.

Cash at the end of 2018 was $218 million, a decrease of about $75 million from the prior year. Cash from operations contributed $2.1 billion to the coffers, while investing activities used about $522 million, with increases the result of new distribution centers and additional investment in existing locations. Financing activities subtracted about $1.6 billion as AutoZone repaid about $250 million in debt and purchased about $1.6 billion in treasuries.

Strategy

AutoZone's core strategy includes expanding its store network and store inventory to meet customer needs. It added about 200 stores (net of closings) in fiscal 2018 (on top of 215 in 2017 and 205 in 2016) and is focusing on new-store development while also enhancing its existing stores and infrastructure. Nearly 50 of the new stores in 2018 were opened in Mexico and Brazil. The company also opened a distribution center in 2018.

With an eye on expanding inventory, AutoZone is focused on hub and mega hub locations, which offer inventory two to four times broader than typical stores. In 2018, it opened five hub stores for a total of nearly 195 and eight mega hub locations, bringing that total to about 25. The company plans to have a total of 40 mega hub stores in operation over the next few years.

While AutoZone directly imports between 10% and 15% of parts, many of its domestic vendors get supplies from overseas, making the company subject to tariffs and other complications from international trade tensions.

Company Background

Joseph "Pitt" Hyde took over the family grocery wholesale business, Malone & Hyde (established 1907) in 1968. He expanded into specialty retailing, opening drugstores, sporting goods stores, and supermarkets, but his fortunes began to race on Independence Day 1979, when he opened his first Auto Shack auto parts store in Forrest City, Arkansas.

Using retailing behemoth Wal-Mart as a model, Hyde concentrated on smaller markets in the South and Southeast, emphasizing everyday low prices and centralized distribution operations. He stressed customer service to provide his do-it-yourself customers with expert advice on choosing parts. While a number of retailers have tried to copy Wal-Mart's successful model, Hyde had an inside track: Before starting Auto Shack he served on Wal-Mart's board for seven years.

Auto Shack had expanded into seven states by 1980, and by 1983 it had 129 stores in 10 states. The next year Malone & Hyde's senior management, with investment firm Kohlberg Kravis Roberts (KKR), took the company private in an LBO. Auto Shack continued to expand, reaching 192 stores in 1984. The company was spun off to Malone & Hyde's shareholders in 1987, and Malone & Hyde's other operations were sold. The company changed its name to AutoZone in 1987, in part to settle a lawsuit with RadioShack.

To build its online presence, AutoZone in 2013 acquired AutoAnything, an online retailer of specialized automotive products.

Blue Ribbon Motoring, Llc

AVE LAUREL 206 CALLE C URB IND MINILLAS
Bayamon, PR 00959-1909
Phone: 1 (858) 569-8111

Stats

Employer Type: Privately Owned
Employees (This Location): 125
Employees (All Locations): 125

Major Office Locations

Bayamon, PR