AutoZone Inc.

Overview Key strengths Key risks Leading aftermarket auto parts retailer generating $14.7 billion in sales during fiscal 2021. Stiff competition from other national auto parts retailers in the do-it-yourself (DIY) and do-it-for-me (DIFM) segments. Bargaining power over suppliers enabled by its large scale. Margin pressure from commercial segment growth. Track record of strong free operating cash flow generation. Longer-term risk of accelerating electric vehicle adoption. The company has been expanding its DIFM segment at a healthy pace over the past several years, increasing last-12-month (LTM) segment sales by more than 85% over the past five years. This has led to DIFM segment revenue increasing to account for 25% of total sales from about 20% while total sales have climbed nearly

...AutoZone continues to gain share in the DIFM commercial business segment by showcasing a strong value proposition relative to smaller and independent aftermarket auto parts retailers. The company has been expanding its DIFM segment at a healthy pace over the past several years, increasing last-12-month (LTM) segment sales by more than 85% over the past five years. This has led to DIFM segment revenue increasing to account for 25% of total sales from about 20% while total sales have climbed nearly 50% during the same period. We believe its commercial segment growth will continue to outpace the overall business, owing to the increasing complexity of automotive parts, as well as the company's investments in its commercial program. AutoZone has improved its capabilities to serve commercial customers through ongoing initiatives to enhance its product assortment and expand its commercial...

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