Case30 Autozone

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Case30 Autozone

Case 30

Autozone Inc.

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Group A Team Member

Juthatip Khaovisate                                 5949005

Phantida Pukpinyo                                   5949007

Kamonchat Vonglodjanaporn                   5949024

Chanjilar Panyakorn                             5949038

Company background

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   Autozone’s first store opened in 1979 under the name Auto Shack however in 1987 the name was changed to Autozone.  The company acts as a retailer and distributor of automotive replacement parts and accessories in the United States. Then in 1991, after four years of steady growth, the company went public and was listed on the New York stock exchange.

  By 2012, the company become the one of the largest retailer of automotive replacement parts and accessories in the United State. AutoZone has come a long way. Today, AutoZone serves customers in 48 states, Mexico, Brazil and with more than 65,000 employees and 4,813 stores.

    The Company’s product lines included cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.

     Autozone’s success in developing category-leading distribution capabilities had resulted in both the highest operating margin for its industry and strong consumer service. Today, Auto Shack is AutoZone – a Fortune 500 company and the leading auto parts retailer in the United States with more than $8.1 billion in annual sales.

Current situation

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     In 2008, the US suffer from the economic recession therefore the market recovery shown unusually slow growth. As the economy struggled and unemployment was high, fewer new cars were purchased and older cars were kept on the road longer, required more frequent repairs. As a result, the auto-parts retail business enjoyed strong top-line growth as auto-parts retailers operated with high-gross margin. However the company experienced high competition as retailers continue to expand the operation. Despite high level of industry intense competition and worries that market will be oversaturation, the company still aims to expand internationally.

How has AutoZone’s stock price performed over the previous five years? What other financial measures can you cite that are consistent with the stock price performance?

 Over the past five years, the stock price has increased significantly, price show a positive trend since 1997.  According to the chart below; on August 1, 2008 the stock price was only $121 compared to $307 on August 1, 2011 with compound annual growth rate at 26%.

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    Strong appreciation come from several reasons. Firstly as mentioned above that in the current economic situation going through a recession. As Auto-part business is a counter-cyclical, are those that do well in economic downturns. The stock price of the companies belonging to counter-cyclical industry has a tendency of downward movement in times of economic growth and goes up during an economic recession company growth is highly related to the economy which will also reflected on the company’s stock price.  As a number of new car purchased was decline, people demand more repairmen as for this reason, the stock price of the company significantly improved since 2008.