AutoZone Inc. ( AZO ) has authorized the repurchase of an additional $500 million of the company’s common stock under its ongoing share repurchase program. The move will slash about 5% of the company’s outstanding shares out of circulation. As of the fiscal 2010 ended August 31, 2010, the company had 49.3 million of outstanding shares.
 
Since the inception of the share repurchase program in 1998, AutoZone has authorized the repurchase of $9.4 billion worth of shares (including the above amount). The company has repurchased 121.7 million shares at an aggregate cost of $8.67 billion in the same period.
 
AutoZone’s share repurchase program has been supported by improved earnings and strong financials. In the fiscal year ended August 28, 2010, AutoZone’s profit rose 12.4% to $738.3 million or $14.97 per share from $657 million or $11.73 per share in the previous fiscal year. The profit was higher than the Zacks Consensus Estimate by 21 cents per share.
 
Net sales escalated 8% to $7.4 billion, up from the Zacks Consensus Estimate of $7.3 billion. Domestic same store sales went up 5.4% during the fiscal year. Operating profit increased 12.2% to $1.3 billion from $1.2 billion a year ago. Consequently, operating margin was 17.9% versus 17.3% last year.
 
In fiscal 2010, AutoZone had a net cash flow of $947.6 million before share repurchases and changes in debt. This was an improvement from the year-ago level of $673.3 million.
 
AutoZone is focused on aggressive expansion of its Hub store, acceleration of store maintenance and expansion in the size of its commercial sales force. For the fiscal 2010, the company has opened 163 stores, replaced 3 stores, and closed 3 stores in the U.S. as well as opened 50 stores in Mexico. As of August 28, 2010, the company had 4,389 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 238 stores in Mexico.
 
Followed by aggressive store expansion strategy, impressive share repurchase program and strong results, AutoZone maintained a Zacks #1 Rank on its stock, which translated to a short-term recommendation of “Strong Buy”.
 
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