AutoZone motors ahead, comps soften
The nation’s leading auto parts retailer produced modest sales and profit growth during its third quarter but managed to achieve double digit earnings per share growth thanks to stock buyback activity.
AutoZone sales increased 4% to $2.6 billion during the quarter ended May 7, thanks to the addition of new stores and a 2% same-store sales increase. Net income increased 6% to $327.5 million, while earning per share increased 12.6% to $10.77 as the company spent $533 million to repurchase 687,000 shares.
The share repurchase activity kept alive AutZone’s streak of 39 consecutive quarters of double digit earnings per share growth.
“AutoZoners across the company remain committed to providing superior service to our customers and that dedication has resulted in consistent, solid performance,” said AutoZone chairman, president and CEO Bill Rhodes. “During the quarter, we continued implementation of our inventory availability initiatives. At the end of the quarter, we have expanded our increased frequency of distribution center deliveries initiative to 1,600 domestic AutoZone stores and expect by the end of the fiscal year to be servicing approximately 2,000 of our over 5,000 domestic AutoZone stores.”
The company also plans to open approximately four additional distribution facilities it calls “Mega Hubs” by the end of the fiscal year to finish with a total of 11.
“The results of our initiatives continue to meet or exceed our expectations, further confirming our new inventory deployment strategy,” Rhodes said. “Regarding the third quarter’s results, sales were below our expectations as weather negatively impacted sales primarily in Midwestern, Middle Atlantic, and Northeastern states.”
During the quarter, AutoZone opened 33 new stores in the U.S. and seven new stores in Mexico. The company now operates a total of 5,226 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 458 stores in Mexico, 25 IMC branches, and eight stores in Brazil for a total count of 5,717.
Barnes & Noble Education expands college turf
Amazon.com has been encroaching on Barnes & Noble Education’s collegiate bookstore business with a rapidly expanding network of campus pickup locations, but Barnes & Noble is striking back.
Fourteen colleges and universities have selected Barnes & Noble College as their partner of choice to operate their campus bookstores. The 14 new contracts represent 23 new campus and virtual bookstores. The schools represent a projected additional 140,000 students and their faculty.
In the past month, Georgetown University, the University of Connecticut, and the University of North Carolina at Chapel Hill have chosen to partner with Barnes & Noble College. With today’s announcement, those institutions of higher learning are joined by:
· Assumption College
· Bates Technical College
· Chabot College
· Colorado College
· Lenoir Community College
· Lincoln Memorial University
· Northern Michigan University
· Ocean County College
· St. Mary’s University
· Seton Hill University
· Youngstown State University
“Barnes & Noble College’s continued success builds significantly on Barnes & Noble Education’s mission and provides an even greater footprint to deliver innovative and affordable educational content, competency-based educational tools and courseware solutions,” said Max J. Roberts, CEO, Barnes & Noble Education, Inc.
Commentary: Meet the next generation of store associate
Retailers will be excited by the prospect of employees that are never late and don’t need to take breaks or even be paid, but will customers accept them?
We are going to find out. MasterCard is unveiling the first commerce applications for “Pepper,” a new humanoid robot from Softbank Robotics. The app will be powered by the MasterCard MasterPass digital payment service. Pizza Hut Restaurants Asia P/L will be the inaugural launch partner, with an in-store pilot expected by the end of 2016, but it stands to reason Pepper will make his way to North America if Asian consumer response is positive.
Pizza Hut Asia will be piloting Pepper for order-taking and personalized service. A consumer will be able to initiate an engagement by greeting Pepper and pairing the consumer’s MasterPass account by either tapping the Pepper icon within the wallet or by scanning a QR code on the tablet that the robot holds.
After pairing with MasterPass, Pepper will be able to assist cardholders by providing personalized recommendations and offers, additional information on products, and assistance in checking out and paying for items. Pepper will be able to initiate, approve and complete a transaction by connecting to MasterPass via a Wi-Fi connection and the entire transaction happens within the wallet.
“Consumers have come to expect personalized service, customized offers and simple and seamless processes both in-store and online,” said Tobias Puehse, VP, innovation management, digital payments & labs at MasterCard. “The app’s goal is to provide consumers with a more memorable and personalized shopping experience beyond today’s self-serve machines and kiosks, by combining Pepper’s intelligence with a secure digital payment experience via MasterPass.”
There are obvious limitations to how deeply Pepper can engage in conversation with a consumer or determine their unstated needs. Also, Pepper cannot currently stock shelves or retrieve items. However, as artificial intelligence, natural language comprehension, and kinetic technology continue evolving at a rapid pace, it is likely in the not-too-distant future robots will be able to perform most or all of the functions currently performed by human associates,
Within the U.S., Lowe’s has been running a robotic pilot at its Orchard Supply Hardware subsidiary. Robots assist customers in finding specific products and obtaining real-time information on promotions and inventory levels. They also remotely connect with expert employees to answer project questions.
It is too early to say for sure exactly how robotic associates will fit into the store of the future, or whether they will mostly or totally displace human workers. But it is nearly certain that a customer visiting a store in 2026 will interact with fewer people and more machines than they do in 2016.