AutoZone 2010 Annual Report Download - page 3

AutoZoners always put customers first!
We know our parts and products.
Our stores look great!
We’ve got the best merchandise at the right price.
AutoZone Pledge, est. 1986
On behalf of our more than 63,000 AutoZoners across
North America, it is an honor for me to update you on our
progress during fiscal 2010 and to review our continuing
opportunities for 2011 and beyond. During 2010, we grew
revenues by eight percent and grew earnings per share
by 27.6% on top of our very solid 2009 results. More
important than this year’s results, we believe AutoZone
continues to be very well positioned for future growth.
In September, we hosted our annual National Sales Meeting
in Memphis, Tennessee, where we had the opportunity
to thank our leadership team for their dedication and
commitment to excellence that led to our success. We were
also able to reflect on how our organization has changed
over just the last five years. In five years, we’ve expanded
our store footprint by over 25%, ending fiscal 2010
with 4,627 total stores across the U.S., Puerto Rico and
Mexico. Our sales have grown from $5.7 billion annually
in 2005 to over $7.3 billion in 2010, and our comparable
earnings per share have more than doubled, growing from
$7.23/share in 2005 to $14.97/share in 2010. These are
no small accomplishments, and they are entirely derived
from the efforts of our AutoZoners across the company
who go the Extra Mile every day in order to Always Put
Customers First! From the company’s first store in Forrest
City, Arkansas, the commitment to adhering to our culture
and values has been critical to our success and remains
one of our key points of differentiation. During these
difficult financial times, we continue to receive thousands
of notes annually thanking our AutoZoners for their efforts
to help our customers solve their problems or to effectively
maintain their vehicles, all at a very compelling value
proposition. We call these notes Extra Miler stories and
we regularly celebrate these efforts, reinforcing positive
behaviors we want to replicate. These behaviors are the
secret to our success!
Our operating theme for 2011 is 1TEAM Going the
Extra Mile. The emphasis is to focus on incorporating our
Commercial and Retail business models more seamlessly.
While we’ve been streamlining our information systems to
make it easier for AutoZoners to serve all of our customers,
we’ll look to build on this theme in 2011 with improved
technologies that better leverage the Internet, continued
improvements to Commercial Z-net (our new technology
to support sales to Commercial customers), ongoing parts
catalog enhancements, and better parts availability across
the chain. But the real emphasis and benefit of our 1TEAM
approach will be that every customer receives an exceptional
experience when they interact with us. Our pledge, written at
the top of this letter, starts with putting customers first. Our
past successes have come from this simple principle. It will
continue as our primary focus in 2011, as we understand that
it is what defines our company.
Summary of 2010 results
We were pleased to announce another year of double digit
earnings-per-share growth. Based on virtually any of our key
operating metrics, the organization delivered extremely strong
results. In fact, we have now recorded sixteen consecutive
quarters of double digit earnings-per-share growth and seven
straight quarters of earnings-per-share growth in excess of
20%. Our same store sales increased 5.4% in 2010 (versus
last year’s 4.4% sales increase over a comparable 52 week
period in fiscal 2008, which excludes a fifty third week of
financial results). Also, our operating profit increased 12.2%
versus 2009’s comparable 7.2% increase. And, our earnings
per share increased 27.6% versus 2009’s comparable basis
of 19.7%. We also produced record operating cash flow of
$1.196 billion, up from $924 million last year, and Return on
Invested Capital (ROIC) reached a new all-time high of 27.6%
versus last year’s 24.4%.
While the aftermarket industry, across both Retail and
Commercial, experienced another strong year in 2010,
we were very pleased with our results. Based on third
party statistics, we continued to gain market share across
both our Retail and Commercial customer segments. And,
our customers were telling us their shopping experience
continues to improve. We cannot, and will not, rest on our
laurels in 2011. We will continue to focus on improving all
aspects of our business. Our culture remains our key point of
differentiation, and we will not lose sight of the importance of
basic execution in every aspect of our business.
Dear Customers, AutoZoners, and Stockholders:
In order to succeed in the future,
we will have to work even harder
than we have in the past.
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