Shares of AutoZone Inc. AZO, +7.64% rallied 2.6% in premarket trading Tuesday, after the auto parts retailer reported a big fiscal first-quarter profit beat and sales that rose above expectations, amid continued strength in its commercial business. Net income for the quarter to Nov. 20 rose to $555.2 million, or $25.69 a share, from $442.4 million, or $18.61 a share, in the year-ago period. The FactSet consensus for earnings per share was $20.98. Sales increased 16.3% to $3.67 billion, above the FactSet consensus of $3.37 billion, as the commercial business grew 29.4%. Cost of sales rose 17.9% to $1.74 billion, as gross margin fell 65 basis points to 52.5%, primarily because of initiatives to accelerate commercial business growth. The company said it spent $900 million to repurchase its shares during the quarter, paying at average price of $1,749. “We are optimistic about our growth prospects for the balance of the fiscal year,” said Chief Executive Bill Rhodes. The stock has run up 23.2% over the past three months while the S&P 500 SPX, +2.07% has gained 1.6%.
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