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What changed in AutoZone's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AutoZone's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+267 added−282 removedSource: 10-K (2023-10-24) vs 10-K (2022-10-24)

Top changes in AutoZone's 2023 10-K

267 paragraphs added · 282 removed · 239 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+7 added−7 removed22 unchanged
Biggest changeLeRiche was named Senior Vice President – Store Operations in June 2021. From 2015 to 2021, he was a Divisional Vice President – Store Operations. Prior to 2015, Mr. LeRiche held several other key management positions with the Company. ​ Grant E. McGee, 60—Senior Vice President – Commercial, Customer Satisfaction Grant E.
Biggest changeLeRiche held several other key management positions with the Company. ​ Grant E. McGee, 61—Senior Vice President – Commercial, Customer Satisfaction Grant E. McGee was named Senior Vice President – Commercial in June 2021 and has notified the Company of his intent to retire, effective around the end of the 2023 calendar year. From 2007 to 2021, Mr.
Z-net provides parts information based on the year, make, model and engine type of a vehicle and also tracks inventory availability at the store, at other nearby stores and through special order. The Z-net display screens are placed on the hard parts counter or pods, where both the AutoZoner and customer can view the screen.
Z-net provides parts information based on year, make, model and engine type of a vehicle and also tracks inventory availability at the store, at other nearby stores and through special order. The Z-net display screens are placed on the hard parts counter or pods, where both the AutoZoner and customer can view the screen.
We utilize advertising, direct marketing, loyalty programs and promotions primarily to highlight our great value, the availability of high quality parts and develop a relationship with an expanding base of customers. Broadcast and digital media are our primary advertising methods of driving retail traffic, while we leverage a dedicated sales force and our ProVantage loyalty program to drive commercial sales.
We utilize advertising, direct marketing, loyalty programs and promotions primarily to highlight our great value, the availability of high quality parts and develop a relationship with an expanding base of customers. Digital and broadcast media are our primary advertising methods of driving retail traffic, while we leverage a dedicated sales force and our ProVantage loyalty program to drive commercial sales.
No other class of similar products accounted for 10 percent or more of our total revenues, and no other individual vendor provided more than 10 percent of our total purchases. We believe alternative sources of supply exist, at similar costs, for most types of product sold.
No other class of similar products accounted for 10 percent or more of our total revenues, and no individual vendor provided more than 10 percent of our total purchases. We believe alternative sources of supply exist, at similar costs, for most types of product sold.
Store Personnel and Training We provide on-the-job training as well as formal training programs, including an annual national sales meeting with related cascading meetings at our distribution centers, regional offices and stores; store meetings on specific sales and product topics; standardized computer-based training to support culture, safety, salesmanship, compliance and product and job knowledge; and several specialist, vendor and third-party programs to support learning and development in areas requiring technical expertise and specific job knowledge.
Store Personnel Training and Incentives We provide on-the-job training as well as formal training programs, including an annual national sales meeting with related cascading meetings at our distribution centers, regional offices and stores; store meetings on specific sales and product topics; standardized computer-based training to support culture, safety, salesmanship, compliance and product and job knowledge; and several specialist, vendor and third-party programs to support learning and development in areas requiring technical expertise and specific job knowledge.
All domestic AutoZoners are encouraged to complete our in-house product knowledge program and Parts Expert certification, which is developed in partnership with our key suppliers. Training is supplemented with frequent store visits by management. Store managers, commercial sales managers and managers at various levels across the organization receive financial incentives through performance-based bonuses.
All domestic AutoZoners are encouraged to complete our in-house product knowledge program and Parts Expert certification, which is developed in partnership with our key suppliers. Training is supplemented with frequent store visits by management. Additionally, store managers, commercial sales managers and managers at various levels across the organization receive financial incentives through performance-based bonuses.
Our competitors include national, regional and local auto parts chains, independently owned parts stores, online automotive parts stores or marketplaces, wholesale distributors, jobbers, repair shops, car washes and auto dealers, in addition to discount and mass merchandise stores, hardware stores, supermarkets, drugstores, convenience stores, home stores and other retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories, tools and maintenance parts.
Our competitors include national, regional and local auto parts chains, independently owned parts stores, online automotive parts stores or marketplaces, wholesale distributors, jobbers, repair shops, car washes and auto dealers, in addition to discount and mass merchandise stores, hardware stores, supermarkets, drugstores, convenience stores, home stores and other retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories and tools.
We utilize in-store signage, creative product placement and promotions to help educate customers about products that they need. 9 Table of Contents Purchasing and Supply Chain Merchandise is selected and purchased for all stores through our store support centers located in Memphis, Tennessee; Monterrey, Mexico and Sao Paulo, Brazil.
We utilize in-store signage, creative product placement and promotions to help educate customers about products that they may need. 9 Table of Contents Purchasing and Supply Chain Merchandise is selected and purchased for all stores through our store support centers located in Memphis, Tennessee; Monterrey, Mexico and Sao Paulo, Brazil.
With the oversight and support of a cross-functional Diversity Council and DEI Steering Committee, our DEI efforts influence and inform many parts of our human capital management function including talent acquisition, retention, professional development and workforce management. Our first business resource group (“BRG”) was established in 2014 (AutoZone Women’s Initiative).
With the oversight and support of a cross-functional Diversity Council and DEI Steering Committee, our DEI efforts influence and inform many parts of our human capital management efforts including talent acquisition, retention, professional development and workforce management. Our first business resource group (“BRG”) was established in 2014 (AutoZone Women’s Initiative).
Approximately 90% to 99% of each store’s square footage is selling space. In our satellite stores, approximately 40% to 50% of our space is dedicated to hard parts inventory, while our hub stores and mega hubs have 70% to 85% of their space utilized for hard parts.
Approximately 90% to 99% of each store’s square footage is selling space. In our satellite stores, approximately 40% to 50% of our space is dedicated to hard parts inventory, while our hub and mega hub stores have 70% to 85% of their space utilized for hard parts.
AutoZoners also provide free diagnostic and related services, including check engine and anti-lock braking system light readings through our AutoZone Fix Finder service, testing of starters, alternators and batteries, battery charging and the collection of used oil for recycling. 8 Table of Contents Merchandising The following tables show some of the types of products we sell by major category of items: ​ ​ ​ ​ ​ Failure Maintenance Discretionary A/C Compressors Batteries & Accessories Bearings Belts & Hoses Calipers Chassis Clutches CV Axles Engines Fuel Pumps Fuses Ignition Lighting Mufflers Radiators Starters & Alternators Thermostats Tire Repair Water Pumps ​ Antifreeze & Windshield Washer Fluid Brake Drums, Rotors, Shoes & Pads Chemicals, including Brake & Power Steering Fluid, Oil & Fuel Additives Oil & Transmission Fluid Oil, Cabin, Air, Fuel & Transmission Filters Oxygen Sensors Paint & Accessories Refrigerant & Accessories Shock Absorbers & Struts Spark Plugs & Wires Windshield Wipers ​ Air Fresheners Cell Phone Accessories Drinks & Snacks Floor Mats & Seat Covers Interior & Exterior Accessories Mirrors Performance Products Protectants & Cleaners Sealants & Adhesives Steering Wheel Covers Stereos & Radios Tools Towing Wash & Wax ​ We believe customer satisfaction is often impacted by our ability to promptly provide specific automotive products as requested.
AutoZoners also provide free diagnostic and related services, including check engine and anti-lock braking system light readings through our AutoZone Fix Finder service, testing of starters, alternators and batteries, battery charging and the collection of used oil for recycling. 8 Table of Contents Merchandising The following tables show some of the types of products we sell by major category of items: ​ ​ ​ ​ ​ Failure Maintenance Discretionary A/C Compressors Batteries & Accessories Bearings Belts & Hoses Calipers Chassis Clutches CV Axles Engines Fuel Pumps Fuses Ignition Lighting Mufflers Radiators Starters & Alternators Thermostats Tire Repair Water Pumps ​ Antifreeze & Windshield Washer Fluid Brake Drums, Rotors, Shoes & Pads Chemicals, including Brake & Power Steering Fluid, Oil & Fuel Additives Oil & Transmission Fluid Oil, Cabin, Air, Fuel & Transmission Filters Oxygen Sensors Paint & Accessories Refrigerant & Accessories Shock Absorbers & Struts Spark Plugs & Wires Windshield Wipers ​ Air Fresheners Cell Phone Accessories Drinks & Snacks Floor Mats & Seat Covers Interior & Exterior Accessories Mirrors Performance Products Protectants & Cleaners Sealants & Adhesives Steering Wheel Covers Tools Towing Vehicle Entertainment Systems Wash & Wax ​ ​ ​ We believe customer satisfaction is often impacted by our ability to promptly provide specific automotive products as requested.
Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.
Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.
We sell automotive hard parts, maintenance items, accessories and non-automotive parts through www.autozone.com, for pick-up in store or to be shipped directly to a customer’s home or business, with next day or same day delivery programs in most of our U.S. markets.
In addition to our in-store offerings, we sell automotive hard parts, maintenance items, accessories and non-automotive parts through www.autozone.com, for pick-up in store or to be shipped directly to a customer’s home or business, with next day or same day delivery programs in most of our U.S. markets.
As part of our program, we offer credit and delivery to our customers, as well as online ordering through www.autozonepro.com or through the AutoZone Pro smartphone application. Through our hub and mega hub stores, we offer a greater range of parts and products desired by professional technicians.
As part of our program, we offer credit and delivery to our customers, as well as online ordering through www.autozonepro.com or through the AutoZone Pro smartphone application. Through our hub and mega hub stores, we offer a greater range than our satellite stores of parts and products desired by professional technicians.
Our hub stores (including mega hubs, which carry an even broader assortment) carry a larger assortment of products that are delivered to local satellite stores. We are constantly updating the products we offer to ensure our inventory matches the products our customers need or desire.
Our hub stores (including mega hubs, which carry an even broader assortment) carry a larger assortment of products that are delivered to local satellite stores. We are continuously updating the products we offer to ensure our inventory matches the products our customers need or desire.
While many of our AutoZoners follow more traditional career paths (e.g., part-time to full-time sales, store manager, district manager, regional manager, vice president), we encourage cross-functional development and support of AutoZoners as they expand their career into other departments and fields of interest.
While many of our AutoZoners follow more traditional career paths (e.g., part-time to full-time sales, store manager, district manager, regional manager, vice president), we encourage cross-functional development and support of AutoZoners as they expand their career into other departments and fields of interest within the Company.
Store Design, Visual Merchandising and Promotional Execution We design and build stores for high visual impact. The typical store utilizes colorful exterior and interior signage, exposed beams and ductwork and brightly lit interiors. Maintenance products, accessories and non-automotive items are attractively displayed for easy browsing by customers.
Store Design, Visual Merchandising and Promotional Execution We design and build stores for high visual impact. The typical store utilizes colorful exterior and interior signage, exposed beams and ductwork, finished floors and brightly lit interiors. Batteries, maintenance products, accessories and non-automotive items are attractively displayed for easy browsing by customers.
A key differentiating component versus our competitors is our exclusive line of in-house brands, which includes Duralast and the family of Duralast brands, ProElite, Shop Pro, SureBilt, TotalPro, TruGrade and Valucraft. We believe that our overall value compares favorably to that of our competitors.
A key differentiating component versus our competitors is our exclusive line of in-house brands, which includes Duralast and the family of Duralast brands, ProElite, ShopPro, SureBilt, TotalPro, TruGrade and Valucraft. We believe that our overall value compares favorably to that of our competitors.
Most of our merchandise flows through our distribution centers to our stores by our fleet of tractors and trailers or by third-party trucking firms. The distribution centers replenish all stores up to multiple times per week depending on store sales volumes.
Most of our merchandise flows through our distribution centers to our stores by our fleet of tractors and trailers or by third-party transportation firms. The distribution centers replenish our stores up to multiple times per week depending on store sales volumes.
Commercial Our commercial sales program operates in a highly fragmented market, and we are a leading distributor of automotive parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts in the Americas.
Commercial Our commercial sales program operates in a highly fragmented market, and we are a leading distributor of automotive parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts in the Americas.
Previously, he served as Senior Vice President – Commercial from 2015 to 2021, Vice President – Commercial Support from 2013 to 2015 and Vice President – Merchandising from 2008 to 2013. He was also a Divisional Vice President – Store Operations from 2005 to 2008. Prior to 2005, Mr.
Daniele served as Senior Vice President – Commercial from 2015 to 2021, Vice President – Commercial Support from 2013 to 2015 and Vice President – Merchandising from 2008 to 2013. Mr. Daniele was also a Divisional Vice President – Store Operations from 2005 to 2008. Prior to 2005, Mr.
Prior to his appointment as President and Chief Executive Officer, he served in various capacities within the Company since 1994. Prior to 1994, he was a manager with Ernst & Young LLP. Mr.
Prior to his appointment as President and Chief Executive Officer, Mr. Rhodes served in various capacities within the Company since 1994. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young LLP. As previously announced, Mr.
Aligned with our values, we strive to continually monitor our working and shopping environment to keep our AutoZoners and customers as safe as possible. ​ Additional information about our human capital resources can be found in our most recent Corporate Social Responsibility (“CSR”) Report, which is available on our website.
Aligned with our values, we strive to continually monitor our working and shopping environment to keep our AutoZoners and customers as safe as possible. ​ Additional information about our human capital resources can be found in our most recent Environmental, Social & Governance (“ESG”) Report, which is available on our website.
Prior to joining AutoZone, from 2018 to 2020, he served as Executive Vice President and Chief Financial Officer of Hertz Global Holdings, Inc., a worldwide rental company. From 2014 to 2018, he served as Chief Financial Officer of Nielsen Holdings plc, an information, data and measurement company.
Prior to joining AutoZone, Mr. Jackson served as Executive Vice President and Chief Financial Officer of Hertz Global Holdings, Inc., a worldwide rental company, since 2018. From 2014 to 2018, Mr. Jackson served as Chief Financial Officer of Nielsen Holdings plc, an information, data and measurement company. Prior to 2014, Mr.
Many members of our senior leadership team have held positions in two or more areas of the business. We also invest in advanced leadership training in order to deepen bench strength and support succession planning. For additional information, see “Store Operations—Store Personnel and Training” below.
Many members of our senior leadership team have held positions in multiple areas of the business. We also invest in advanced leadership training in order to deepen our bench strength and support succession planning. For additional information, see “Store Operations—Store Personnel Training and Incentives” below.
Prior to that, he was Chief Marketing Officer and a key member of the leadership team at Navistar International Corporation. Mr. Saltiel has also been with Sony Electronics as General Manager, Marketing, and Ford Motor Company where he held multiple marketing roles. ​ Richard C. Smith, 58—Senior Vice President – Human Resources, Customer Satisfaction Richard C.
Saltiel was Senior Vice President – Marketing since 2013. Prior to that, Mr. Saltiel was Chief Marketing Officer and a key member of the leadership team at Navistar International Corporation. Mr. Saltiel has also been with Sony Electronics as General Manager, Marketing, and Ford Motor Company where he held multiple marketing roles. ​ Richard C.
We ended fiscal 2022 with 272 total domestic hub stores, which have a larger assortment of products as well as regular replenishment items that can be delivered to a store in its network within 24 hours. Hub stores are generally replenished from distribution centers multiple times per week.
We ended fiscal 2023 with 308 domestic and 39 international hub stores, which have a larger assortment of products as well as regular replenishment items that can be delivered to a store in its network within 24 hours. Hub stores are generally replenished from distribution centers multiple times per week.
Hub stores have increased our ability to distribute products on a timely basis to many of our stores and to expand our product assortment. As a subset of our domestic hub stores, we ended fiscal 2022 with 78 domestic mega hubs, an increase of 20 since the end of fiscal 2021.
Hub stores have increased our ability to distribute products on a timely basis to many of our stores and to expand our product assortment. As a subset of our domestic hub stores, we ended fiscal 2023 with 98 mega hubs, an increase of 20 since the end of fiscal 2022. Additionally, we have two mega hubs in Mexico.
About 90 percent of our AutoZoners were employed in stores or in direct field supervision, approximately 6 percent in distribution centers and approximately 4 percent in store support and other functions. Included in the above numbers are approximately 14,500 persons employed in our international operations.
About 91 percent of our AutoZoners were employed in stores or in direct field supervision, approximately 6 percent in distribution centers and approximately 3 percent in store support and other functions. Included in the above numbers are approximately 15,500 AutoZoners employed in our international operations.
AutoZone competes on the basis of customer service, including the knowledge and expertise of our AutoZoners; merchandise quality, selection and availability; product warranty; store layouts, location and convenience; price; and the strength of our AutoZone brand name, trademarks and service marks.
AutoZone competes on the basis of customer service, including the knowledge and expertise of our AutoZoners and our ability to provide prompt delivery to commercial customers; merchandise quality, selection and availability; product warranty; store layouts, location and convenience; price; and the strength of our AutoZone brand name, trademarks and service marks.
Item 1. Business Introduction AutoZone, Inc. (“AutoZone,” the “Company,” “we,” “our” or “us”) is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 27, 2022, operated 6,168 stores in the United States (“U.S.”), 703 stores in Mexico and 72 stores in Brazil.
Item 1. Business Introduction AutoZone, Inc. (“AutoZone,” the “Company,” “we,” “our” or “us”) is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 26, 2023, operated 6,300 stores in the United States (“U.S.”), 740 stores in Mexico and 100 stores in Brazil.
We sell the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.
We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com.
Human Capital Resources We believe the foundation of our success is our culture, which is rooted in our Pledge and Values and defines how our employees (“AutoZoners”) take care of customers and fellow AutoZoners. Each AutoZoner works hard to Live the Pledge, share their passion for WOW!
We do not derive revenue from automotive repair or installation services. Human Capital Resources We believe the foundation of our success is our culture, which is rooted in our Pledge and Values and defines how our employees (“AutoZoners”) take care of customers and fellow AutoZoners. Each AutoZoner works hard to Live the Pledge, share their passion for WOW!
We have dedicated sales teams focused on independent repair shops as well as national, regional and public sector commercial accounts. 7 Table of Contents Store Development The following table reflects our location development during the past five fiscal years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ 2022 2021 2020 2019 2018 Locations: Beginning 6,767 6,549 6,411 6,202 6,029 Sold (1) — — — — 26 New 177 219 138 209 201 Closed 1 1 — — 2 Net new 176 218 138 209 199 Relocated 13 12 5 2 7 Ending 6,943 6,767 6,549 6,411 6,202 ​ (1) 26 Interamerican Motor Corporation (“IMC”) branches sold on April 4, 2018. ​ We believe expansion opportunities exist in markets we do not currently serve, as well as in markets where we can achieve a larger presence.
We have dedicated sales teams focused on independent repair shops as well as national, regional and fleet commercial accounts. ​ 7 Table of Contents Store Development The following table reflects our store development during the past five fiscal years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ 2023 2022 2021 2020 2019 Stores: Beginning 6,943 6,767 6,549 6,411 6,202 New 198 177 219 138 209 Closed 1 1 1 — — Net new 197 176 218 138 209 Relocated 12 13 12 5 2 Ending 7,140 6,943 6,767 6,549 6,411 ​ We believe expansion opportunities exist in markets we do not currently serve, as well as in markets where we can achieve a larger presence.
The title of each executive officer includes the words “Customer Satisfaction” which reflects our commitment to customer service. William C. Rhodes, III, 57—Chairman, President and Chief Executive Officer, Customer Satisfaction William C. Rhodes, III, was named Chairman of AutoZone during fiscal 2007 and has been President, Chief Executive Officer and a director since March 2005.
The title of each executive officer includes the words “Customer Satisfaction” which reflects our commitment to customer service. William C. Rhodes, III, 58—Chairman, President and Chief Executive Officer, Customer Satisfaction William C. Rhodes, III has served as AutoZone’s President and Chief Executive Officer, and a director since 2005 and was named Chairman in 2007.
We focus heavily on retention by offering competitive compensation and benefits packages, extensive training and development opportunities and leveraging our business resource groups to support AutoZoners with common interests or backgrounds contribute their voices, time, and talent to helping AutoZoners succeed in their careers. ​ As of August 27, 2022, we employed approximately 112,000 AutoZoners, approximately 62 percent of whom were employed full-time and the remaining 38 percent were employed part-time.
We focus heavily on retention by offering competitive compensation and benefits packages, extensive training and development opportunities and leveraging our business resource groups to support AutoZoners across the organization contribute their voices, time, and talent to helping other AutoZoners succeed in their careers. ​ As of August 26, 2023, we employed approximately 119,000 AutoZoners, approximately 60 percent of whom were employed full-time and the remaining 40 percent were employed part-time.
McGee was named Senior Vice President – Commercial in June 2021. From 2007 to 2021, he was a Divisional Vice President – Store Operations. From 2004 to 2007, he was Vice President – Commercial. Prior to 2004, Mr.
McGee was a Divisional Vice President – Store Operations. From 2004 to 2007, Mr. McGee was Vice President – Commercial. Prior to 2004, Mr.
Smith was named Senior Vice President – Human Resources in December 2015. Mr. Smith has been an AutoZoner since 1985, previously holding the position of Divisional Vice President – Store Operations since 1997. Prior thereto, Mr. Smith served in various capacities within the Company. ​ Kristen C. Wright, 46—Senior Vice President – General Counsel & Secretary, Customer Satisfaction Kristen C.
Smith, 59—Senior Vice President – Human Resources, Customer Satisfaction Richard C. Smith was named Senior Vice President – Human Resources in December 2015. Mr. Smith has been an AutoZoner since 1985, previously holding the position of Divisional Vice President – Store Operations since 1997. Prior thereto, Mr.
We believe these opportunities are important to attract, motivate and retain high quality AutoZoners. ​ Recognition The AutoZone Pledge and Values drive our success and foster a strong, unique culture of teamwork and customer service. We encourage the recognition of AutoZoners for a variety of accomplishments, such as going above and beyond to deliver Trustworthy Advice and WOW!
We believe these opportunities are important to attract, motivate and retain high quality AutoZoners. ​ Recognition The AutoZone Pledge and Values drive our success and foster a strong, unique culture of teamwork and customer service.
Our stores utilize our computerized proprietary Point-of-Sale System, which includes bar code scanning and point-of-sale data collection terminals. Our proprietary Store Management System provides administrative assistance, as well as enhanced merchandising information and improved inventory control.
Our stores utilize our computerized proprietary Point-of-Sale System, which includes bar code scanning and point-of-sale data collection terminals. Our proprietary Store Management System provides administrative assistance, as well as enhanced merchandising information and improved inventory control. We believe the Point-of-Sale System also enhances customer service, while the Store Management System provides simplified warranty and product return procedures.
Marketing and Merchandising Strategy We are dedicated to providing customers with superior service and trustworthy advice as well as quality automotive parts and products at a great value in conveniently located, well-designed stores.
In addition to continuing to lease or develop our own locations, we evaluate and may make strategic acquisitions. Marketing and Merchandising Strategy We are dedicated to providing customers with superior service and trustworthy advice as well as quality automotive parts and products at a great value in conveniently located, well-designed stores.
Mega hubs work in concert with our hubs to drive customer satisfaction through improved local parts availability and expanded product assortments. A mega hub store carries inventory of 80,000 to 110,000 unique SKUs, approximately twice what a hub store carries.
Mega hubs work in concert with other hubs to drive customer satisfaction through improved local parts availability and expanded product assortments. A mega hub carries inventory of 80,000 to 110,000 unique SKUs, approximately twice what a hub store carries. Mega hubs provide coverage to both surrounding stores and other hub stores multiple times a day or on an overnight basis.
Our CSR Report is not, and will not be deemed to be, a part of this Annual Report on Form 10-K or incorporated by reference into any of our other filings with the Securities and Exchange Commission (“the SEC”). ​ 5 Table of Contents Store Operations At August 27, 2022, our stores were in the following locations: ​ ​ ​ ​ Store ​ ​ Count Alabama 122 Alaska 8 Arizona 164 Arkansas 72 California 649 Colorado 100 Connecticut 55 Delaware 17 Florida 414 Georgia 211 Hawaii 12 Idaho 32 Illinois 246 Indiana 162 Iowa 36 Kansas 54 Kentucky 104 Louisiana 130 Maine 14 Maryland 92 Massachusetts 84 Michigan 218 Minnesota 61 Mississippi 98 Missouri 121 Montana 15 Nebraska 25 Nevada 67 New Hampshire 23 New Jersey 121 New Mexico 64 New York 212 North Carolina 235 North Dakota 7 Ohio 281 Oklahoma 85 Oregon 55 Pennsylvania 216 Puerto Rico 50 Rhode Island 17 Saint Thomas 1 South Carolina 104 South Dakota 9 Tennessee 179 Texas 670 Utah 70 Vermont 2 Virginia 149 Washington 98 Washington, DC 5 West Virginia 45 Wisconsin 78 Wyoming 9 Total Domestic stores 6,168 Mexico 703 Brazil 72 Total stores 6,943 ​ 6 Table of Contents Store Formats Substantially all stores are based on standard store formats, resulting in generally consistent appearance, merchandising and product mix.
Our ESG Report is not, and will not be deemed to be, a part of this Annual Report on Form 10-K or incorporated by reference into this or any of our other filings with the Securities and Exchange Commission (“the SEC”). ​ 5 Table of Contents Store Operations At August 26, 2023 our stores were in the following locations: ​ ​ ​ ​ Store ​ ​ Count Alabama 123 Alaska 8 Arizona 165 Arkansas 73 California 658 Colorado 102 Connecticut 58 Delaware 20 Florida 430 Georgia 214 Hawaii 12 Idaho 33 Illinois 248 Indiana 164 Iowa 37 Kansas 55 Kentucky 105 Louisiana 132 Maine 14 Maryland 93 Massachusetts 88 Michigan 221 Minnesota 63 Mississippi 98 Missouri 122 Montana 15 Nebraska 25 Nevada 70 New Hampshire 23 New Jersey 124 New Mexico 64 New York 212 North Carolina 241 North Dakota 7 Ohio 288 Oklahoma 87 Oregon 57 Pennsylvania 228 Puerto Rico 51 Rhode Island 17 Saint Thomas 1 South Carolina 107 South Dakota 9 Tennessee 183 Texas 693 Utah 70 Vermont 2 Virginia 153 Washington 100 Washington, DC 5 West Virginia 45 Wisconsin 78 Wyoming 9 Total Domestic stores 6,300 Mexico 740 Brazil 100 Total stores 7,140 ​ 6 Table of Contents Store Formats Substantially all stores are based on standard store formats, resulting in generally consistent appearance, merchandising and product mix.
Prior to joining McDonald’s, she spent 11 years with Walmart Stores holding various leadership roles including Vice President – International Technology Delivery. Throughout her career, Ms. Borninkhof held various roles in store retail, distribution center operations and process improvement. Eric S. Gould, 53—Senior Vice President – Supply Chain, Customer Satisfaction Eric S.
Borninkhof spent 11 years with Walmart Stores holding various leadership roles including Vice President – International Technology Delivery. Throughout her career, Ms. Borninkhof held various roles in store retail, distribution center operations and process improvement. Preston B. Frazer, 47—Senior Vice President – Finance, Store Development and Strategy, Customer Satisfaction Preston B.
At August 27, 2022, in 5,342 of our domestic stores we had a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. We also have commercial programs in all stores in Mexico and Brazil.
At August 26, 2023, in 5,682 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts.
Prior to that, he was Vice President – Store Operations Support. He began his career with AutoZone in 2006 in Finance and has held several key functional roles of increasing responsibility. Prior to joining AutoZone, Mr. Frazer was a senior manager with the accounting firm of KPMG, LLP. ​ Thomas B.
Frazer began his career with AutoZone in 2006 in Finance and has held several key functional roles. Prior to joining AutoZone, Mr. Frazer was a senior manager with the accounting firm of KPMG, LLP. Eric S. Gould, 54—Senior Vice President – Supply Chain, Customer Satisfaction Eric S. Gould was named Senior Vice President, Supply Chain in February 2021.
Newbern held several other key management positions with the Company. ​ K. Michelle Borninkhof, 48 — Senior Vice President and Chief Information Officer, Customer Satisfaction K. Michelle Borninkhof was named Senior Vice President and Chief Information Officer during April 2021. Prior to that, she was Chief Information Officer and Vice President for U.S. Technology at McDonald’s since 2018.
Michelle Borninkhof, 49 — Senior Vice President and Chief Information Officer, Customer Satisfaction K. Michelle Borninkhof was named Senior Vice President and Chief Information Officer in April 2021. Prior to that, Ms. Borninkhof was Chief Information Officer and Vice President for U.S. Technology at McDonald’s since 2018. Prior to joining McDonald’s, Ms.
Since then, five other BRGs now support AutoZoners who share common interests or backgrounds and have a mission to contribute their voices, time and talent to helping AutoZoners succeed and grow in their careers. ​ Health and Safety We are committed to providing a safe working and shopping environment for our AutoZoners and customers.
Since then, five other BRGs now exist to help AutoZoners across the organization grow and succeed in their careers. ​ Health and Safety We are committed to providing a safe working and shopping environment for our AutoZoners and customers.
Pleas is a member of the Board of Directors for Kirkland’s Inc. ​ Albert Saltiel, 58—Senior Vice President – Marketing and E-Commerce, Customer Satisfaction Albert Saltiel was named Senior Vice President – Marketing and E-Commerce during October 2014. Previously, he was Senior Vice President – Marketing since 2013.
Pleas is a member of the Board of Directors for Kirkland’s Inc. ​ Albert Saltiel, 59—Senior Vice President – Marketing and E-Commerce, Customer Satisfaction Albert Saltiel was named Senior Vice President – Marketing and E-Commerce during October 2014 and has notified the Company of his intent to retire, effective around the end of the 2023 calendar year. Previously, Mr.
Patent and Trademark Office as well as in certain other countries, including without limitation: “AutoZone,” “Get in the Zone,” “Duralast,” “Econocraft,” “ProElite,” “Shop Pro,” “SureBilt,” “TotalPro,” “TruGrade,” “Valucraft,” and “ALLDATA,” along with variations of these trademarks.
Patent and Trademark Office as well as in certain other countries, including without limitation: “AutoZone,” “Get in the Zone,” “Duralast,” “Econocraft,” “ProElite,” “ShopPro,” “SureBilt,” “TotalPro,” “TruGrade,” “Valucraft,” and “ALLDATA,” along with variations of these trademarks. Our trademark registrations have various expiration dates; however, assuming that the trademarks are properly maintained and in use, such registrations may typically be renewed indefinitely.
Additionally, we have an office in Shanghai, China to support our sourcing efforts in Asia. In fiscal 2022, one class of similar products accounted for approximately 13 percent of our total revenues, and one vendor supplied approximately 8 percent of our total purchases.
Additionally, we have offices in Shanghai, China, Haryana, India and Istanbul, Turkey to support our global sourcing efforts. In fiscal 2023, one class of similar products accounted for approximately 14 percent of our total revenues.
Customer Service, taking initiative to prevent incidents and injuries, making contributions to help detect or report internal or external theft or providing significant service to 4 Table of Contents help others.
We encourage the recognition of AutoZoners for a variety of accomplishments, such as going above and 4 Table of Contents beyond to deliver Trustworthy Advice and WOW! Customer Service, taking initiative to prevent incidents and injuries, making contributions to help detect or report internal or external theft or providing significant service to help others.
Previously, he was Vice President – Accounting since 2000, and Director of General Accounting since 1996. Prior to joining AutoZone, he was a Division Controller with Fleming Companies, Inc. where he served in various capacities during his tenure from 1988 to 1996. Prior to 1988, he worked with Ernst & Young. Mr.
Pleas was named Senior Vice President and Controller during 2007. Prior to that, Mr. Pleas held several key management positions within the Company’s accounting department. Prior to joining AutoZone, Mr. Pleas was a Division Controller with Fleming Companies, Inc. where he served in various capacities during his tenure from 1988 to 1996. Prior to 1988, Mr.
Mild or rainy weather tends to soften sales, as parts failure rates are lower in mild weather and elective maintenance is deferred during periods of rainy weather. Over the longer term, we believe the effects of weather balance out, as we have stores throughout the Americas. AutoZone Websites Our primary website is at www.autozone.com.
Over the longer term, we believe the effects of weather balance out, as we have stores throughout the Americas. AutoZone Websites Our primary website is www.autozone.com.
We seek to open new stores in high visibility sites in high traffic locations within or contiguous to existing market areas and attempt to cluster development in markets in a relatively short period of time. In addition to continuing to lease or develop our own locations, we evaluate and may make strategic acquisitions.
We seek to open new stores in high visibility sites in high traffic locations within or contiguous to existing market areas and attempt to cluster development in markets in a relatively short period of time. We believe our stores are “destination stores,” generating their own traffic, therefore we situate most stores on major thoroughfares with easy access and good parking.
We believe that this centralization enhances consistent execution of our merchandising and marketing strategies at the store level, while reducing expenses and cost of sales. ​ Store Automation All of our stores have Z-net, our proprietary electronic catalog that enables our AutoZoners to efficiently look up the parts that our customers need and to provide complete job solutions, advice and information for customer vehicles.
In addition, we have offices in Shanghai, China and Haryana, India that provide sourcing, technology or other support functions. ​ Store Automation All of our stores have Z-net, our proprietary electronic catalog that enables our AutoZoners to efficiently look up the parts that our customers need and provide complete job solutions, advice and information for customer vehicles.
Prior to 2014, he held a variety of leadership roles at General Electric Company. Mr. Jackson serves on the Board of Directors for Eli Lilly & Co. ​ Philip B. Daniele, 53—Executive Vice President — Merchandising, Supply Chain and Marketing, Customer Satisfaction Philip B. Daniele was named Executive Vice President – Merchandising, Supply Chain and Marketing in June 2021.
Jackson held a variety of leadership roles at General Electric Company, including Vice President and Chief Financial Officer of a division of General Electric Oil and Gas. Mr. Jackson serves on the Board of Directors for Eli Lilly & Co. ​ Thomas B. Newbern, 61—Chief Operating Officer, Customer Satisfaction Thomas B. Newbern was named Chief Operating Officer in September 2023.
McGee held several other key positions with the Company. ​ Charlie Pleas, III, 57— Senior Vice President – Accounting and Finance, Customer Satisfaction Charlie Pleas, III, became Senior Vice President, Finance and Accounting in December, 2021. He was named Senior Vice President and Controller during 2007. Prior to that, he was Vice President and Controller since 2003.
McGee held several other key positions with the Company. ​ Charlie Pleas, III, 58— Senior Vice President – Accounting and Finance, Customer Satisfaction Charlie Pleas, III, became Senior Vice President, Finance and Accounting in December 2021 and has notified the Company of his intent to retire, effective around the end of the 2023 calendar year. Mr.
His career with AutoZone began in 1983, and he has held several key management roles within the Company, including Vice President – Store Operations Support and Vice President – Merchandising, before returning to AutoZone. ​ ​ 13 Table of Contents
Hackney served as Senior Vice President, Merchandising, since rejoining the Company in October 2022 after a brief retirement. Mr. Hackney’s career with AutoZone began in 1983, and he has held several key management roles within the Company, including Senior Vice President, Merchandising, Vice President, Store Operations Support and Vice President, Merchandising. Jennifer M.
Store Support Centers All store support functions are centralized in our store support centers located in Memphis, Tennessee; Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil.
Store Support Centers All store support functions are centralized in our store support centers located in Memphis, Tennessee; Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. We believe that this centralization enhances consistent execution of our merchandising and marketing strategies at the store level, while reducing expenses and cost of sales.
Competition The sale of automotive parts, accessories and maintenance items is highly competitive due to numerous factors, including name recognition, product availability, customer service, store location and price. AutoZone competes in the aftermarket auto parts industry, which includes both the retail DIY and commercial do-it-for-me (“DIFM”) auto parts and products markets.
AutoZone competes in the aftermarket auto parts industry, which includes both the retail DIY and commercial do-it-for-me (“DIFM”) auto parts and products markets.
He has served in various capacities within the Company since 2001, which included leading the Company’s expansion into Mexico. Prior to 2001, Mr. Hurtado held different positions with RadioShack including Director General in Mexico and General Manager in Venezuela. ​ 12 Table of Contents Dennis W. LeRiche, 54—Senior Vice President – Store Operations, Customer Satisfaction Dennis W.
Hurtado held different positions with RadioShack including Director General in Mexico and General Manager in Venezuela. Dennis W. LeRiche, 55—Senior Vice President – Store Operations, Customer Satisfaction Dennis W. LeRiche was named Senior Vice President – Store Operations in June 2021. From 2015 to 2021, Mr. LeRiche was a Divisional Vice President – Store Operations. Prior to 2015, Mr.
Our trademark registrations have various expiration dates; however, assuming that the trademarks are properly maintained and in use, such registrations may typically be renewed indefinitely. Seasonality Our business is somewhat seasonal in nature, with the highest sales typically occurring in the spring and summer months of February through September, and the lowest sales in the months of December and January.
Seasonality Our business is somewhat seasonal in nature, with the highest sales typically occurring in the spring and summer months of February through September, and the lowest sales in the months of December and January. During short periods of time, a store’s sales can be affected by weather conditions.
During short periods of time, a store’s sales can be affected by weather conditions. Extremely hot or extremely cold weather may enhance sales by causing parts to fail; thereby increasing sales of seasonal products.
Extremely hot or extremely cold weather may enhance sales by causing parts to fail; thereby increasing sales of seasonal products. Mild or rainy weather tends to soften sales, as parts failure rates are lower in mild weather and elective maintenance is deferred during periods of rainy weather.
Gould held several other key management positions within the Company. ​ Domingo J. Hurtado, 61—Senior Vice President – International, Customer Satisfaction Domingo J. Hurtado Rodríguez was named Senior Vice President – International in September 2018. Prior to that, he was President – AutoZone de México.
Hurtado Rodríguez was named Senior Vice President – International in September 2018. Prior to that, Mr. Hurtado was President – AutoZone de México. Mr. Hurtado has served in various capacities within the Company since 2001, which included leading the Company’s expansion in Mexico. Prior to 2001, Mr.
Newbern, 60—Executive Vice President – International, Information Technology and ALLDATA, Customer Satisfaction Thomas B. Newbern was named Executive Vice President – International, Information Technology and ALLDATA in June 2021. From 2015 to 2021, he was Executive Vice President – Store Operations, Commercial, Loss Prevention and ALLDATA.
Since March 2023, Mr. Newbern served as Executive Vice President Operations, Sales and Technology. From 2015 to March 2023, Mr. Newbern served as Executive Vice President overseeing Store Operations, Commercial, International, Information Technology, Loss Prevention and ALLDATA in different capacities. From 2007 to 2015, Mr. Newbern served as Senior Vice President overseeing Store Operations and Commercial.
Daniele held several other key management positions with the Company. ​ Preston B. Frazer, 46—Executive Vice President – Store Operations, Commercial and Loss Prevention, Customer Satisfaction Preston B. Frazer was named Executive Vice President – Store Operations, Commercial and Loss Prevention in June 2021. From 2019 to 2021, he was Senior Vice President – Store Operations.
Frazer was named Senior Vice President Finance, Store Development and Strategy in March 2023. From 2021 to 2023 Mr. Frazer served as Executive Vice President – Store Operations, Commercial and Loss Prevention. From 2019 to 2021 Mr. Frazer served as Senior Vice President – Store Operations. Prior to that, Mr. Frazer was Vice President – Store Operations Support. Mr.
Mega hubs provide coverage to both surrounding stores and other hub stores multiple times a day or on an overnight basis. Currently, we have over 6,000 domestic stores with access to mega hub inventory. A majority of these stores currently receive mega hub service same day.
Currently, we have over 6,000 domestic stores with access to mega hub inventory. A majority of these stores currently receive mega hub service same day. Competition The sale of automotive parts, accessories and maintenance items is highly competitive due to numerous factors, including name recognition, product availability, customer service, store location and price.
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We believe our stores are “destination stores,” generating their own traffic rather than relying on traffic created by adjacent stores. Therefore, we situate most stores on major thoroughfares with easy access and good parking.
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Rhodes has notified the Board of his intention to relinquish his roles as President and Chief Executive Officer, effective January 2024, and the Board intends to appoint Mr. Rhodes to the role of Executive Chairman at such time. Philip B. Daniele III, 54—CEO-Elect, Customer Satisfaction Philip B. Daniele III was named CEO-Elect in June 2023. Previously Mr.
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We believe the Point-of-Sale System also enhances customer service through faster processing of transactions, while the Store Management System provides simplified warranty and product return procedures.
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Daniele had served as Executive Vice President – Merchandising, Marketing and Supply Chain from June 2021 to September 2023. The Board of Directors intends to appoint Mr. Daniele to the role of Chief Executive Officer and also appoint him to serve on the 11 Table of Contents Board in January 2024. Previously, Mr.
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Rhodes is a member of the Board of Directors for Dollar General Corporation. 11 Table of Contents Jamere Jackson, 53—Executive Vice President, Chief Financial Officer and Store Development, Customer Satisfaction Jamere Jackson joined AutoZone on September 13, 2020 as Executive Vice President and Chief Financial Officer.
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Daniele held several other key management positions with the Company. ​ Jamere Jackson, 54—Chief Financial Officer, Customer Satisfaction Jamere Jackson was named Chief Financial Officer in January 2021 and, in that capacity, leads the Finance and Store Development teams. Mr. Jackson also held the title of Executive Vice President from January 2021 until his promotion in September 2023.
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From 2013 to 2015, he was Senior Vice President – Store Operations and Loss Prevention. From 2012 to 2013, he was Senior Vice President – Store Operations and Store Development. From 2007 to 2012, he was Senior Vice President – Store Operations, and from 1998 to 2007, he was Divisional Vice President –Store Operations. Prior to 1998, Mr.
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From 1998 to 2007, Mr. Newbern was Divisional Vice President – Store Operations. Mr. Newbern began his career with AutoZone in 1985. ​ William R. Hackney, 58—Executive Vice President – Merchandising, Marketing and Supply Chain, Customer Satisfaction William R. Hackney was named Executive Vice President – Merchandising, Marketing and Supply Chain in September 2023. Previously, Mr.
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Gould was named Senior Vice President, Supply Chain in February 2021. From 2017 to 2021, he served as Vice President, Supply Chain Replenishment and from 2013 to 2017 he served as Vice President – Commercial Sales. He was also Vice President – Replenishment from 2003 to 2013. Prior to 2003, Mr.
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Bedsole, 52—Senior Vice President, General Counsel & Secretary, Customer Satisfaction Jenna M. Bedsole was named Senior Vice President, General Counsel & Secretary in April 2023. Prior to joining AutoZone, Ms. Bedsole was a partner with the law firm of Baker, Donelson, Bearman, Caldwell and Berkowitz P.C. since 2011, where she chaired the Labor and Employment practice group. ​ K.
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Wright was named Senior Vice President – General Counsel & Secretary effective January 2014. She previously held the title of Vice President – Assistant General Counsel & Assistant Secretary since January 2012. Before joining AutoZone, Ms. Wright was a partner with the law firm of Bass, Berry & Sims PLC. ​ William R.
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From 2017 to 2021, Mr. Gould served as Vice President, Supply Chain Replenishment. Prior to that, Mr. Gould held several key management 12 Table of Contents positions with the Company, including Vice President of Commercial, Commercial Support and Merchandising Pricing & Analysis. Domingo J. Hurtado, 62—Senior Vice President – International, Customer Satisfaction Domingo J.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur failure to protect our reputation could have a material adverse effect on our brand name and profitability. ​ We believe our continued strong sales growth is driven in significant part by our AutoZone and private label brand names.
Biggest changeFurthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations. 18 Table of Contents Our failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, employees, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability. ​ We believe our continued strong sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, employees, suppliers, vendors and other stakeholders.
Milder weather conditions may lower the failure rates of automotive parts, while extended periods of rain and winter precipitation may cause our customers to defer maintenance and repair on their vehicles. Extremely hot or cold conditions may enhance demand for our products due to increased failure rates of our customers’ automotive parts.
Milder weather conditions may lower the failure rates of automotive parts, while extremely hot or cold conditions may enhance demand for our products due to increased failure rates of our customers’ automotive parts. Extended periods of rain and winter precipitation may cause our customers to defer maintenance and repair on their vehicles.
The value in our brand names and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics.
The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics.
Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as COVID-19), constraints on the global supply chain and other factors continue to affect the global economy.
Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy.
These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations. ​ Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition. ​ Our business, like that of most retailers, involves the collection, processing, storage and transmission of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business.
These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations. ​ Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition. ​ Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business.
Increases in fuel and energy prices may cause our customers to defer purchases of certain of our products as they use a higher percentage of their income to pay for gasoline and other energy costs and may drive their vehicles less, resulting in less wear and tear and lower demand for repairs and maintenance. ● the economy.
Increases in fuel and energy prices may cause our customers to defer purchases of certain of our products as they use a higher percentage of their income to pay for fuel and other energy costs and may drive their vehicles less, resulting in less wear and tear and lower demand for repairs and maintenance. ● the economy.
While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. ​ In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring new systems with new functionality.
While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. ​ In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively 19 Table of Contents acquiring new systems with new functionality.
Given the short amount of time between finalized rulemaking and the dates these laws become effective and enforceable, there can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body. ​ 20 Table of Contents Indebtedness, Financial and Market Risks We are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us. ​ We are self-insured up to certain limits for workers’ compensation, employee group medical, general liability, product liability, property and automobile.
Given the short amount of time between finalized rulemaking and the dates these laws become effective and enforceable, there can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body. ​ Indebtedness, Financial and Market Risks We are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us. ​ We are self-insured up to certain limits for workers’ compensation, employee group medical, general liability, product liability, property and automobile.
Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, product warranty, distribution locations and the strength of our AutoZone brand name, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships and have large available inventories.
Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand name, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships and have large available inventories.
As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance. ​ Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material negative effect on our sales and our business. ​ Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions (including due to the impacts of climate change or otherwise) such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. ​ In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty.
As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance. ​ Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material negative effect on our sales and our business. ​ Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. ​ In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty.
If we fail to effectively utilize our existing hubs and/or supply chains, or if our investments in our supply chain initiatives, including directly sourcing some products from outside the U.S., do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins. 17 Table of Contents ​ Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets. ​ The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations.
If we fail to effectively utilize our existing hubs and/or supply chains, or if our investments in our supply chain initiatives, including directly sourcing some products from outside the U.S., do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins. ​ Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets. ​ The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations.
We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry. 21 Table of Contents ​ We may be adversely affected by legal, regulatory or market responses to global climate change. ​ Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations.
We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry. ​ We may be adversely affected by legal, regulatory or market responses to global climate change. ​ Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations.
The potential effects of the various laws regulating the collection, processing, transfer and use of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired.
The potential effects of the various laws regulating the collection, processing, transfer and use of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing 20 Table of Contents practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired.
Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​ 19 Table of Contents While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving, increasing in frequency and sophistication, and may be difficult to anticipate or detect for long periods of time.
Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​ While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving, increasing in frequency and sophistication, and can be difficult to anticipate or detect for long periods of time.
Same store sales are impacted both by customer demand levels and by the prices we are able to charge for our products, which can also be negatively impacted by economic pressures. ​ If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited. ​ Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national and regional auto parts chains, independently owned parts stores, wholesalers, jobbers and online retailers in order to increase our commercial market share.
Same store sales are impacted both by customer demand levels and by the prices we are able to charge for our products, which can also be negatively impacted by economic pressures. ​ If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited. ​ Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share.
Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​ 16 Table of Contents If we experience transitions with any of our significant vendors, or if they experience financial difficulties or otherwise are unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers’ perceptions of us and cause us to lose customers and sales. ​ Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business. ​ A disruption to our supply chain and distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things.
Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​ If any of our significant vendors experience financial difficulties, business disruptions or are unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers’ perceptions of us and cause us to lose customers and sales. ​ Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business. ​ A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things.
Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence.
Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in 16 Table of Contents costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence.
There can be no assurance we will be able to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. In addition, we extensively utilize our hub network, our supply chain and our logistics management techniques to efficiently stock our stores.
There can be no assurance we will be able to 17 Table of Contents achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​ In addition, we extensively utilize our hub network, our supply chain and our logistics management techniques to efficiently stock our stores.
Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose mandatory requirements on greenhouse gas emissions. Such laws, if enacted, are likely to impact our business in a number of ways.
Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose mandatory requirements for reductions of greenhouse gas (GHG) emissions. Such laws, if enacted, are likely to impact our business in a number of ways.
Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors. ​ Risks associated with products sourced outside the U.S. ​ We directly imported approximately 15% of our purchases in fiscal 2022, but many of our domestic vendors directly import their products or components of their products.
Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors. ​ We are subject to risks associated with products sourced outside the U.S. ​ We directly imported approximately 16% of our purchases in fiscal 2023, but many of our domestic vendors directly import their products or components of their products.
Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes , economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability.
Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers’ failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, port labor agreements, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability.
If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in monetary penalties, reputational harm and increased costs of regulatory compliance.
If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance.
With the increasing use of digital tools and social media, and our competitors’ increased focus on optimizing customers’ online experience, our customers are quickly able to compare prices, product assortment, product availability and feedback from other customers before purchasing products. ​ If we are unable to continue to manage in-stock inventory and costs, provide competitive delivery options, develop successful competitive strategies, including the maintenance of effective promotions, advertising and loyalty programs, develop and execute effective digital and omni-channel strategies or otherwise compete effectively, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline. ​ We may not be able to sustain our historic rate of sales growth. ​ We have increased our store count in the past five fiscal years, growing from 6,029 stores at August 26, 2017, to 6,943 stores at August 27, 2022, a compounded annual growth rate of three percent.
With the increasing use of digital tools and social media, and our competitors’ increased focus on optimizing customers’ online experience, our customers are quickly able to compare prices, product assortment, product availability and feedback from other customers before purchasing products. ​ If we are unable to continue to manage in-stock inventory and costs, provide competitive delivery options, develop successful competitive strategies, including the maintenance of effective promotions, advertising and loyalty programs, develop and execute effective digital and omni-channel strategies or otherwise compete effectively, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline. ​ We may not be able to sustain our historic rate of sales growth. ​ We have increased our store count in the past five fiscal years, growing from 6,202 stores at August 25, 2018, to 7,140 stores at August 26, 2023, a compounded annual growth rate of three percent.
See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of same store sales. ​ We open new stores only after evaluating customer buying trends and market demand/needs, all of which could be adversely affected by persistent unemployment, wage cuts, small business failures and microeconomic conditions unique to the automotive industry.
See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of same store sales. ​ We open new stores only after evaluating customer buying trends and market demand/needs, all of which could be adversely affected by persistent unemployment, wage cuts, small business failures, microeconomic conditions unique to the automotive industry and our ability to expand into international markets.
Increased prevalence of electric vehicles, whether due to changes in consumer preferences or regulatory action banning the sale of new internal combustion vehicles, can result in less frequent parts failures and reduced need for parts. ● the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranties or maintenance offered on new vehicles. ● restrictions on access to telematics and diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation.
Increased prevalence of electric vehicles, whether due to changes in consumer preferences or regulatory action incentivizing the purchase of electric vehicles, can result in less frequent parts failures and reduced need for parts. ● the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the warranties or maintenance offered on new vehicles. ● restrictions on access to telematics and diagnostic tools and repair information imposed by the original vehicle manufacturers or by governmental regulation.
There can be no assurance that the security measures we or our third-party service providers and vendors have in place today or introduce in the future in an effort to keep up with growing and evolving risks will prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred.
The security measures we or our third-party service providers and vendors have in place today in an effort to keep up with growing and evolving risks do not always prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either.
Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact our business and financial condition. ​ While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past attempted, and will continue to attempt, to gain access to, or disrupt the effectiveness of, these systems and data as the result of a cyber-attack, employee misconduct, employee error, system compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts.
Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​ While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts.
As we or our domestic vendors increase our imports of merchandise from foreign vendors, the risks associated with these imports will also increase. ​ Our ability to grow depends in part on new store openings, existing store remodels and expansions and effective utilization of our existing supply chain and hub network. ​ Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers’ needs on a timely and profitable basis.
As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase. ​ Our ability to grow depends in part on new store openings, existing store remodels and expansions and effective utilization of our existing supply chain and hub network. ​ Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers’ needs on a timely and profitable basis.
Additionally, climate changes can create more variability in the short-term or lead to other weather conditions that could impact our business. ● technological advances. Advances in automotive technology, such as improved parts design can result in cars needing maintenance less frequently and parts lasting longer. ● the number of miles vehicles are driven annually.
Additionally, climate changes can create more variability in the short-term or lead to other weather conditions that could impact our business. ● technological advances. Advances in automotive technology, such as improved parts design, can result in cars needing maintenance less frequently and parts lasting longer. ● prevalence of electric vehicles.
If we are unable to profitably develop new commercial customers, our sales growth may be limited. ​ 15 Table of Contents Our business depends upon hiring, training and retaining qualified employees. ​ We believe much of our brand value lies in the quality of the approximately 112,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA.
If we are unable to profitably develop new commercial customers, our sales growth may be limited. ​ 15 Table of Contents Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel. ​ We believe much of our brand value lies in the quality of the approximately 119,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA.
Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation, including tax legislation such as the Inflation Reduction Act of 2022, could have an adverse impact, directly or indirectly, on our financial condition and results of operations.
Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation, including tax legislation, could have an adverse impact, directly or indirectly, on our financial condition and results of operations.
Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions. ​ Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy. ​ In addition, our operations in international markets are conducted primarily in the local currency of those countries.
Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences. ​ Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy. ​ In addition, our operations in international markets are conducted primarily in the local currency of those countries.
Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared over social media. 18 Table of Contents ​ Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies.
Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner. ​ Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies.
To the extent any cyber-attack or intrusion in our or one of our third-party service provider’s information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required under federal and state privacy laws to notify impacted individuals and face substantial liability due to claims arising from customers, financial institutions, regulatory authorities, payment card issuers and others.
To the extent any cyber incident involving our or one of our third-party service provider’s information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial liability due to claims arising from customers, financial institutions, regulatory authorities, payment card issuers and others.
These could adversely affect our financial condition and operations. ​ ​ 22 Table of Contents ​ Item 1B. Unresolved Staff Comments None.
These could adversely affect our financial condition and operations. ​ Item 1B. Unresolved Staff Comments None.
As a result, we or our service providers could experience, and on occasion have experienced, one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure.
As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure.
Accomplishing our new and existing store expansion goals will depend upon a number of factors, including the ability to partner with developers and landlords to obtain suitable sites for new and expanded stores at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations.
Accomplishing store development and expansion goals will depend upon a number of factors, including the ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations.
Our inability to appropriately respond to such changes could adversely impact our business, financial condition, results of operations or cash flows. ​ Our reputation may be adversely affected if we are not able to achieve our Environmental, Social, and Governance (ESG) goals. ​ Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability (including with respect to our supply chain), natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Our inability to appropriately respond to such changes could adversely impact our business, financial condition, results of operations or cash flows ​ We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of greenhouse gas (GHG) emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters. ​ Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, healthcare, data privacy, cybersecurity, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may differ substantially in the areas where we operate.
These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others.
Additionally, we have increased annual revenues in the past five fiscal years from $10.9 billion in fiscal 2017 to $16.3 billion in fiscal 2022, with a compounded annual growth rate of eight percent. Annual revenue growth is driven by increases in same store sales, the opening of new stores and the development of new commercial programs.
Additionally, we have increased annual revenues in the past five fiscal years from $11.2 billion in fiscal 2018 to $17.5 billion in fiscal 2023, with a compounded annual growth rate of nine percent. Annual revenue growth is driven by increases in same store sales, the opening of new stores and the development of new commercial programs.
It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption.
Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​ It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption.
Vehicles seven years old or older are generally no longer under the original vehicle manufacturers’ warranties and tend to need more maintenance and repair than newer vehicles. ● rising fuel and energy prices.
Vehicles seven years old or older are generally no longer under the original vehicle manufacturers’ warranties and tend to need more maintenance and repair than newer vehicles. ● the number of miles vehicles are driven. Higher vehicle mileage increases the need for maintenance and repair.
These costs may have a material adverse impact on our business and results of operations . ​ The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed data protection laws designed to provide new rights to consumers and, in some cases, employees.
These costs may have a material adverse impact on our business and results of operations . ​ The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex.
We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.
We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. ​ In the U.S., there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry.
If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings.
Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have adverse effects on our business and financial results. ​ If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings.
Such disruptions may result from damage or destruction of our distribution centers or may be the result of macroeconomic conditions impacting the broader supply chain industry at large.
Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader supply chain industry at large.
We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market.
In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​ We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market.
Furthermore, hardware, software or other IT applications that we or a third party develop for our use may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.
Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security. ​ The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant.
Any negative publicity about these or other areas involving our business, including our response or lack thereof to external events involving civil unrest, social justice, and political issues, whether or not based in fact, could damage our reputation and may result in reduced demand for our merchandise.
Further, our actual or perceived response or lack of response to social, political, environmental or other sensitive issues, whether or not based in fact, could damage our reputation and may result in reduced demand for our merchandise.
Higher vehicle mileage increases the need for maintenance and repair. Mileage levels may be affected by gas prices, ride sharing, weather conditions, and other factors. ● prevalence of electric vehicles.
Mileage levels may be affected by gas prices, ride sharing, weather conditions, and other factors. ● rising fuel and energy prices.
A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows. ​ Inability to acquire and provide quality merchandise at competitive prices could adversely affect our sales and results of operations. ​ We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms.
Failure to attract and retain qualified personnel in key roles could adversely affect our operations. ​ Inability to acquire and provide quality merchandise at competitive prices could adversely affect our sales and results of operations. ​ We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms.
The increasing use of technology also poses a risk as customers are able to quickly compare products and prices and use social media to provide feedback in a manner that is rapidly and broadly disseminated.
Customers are also increasingly using social media to provide feedback and information about our Company, our products and services in a manner that is rapidly and broadly disseminated.
In the U.S., there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Although none of our employees are currently covered by collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future.
Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our employees are currently covered by collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future.
A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support. ​ Our business, financial condition, results of operations and cash flows may be affected by litigation. ​ We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business.
Certain challenges we face in the achievement of our ESG 22 Table of Contents objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report. ​ Our business, financial condition, results of operations and cash flows may be affected by litigation. ​ We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business.
Removed
In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results.
Added
A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows. ​ Our future success depends on the skills and experience of our management and other key personnel.
Removed
Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have adverse effects on our business and financial results.
Added
The unexpected loss of the services of any such persons could adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful.
Removed
In addition, the foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, import limitations on certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade and port labor agreements are beyond our control.
Added
Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers’ confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors.
Removed
Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers.
Added
Multiple states in the U.S. have passed, and continue to pass, data protection laws designed to provide new rights to consumers and, in some cases, employees.
Removed
Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations.
Added
These laws may change over time and may differ 21 Table of Contents substantially across the areas where we operate.
Removed
For example, in connection with the COVID-19 pandemic, public reports indicated there was a spike in cybersecurity attacks as shelter-in-place orders and work-from-home measures led businesses to increase reliance on virtual environments and communications systems, which had been the subject of increasing third-party vulnerabilities and security risks. ​ The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant.
Added
A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support. ​ We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time.
Added
Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control.
Added
These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components.
Added
It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals.
Added
A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material in the aggregate.
Biggest changeWe also have three additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate. 23 Table of Contents
Properties The following table reflects the square footage and number of leased and owned properties for our stores as of August 27, 2022: ​ ​ ​ ​ ​ ​ No. of Store Square ​ ​ Stores ​ Footage (1) Leased 3,786 25,063,509 Owned 3,157 21,371,930 Total 6,943 46,435,439 ​ (1) Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.
Properties The following table reflects the square footage and number of leased and owned properties for our stores as of August 26, 2023: ​ ​ ​ ​ ​ ​ No. of Store Square ​ ​ Stores ​ Footage (1) Leased 3,931 26,158,259 Owned 3,209 21,741,090 Total 7,140 47,899,349 ​ (1) Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.
We have approximately 6.4 million square feet in distribution centers servicing our stores, of which approximately 1.5 million square feet is leased and the remainder is owned. Our 13 distribution centers are located in Arizona, California, Florida, Georgia, Illinois, Ohio, Pennsylvania, Tennessee, Texas, Washington, two in Mexico and one in Brazil.
We have approximately 6.9 million square feet in distribution centers servicing our stores, of which approximately 2.0 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet.
Removed
Our primary store support center is located in Memphis, Tennessee, and consists of approximately 320,000 square feet. We also have three additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. Our primary International Sourcing Office is located in Shanghai, China.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Item 103 of Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million. Applying this threshold, there are no environmental matters to disclose for this period.
Biggest changeAdditionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million. Item 4. Mine Safety Disclosures Not applicable. PART II
We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 23 Table of Contents PART II
We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.
We are involved in various other legal proceedings incidental to the conduct of our business, including, but not limited to, several lawsuits containing class-action allegations in which the plaintiffs are current and former hourly and salaried employees who allege various wage and hour violations and unlawful termination practices.
Item 3. Legal Proceedings We are involved in various other legal proceedings incidental to the conduct of our business, including, but not limited to, claims and allegations related to wage and hour violations, unlawful termination, employment practices, product liability, privacy and cybersecurity, environmental matters, intellectual property rights or regulatory compliance.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 23 ​ ​ ​ PART II ​ 24 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. Reserved 25 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 24 ​ ​ ​ PART II ​ 24 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. Reserved 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.
Removed
Financial Statements and Supplementary Data 42 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 74 Item 9A. Controls and Procedures 74

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShares of common stock repurchased by the Company during the quarter ended August 27, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased ​ ​ Average Price Paid per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ​ ​ Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs May 8, 2022 to June 4, 2022 104,375 ​ $ 1,950.47 ​ 104,375 ​ $ 1,853,994,652 June 5, 2022 to July 2, 2022 124,813 ​ 2,091.49 ​ 124,813 ​ ​ 1,592,949,614 July 3, 2022 to July 30, 2022 145,865 ​ 2,158.08 ​ 145,865 ​ ​ 1,278,161,281 July 31, 2022 to August 27, 2022 98,751 ​ ​ 2,233.73 ​ 98,751 ​ ​ 1,057,578,284 Total 473,804 ​ $ 2,110.57 ​ 473,804 ​ $ 1,057,578,284 ​ The Company also repurchased, at market value, an additional 4,886, 7,611 and 8,287 shares in fiscal years 2022, 2021 and 2020, respectively, from employees electing to sell their stock under the Company’s Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the “Employee Plan”), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone’s common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions.
Biggest changeShares of common stock repurchased by the Company during the quarter ended August 26, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased ​ ​ Average Price Paid per Share (1) ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ​ ​ Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs May 7, 2023 to June 3, 2023 86,678 ​ $ 2,560.49 ​ 86,678 ​ $ 621,625,545 June 4, 2023 to July 1, 2023 94,541 ​ 2,416.71 ​ 94,541 ​ ​ 2,393,147,061 July 2, 2023 to July 29, 2023 107,560 ​ 2,532.00 ​ 107,560 ​ ​ 2,120,805,558 July 30, 2023 to August 26, 2023 114,620 ​ ​ 2,499.71 ​ 114,620 ​ ​ 1,834,288,894 Total 403,399 ​ $ 2,501.93 ​ 403,399 ​ $ 1,834,288,894 ​ (1) Average price per share includes excise tax assessed at one percent of the fair market value of net stock repurchases. ​ 24 Table of Contents The Company also repurchased, at market value, an additional 4,886 and 7,611 shares in fiscal years 2022 and 2021, respectively, from employees electing to sell their stock under the Company’s Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the “Employee Plan”), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone’s common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol “AZO.” On October 17, 2022, there were 1,829 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol “AZO.” On October 16, 2023, there were 1,703 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.
At August 27, 2022, 233,655 shares of common stock were reserved for future issuance under the Executive Plan. 24 Table of Contents Stock Performance Graph The graph below presents changes in the value of AutoZone’s stock as compared to Standard & Poor’s 500 Composite Index (“S&P 500”) and to Standard & Poor’s Retail Index (“S&P Retail Index”) for the five-year period beginning August 26, 2017 and ending August 27, 2022. ​
At August 26, 2023, 232,966 shares of common stock were reserved for future issuance under the Executive Plan. ​ 25 Table of Contents Stock Performance Graph The graph below presents changes in the value of AutoZone’s stock as compared to Standard & Poor’s 500 Composite Index (“S&P 500”) and to Standard & Poor’s Retail Index (“S&P Retail Index”) for the five-year period beginning August 25, 2018 and ending August 26, 2023. ​
Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 6,238, 8,479 and 10,525 shares were sold to employees in fiscal 2022, 2021 and 2020, respectively. At August 27, 2022, 127,524 shares of common stock were reserved for future issuance under the Employee Plan.
Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan.
Purchases by executives under the Executive Plan were 709, 997 and 1,204 shares in fiscal 2022, 2021 and 2020, respectively.
Purchases by executives under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively.
We currently do not pay a dividend on our common stock. Our ability to pay dividends is subject to limitations imposed by Nevada law. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.
We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow. During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors.
Removed
During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors. The program was most recently amended on October 4, 2022, to increase the repurchase authorization by $2.5 billion, bringing the total value of authorized share repurchases to $33.7 billion.
Added
On June 14, 2023, the Board of Directors authorized the repurchase of an additional $2.0 billion of the Company’s common stock, bringing the total value of authorized share repurchases to $35.7 billion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+10 added−12 removed46 unchanged
Biggest changeThe average age of light vehicles has exceeded 11 years since 2012. ​ 27 Table of Contents Results of Operations The following table highlights selected financial information over the past 5 years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2022 2021 (1) 2020 (1) 2019 (2)(3) 2018 (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Statement Data ​ ​ ​ ​ ​ Net sales ​ $ 16,252,230 ​ $ 14,629,585 ​ $ 12,631,967 ​ $ 11,863,743 ​ $ 11,221,077 ​ Cost of sales, including warehouse and delivery expenses ​ 7,779,580 ​ 6,911,800 ​ 5,861,214 ​ 5,498,742 ​ 5,247,331 ​ Gross profit ​ 8,472,650 ​ 7,717,785 ​ 6,770,753 ​ 6,365,001 ​ 5,973,746 ​ Operating, selling, general and administrative expenses ​ 5,201,921 ​ 4,773,258 ​ 4,353,074 ​ 4,148,864 ​ 4,162,890 ​ Operating profit ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ 2,216,137 ​ 1,810,856 ​ Interest expense, net ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ 174,527 ​ Income before income taxes ​ 3,079,091 ​ 2,749,190 ​ 2,216,514 ​ 2,031,333 ​ 1,636,329 ​ Income tax expense (4) ​ 649,487 ​ 578,876 ​ 483,542 ​ 414,112 ​ 298,793 ​ Net income (4) ​ $ 2,429,604 ​ $ 2,170,314 ​ $ 1,732,972 ​ $ 1,617,221 ​ $ 1,337,536 ​ Diluted earnings per share (4) ​ $ 117.19 ​ $ 95.19 ​ $ 71.93 ​ $ 63.43 ​ $ 48.77 ​ Weighted average shares for diluted earnings per share (4) ​ 20,733 ​ 22,799 ​ 24,093 ​ 25,498 ​ 27,424 ​ Same Store Sales ​ ​ ​ ​ ​ ​ Increase in domestic comparable store net sales (5) ​ 8.4 % 13.6 % 7.4 % 3.0 % 1.8 % Balance Sheet Data ​ ​ ​ ​ ​ ​ Current assets ​ $ 6,627,984 ​ $ 6,415,303 ​ $ 6,811,872 ​ $ 5,028,685 ​ $ 4,635,869 ​ Operating lease right-of-use assets (6) ​ ​ 2,918,817 ​ ​ 2,718,712 ​ ​ 2,581,677 ​ ​ — ​ ​ — ​ Working capital (deficit) (12) ​ (1,960,409) ​ (954,451) ​ 528,781 ​ (483,456) ​ (392,812) ​ Total assets ​ 15,275,043 ​ 14,516,199 ​ 14,423,872 ​ 9,895,913 ​ 9,346,980 ​ Current liabilities ​ 8,588,393 ​ 7,369,754 ​ 6,283,091 ​ 5,512,141 ​ 5,028,681 ​ Debt ​ 6,122,092 ​ 5,269,820 ​ 5,513,371 ​ 5,206,344 ​ 5,005,930 ​ Finance lease liabilities, less current portion (6) ​ 217,428 ​ 186,122 ​ 155,855 ​ 123,659 ​ 102,013 ​ Operating lease liabilities, less current portion (6) ​ ​ 2,837,973 ​ ​ 2,632,842 ​ ​ 2,501,560 ​ ​ — ​ ​ — ​ Stockholders’ deficit ​ (3,538,913) ​ (1,797,536) ​ (877,977) ​ (1,713,851) ​ (1,520,355) ​ Selected Operating Data ​ ​ ​ ​ ​ ​ Number of locations at beginning of year ​ 6,767 ​ 6,549 ​ 6,411 ​ 6,202 ​ 6,029 ​ Sold locations (7) ​ — ​ — ​ — ​ — ​ 26 ​ New locations ​ 177 ​ 219 ​ 138 ​ 209 ​ 201 ​ Closed locations ​ 1 ​ 1 ​ — ​ — ​ 2 ​ Net new locations ​ 176 ​ 218 ​ 138 ​ 209 ​ 199 ​ Relocated locations ​ 13 ​ 12 ​ 5 ​ 2 ​ 7 ​ Number of locations at end of year ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ 6,202 ​ AutoZone domestic commercial programs ​ 5,342 ​ 5,179 ​ 5,007 ​ 4,893 ​ 4,741 ​ Inventory per location (in thousands) ​ $ 812 ​ $ 686 ​ $ 683 ​ $ 674 ​ $ 636 ​ Total AutoZone store square footage (in thousands) ​ 46,435 ​ 45,057 ​ 43,502 ​ 42,526 ​ 41,066 ​ Average square footage per AutoZone store ​ 6,688 ​ 6,658 ​ 6,643 ​ 6,633 ​ 6,621 ​ Increase in AutoZone store square footage ​ 3.1 % 3.6 % 2.3 % 3.6 % 3.5 % Average net sales per AutoZone store (in thousands) ​ $ 2,329 ​ $ 2,160 ​ $ 1,914 ​ $ 1,847 ​ $ 1,778 ​ Net sales per AutoZone store average square foot ​ $ 349 ​ $ 325 ​ $ 288 ​ $ 279 ​ $ 269 ​ Total employees at end of year (in thousands) ​ 112 ​ 105 ​ 100 ​ 96 ​ 89 ​ Inventory turnover (8) ​ 1.5x ​ 1.5x ​ 1.3x ​ 1.3x ​ 1.3x ​ Accounts payable to inventory ratio ​ 129.5 % 129.6 % 115.3 % 112.6 % 111.8 % After-tax return on invested capital (9) ​ 52.9 % 41.0 % 35.7 % 35.7 % 32.1 % Adjusted debt to EBITDAR (10) ​ 2.1 ​ 2.0 ​ 2.4 ​ 2.5 ​ 2.5 ​ Net cash provided by operating activities (in thousands) (4) ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ $ 2,128,513 ​ $ 2,080,292 ​ Cash flow before share repurchases and changes in debt (in thousands) (11) ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ $ 1,758,672 ​ $ 1,596,367 ​ Share repurchases (in thousands) (12) ​ $ 4,359,991 ​ $ 3,378,321 ​ $ 930,903 ​ $ 2,004,896 ​ $ 1,592,013 ​ Number of shares repurchased (in thousands) (12) ​ 2,220 ​ 2,592 ​ 826 ​ 2,182 ​ 2,398 ​ 28 Table of Contents (1) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.
Biggest changeThe average age of light vehicles has exceeded 12 years since 2012. ​ 28 Table of Contents Results of Operations The following table highlights selected financial information over the past 5 years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021 (1) 2020 (1) 2019 (2)(3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Statement Data ​ ​ ​ ​ ​ Net sales ​ $ 17,457,209 ​ $ 16,252,230 ​ $ 14,629,585 ​ $ 12,631,967 ​ $ 11,863,743 ​ Cost of sales, including warehouse and delivery expenses ​ 8,386,787 ​ 7,779,580 ​ 6,911,800 ​ 5,861,214 ​ 5,498,742 ​ Gross profit ​ 9,070,422 ​ 8,472,650 ​ 7,717,785 ​ 6,770,753 ​ 6,365,001 ​ Operating, selling, general and administrative expenses ​ 5,596,436 ​ 5,201,921 ​ 4,773,258 ​ 4,353,074 ​ 4,148,864 ​ Operating profit ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ 2,216,137 ​ Interest expense, net ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ Income before income taxes ​ 3,167,614 ​ 3,079,091 ​ 2,749,190 ​ 2,216,514 ​ 2,031,333 ​ Income tax expense (4) ​ 639,188 ​ 649,487 ​ 578,876 ​ 483,542 ​ 414,112 ​ Net income (4) ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 ​ $ 1,732,972 ​ $ 1,617,221 ​ Diluted earnings per share (4) ​ $ 132.36 ​ $ 117.19 ​ $ 95.19 ​ $ 71.93 ​ $ 63.43 ​ Weighted average shares for diluted earnings per share (4) ​ 19,103 ​ 20,733 ​ 22,799 ​ 24,093 ​ 25,498 ​ Same Store Sales ​ ​ ​ ​ ​ ​ ​ Increase in domestic comparable store net sales (5) ​ 3.4 % 8.4 % 13.6 % ​ 7.4 % ​ 3.0 % Increase in international comparable store net sales (5) ​ ​ 29.3 % ​ 19.1 % ​ 22.5 % ​ (2.8) % ​ 4.6 % Increase in international comparable store net sales (constant currency) (5) ​ ​ 17.5 % ​ 19.2 % ​ 20.7 % ​ 4.7 % ​ 7.2 % Increase in total company comparable store net sales (5) ​ ​ 5.6 % ​ 9.2 % ​ 14.3 % ​ 6.6 % ​ 3.2 % Increase in total company comparable store net sales (constant currency) (5) ​ ​ 4.6 % ​ 9.2 % ​ 14.1 % ​ 7.2 % ​ 3.4 % Balance Sheet Data ​ ​ ​ ​ ​ ​ Current assets ​ $ 6,779,426 ​ $ 6,627,984 ​ $ 6,415,303 ​ $ 6,811,872 ​ $ 5,028,685 ​ Operating lease right-of-use assets (6) ​ ​ 2,998,097 ​ ​ 2,918,817 ​ ​ 2,718,712 ​ ​ 2,581,677 ​ ​ — ​ Working capital (deficit) (7) ​ (1,732,430) ​ (1,960,409) ​ (954,451) ​ 528,781 ​ (483,456) ​ Total assets ​ 15,985,878 ​ 15,275,043 ​ 14,516,199 ​ 14,423,872 ​ 9,895,913 ​ Current liabilities ​ 8,511,856 ​ 8,588,393 ​ 7,369,754 ​ 6,283,091 ​ 5,512,141 ​ Debt ​ 7,668,549 ​ 6,122,092 ​ 5,269,820 ​ 5,513,371 ​ 5,206,344 ​ Finance lease liabilities, less current portion (6) ​ 200,702 ​ 217,428 ​ 186,122 ​ 155,855 ​ 123,659 ​ Operating lease liabilities, less current portion (6) ​ ​ 2,917,046 ​ ​ 2,837,973 ​ ​ 2,632,842 ​ ​ 2,501,560 ​ ​ — ​ Stockholders’ deficit ​ (4,349,894) ​ (3,538,913) ​ (1,797,536) ​ (877,977) ​ (1,713,851) ​ Selected Operating Data ​ ​ ​ ​ ​ ​ Number of stores at beginning of year ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ 6,202 ​ New stores ​ 198 ​ 177 ​ 219 ​ 138 ​ 209 ​ Closed stores ​ 1 ​ 1 ​ 1 ​ — ​ — ​ Net new stores ​ 197 ​ 176 ​ 218 ​ 138 ​ 209 ​ Relocated stores ​ 12 ​ 13 ​ 12 ​ 5 ​ 2 ​ Number of stores at end of year ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ AutoZone domestic commercial programs ​ 5,682 ​ 5,342 ​ 5,179 ​ 5,007 ​ 4,893 ​ Total Company Store Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory per store (in thousands) ​ $ 807 ​ $ 812 ​ $ 686 ​ $ 683 ​ $ 674 ​ Total AutoZone store square footage (in thousands) ​ 47,899 ​ 46,435 ​ 45,057 ​ 43,502 ​ 42,526 ​ Average square footage per AutoZone store ​ 6,709 ​ 6,688 ​ 6,658 ​ 6,643 ​ 6,633 ​ Increase in AutoZone store square footage ​ 3.2 % 3.1 % 3.6 % 2.3 % 3.6 % Average net sales per AutoZone store (in thousands) ​ $ 2,435 ​ $ 2,329 ​ $ 2,160 ​ $ 1,914 ​ $ 1,847 ​ Net sales per AutoZone store average square foot ​ $ 363 ​ $ 349 ​ $ 325 ​ $ 288 ​ $ 279 ​ Total employees at end of year (in thousands) ​ 119 ​ 112 ​ 105 ​ 100 ​ 96 ​ Inventory turnover (8) ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.3x ​ 1.3x ​ Accounts payable to inventory ratio ​ 124.9 % 129.5 % 129.6 % 115.3 % 112.6 % After-tax return on invested capital (9) ​ 55.4 % 52.9 % 41.0 % 35.7 % 35.7 % Adjusted debt to EBITDAR (10) ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ 2.5 ​ Net cash provided by operating activities (in thousands) (4) ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ $ 2,128,513 ​ Cash flow before share repurchases and changes in debt (in thousands) (11) ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ $ 1,758,672 ​ Share repurchases (in thousands) (7) ​ $ 3,723,289 ​ $ 4,359,991 ​ $ 3,378,321 ​ $ 930,903 ​ $ 2,004,896 ​ Number of shares repurchased (in thousands) (7) ​ 1,524 ​ 2,220 ​ 2,592 ​ 826 ​ 2,182 ​ 29 Table of Contents (1) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.
(11) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations (11) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases.
We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support long-term growth initiatives and return excess cash to shareholders in the form of share repurchases.
We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases.
Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.
Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.
The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses. 35 Table of Contents Reconciliation of Non-GAAP Financial Measures “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes certain financial measures not derived in accordance with generally accepted accounting principles (“GAAP”).
The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses. 36 Table of Contents Reconciliation of Non-GAAP Financial Measures “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes certain financial measures not derived in accordance with generally accepted accounting principles (“GAAP”).
Debt Facilities On November 15, 2021, we amended and restated our existing revolving credit facility (the “Revolving Credit Agreement”) pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion.
Debt Facilities On November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the “Revolving Credit Agreement”) pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion.
We also sell the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com.
We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com.
While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a slight decrease in mix of sales of the discretionary category and a slight increase in the maintence category compared to last year.
While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a slight decrease in mix of sales of the discretionary category and a slight increase in the maintenance category compared to last year.
(7) Rent is multiplied by a factor of six to capitalize operating leases in the determination of pre-tax invested capital. ​ Recent Accounting Pronouncements See Note A of the Notes to Consolidated Financial Statements for a discussion on recent accounting pronouncements.
(6) Rent is multiplied by a factor of six to capitalize operating leases in the determination of pre-tax invested capital. ​ Recent Accounting Pronouncements ​ See Note A of the Notes to Consolidated Financial Statements for a discussion on recent accounting pronouncements.
Fiscal 2021 Compared with Fiscal 2020 A discussion of changes in our results of operations from fiscal 2020 to fiscal 2021 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Fiscal 2022 Compared with Fiscal 2021 A discussion of changes in our results of operations from fiscal 2022 to fiscal 2021 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date. If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2022.
Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date. If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.1 million for fiscal 2023.
The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends 38 Table of Contents and projected inflation of related factors.
The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors.
Seven Year Old or Older Vehicles As the number of seven year old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer in an effort to save money.
Seven Year Old or Older Vehicles As the number of seven year old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer in an effort to save money. According to the U.S.
Fiscal 2021 capital expenditures increased due to delays in capital spending for the third and fourth quarter of fiscal 2020 related to COVID-19. ​ 31 Table of Contents In addition to building and land costs, our new stores require working capital, predominantly for inventories.
Fiscal 2021 capital expenditures increased due to delays in capital spending for the third and fourth quarter of fiscal 2020 related to the COVID-19 pandemic. 32 Table of Contents ​ In addition to building and land costs, our new stores require working capital, predominantly for inventories.
Quarterly Periods Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2022, 2021 and 2020.
Quarterly Periods Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2023, 2022 and 2021.
During the periods of minimal correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road.
During the periods of minimal 27 Table of Contents correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road.
In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.
In recent history, our methods for determining our exposure have remained 39 Table of Contents consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.
Both our retail sales and commercial sales grew this past year as we made progress on our initiatives aimed at improving our ability to say “Yes” to our customers more frequently and accelerating our commercial growth. ​ Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, fuel costs, wage rates, supply chain disruptions, hiring and other economic conditions.
Our retail sales and commercial sales in our domestic and international markets grew this past year as we made progress on our initiatives aimed at improving our ability to say “Yes” to our customers more frequently. ​ Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, fuel costs, wage rates, supply chain disruptions, hiring and other economic conditions.
According to the latest data provided by the Auto Care Association, as of January 1, 2022, the average age of light vehicles on the road was 12.2 years and these vehicles account for more than 40% of U.S. vehicles.
According to the latest data provided by the Auto Care Association, as of January 1, 2023, the average age of light vehicles on the road was 12.5 years and these vehicles account for more than 40% of U.S. vehicles.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021, filed with the SEC on October 25, 2021, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking “Investor Relations” located at the bottom of the page.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 24, 2022, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking “Investor Relations” located at the bottom of the page.
Given the unpredictability of gas prices, we cannot predict whether gas prices will increase or decrease, nor can we predict how any future changes in gas prices will impact our sales in future periods. ​ We have also experienced continued accelerated pressure on wages in the U.S. during fiscal 2022.
Given the unpredictability of gas prices, we cannot predict whether gas prices will increase or decrease, nor can we predict how any future changes in gas prices will impact our sales in future periods. ​ We have also experienced continued pressure on average hourly wages in the U.S. during fiscal 2023.
The following items in our Consolidated Financial Statements represent our critical accounting policies that require significant estimation or judgment by management: Self-Insurance Reserves We retain a significant portion of the risks associated with workers’ compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks.
The following items in our Consolidated Financial Statements represent our critical accounting policies and estimates by management: Self-Insurance Reserves We retain a significant portion of the risks associated with workers’ compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks.
Therefore, we record receivables for funding earned but not yet received as we purchase inventory. During the year, we regularly review the receivables from vendors to ensure vendors are able to meet their obligations.
Therefore, we record receivables for funding earned but not yet received as we purchase inventory. During the year, we regularly review the receivables from vendors to ensure vendors are able to meet their 40 Table of Contents obligations.
The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the 52 weeks ended, August 27, 2022, August 28, 2021 and August 29, 2020. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended (in thousands) ​ August 27, 2022 ​ August 28, 2021 ​ August 29, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost, per ASC 842 ​ $ 470,563 ​ $ 427,443 ​ $ 415,505 Less: Finance lease interest and amortization ​ (69,564) ​ ​ (56,334) ​ ​ (60,275) Less: Variable operating lease components, related to insurance and common area maintenance ​ (27,721) ​ ​ (25,729) ​ ​ (25,447) Rent expense ​ $ 373,278 ​ $ 345,380 ​ $ 329,783 ​ (4) For fiscal 2022, 2021, and 2020, the effective tax rate was 21.1%, 21.1%, and 21.8%, respectively.
The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the 52 weeks ended, August 26, 2023, August 27, 2022 and August 28, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended (in thousands) ​ August 26, 2023 ​ August 27, 2022 ​ August 28, 2021 ​ August 29, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost, per ASC 842 ​ $ 524,283 ​ $ 470,563 ​ $ 427,443 ​ $ 415,505 Less: Finance lease interest and amortization ​ (86,521) ​ ​ (69,564) ​ ​ (56,334) ​ ​ (60,275) Less: Variable operating lease components, related to insurance and common area maintenance ​ (31,364) ​ ​ (27,721) ​ ​ (25,729) ​ ​ (25,447) Rent expense ​ $ 406,398 ​ $ 373,278 ​ $ 345,380 ​ $ 329,783 ​ (3) For fiscal 2023, 2022, 2021 and 2020, the effective tax rate was 20.2%, 21.1%, 21.1% and 21.8%, respectively.
During fiscal 2022, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 84% of total sales categories continuing to comprise our largest set of categories.
During fiscal 2023, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 85% of total sales categories continuing to comprise our largest set of categories.
The net cash used in financing activities reflected purchases of treasury stock, which totaled $4.4 billion, $3.4 billion and $930.9 million for fiscal 2022, 2021 and 2020, respectively. The treasury stock purchases in fiscal 2022, 2021 and 2020 were primarily funded by cash flows from operations.
The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.7 billion, $4.4 billion and $3.4 billion for fiscal 2023, 2022 and 2021, respectively. The treasury stock purchases in fiscal 2023, 2022 and 2021 were primarily funded by cash flows from operations.
As of August 27, 2022, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1.
As of August 26, 2023, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. 33 Table of Contents The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1.
The contingencies are influenced by items such as tax audits, changes in tax laws, litigation, appeals and prior experience with similar tax positions. We regularly review our tax reserves for these items and assess the adequacy of the amount we have recorded. As of August 27, 2022, we had approximately $43.5 million reserved for uncertain tax positions.
The contingencies are influenced by items such as tax audits, changes in tax laws, litigation, appeals and prior experience with similar tax positions. We regularly review our tax reserves for these items and assess the adequacy of the amount we have recorded. As of August 26, 2023, we had approximately $51.0 million reserved for uncertain tax positions.
Approximately 86% of the vendor funds received during fiscal 2022 were recorded as a reduction of the cost of inventories and recognized as a reduction to cost of sales as these inventories are sold. 39 Table of Contents Based on our vendor agreements, a significant portion of vendor funding we receive is earned as we purchase inventory.
Approximately 88% of the vendor funds received during fiscal 2023 were recorded as a reduction of the cost of inventories and recognized as a reduction to cost of sales as these inventories are sold. Based on our vendor agreements, a significant portion of vendor funding we receive is earned as we purchase inventory.
We had proceeds from the sale of marketable debt securities of $53.9 million, $95.4 million and $84.2 million in fiscal 2022, 2021 and 2020, respectively. Net cash used in financing activities was $3.5 billion in fiscal 2022 and fiscal 2021 and $643.6 million in fiscal 2020.
We had proceeds from the sale of marketable debt securities of $58.4 million, $53.9 million and $95.4 million in fiscal 2023, 2022 and 2021, respectively. Net cash used in financing activities was $2.1 billion in fiscal 2023 and $3.5 billion in fiscal 2022 and fiscal 2021.
On March 15, 2021, we repaid the $250 million 2.500% Senior Notes due April 2021 which were callable at par in March 2021.
On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022. ​ On March 15, 2021, we repaid the $250 million 2.500% Senior Notes due April 2021, which were callable at par in March 2021.
Our effective income tax rate was 21.1% of pre-tax income for fiscal 2022 and fiscal 2021. The benefit of stock options exercised for fiscal 2022 was $63.2 million compared to $56.4 million for fiscal 2021 (see “Note D – Income Taxes” in the Notes to Consolidated Financial Statements).
Our effective income tax rate was 20.2% and 21.1% of pre-tax income for fiscal 2023 and fiscal 2022, respectively. The benefit from stock options exercised in fiscal 2023 was $92.2 million compared to $63.2 million in fiscal 2022 (see “Note D – Income Taxes” in the Notes to Consolidated Financial Statements).
For the fiscal year ended August 27, 2022, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 52.9% as compared to 41.0% for the comparable prior year period. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases).
For the fiscal year ended August 26, 2023, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 55.4% as compared to 52.9% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases).
Reconciliation of Non-GAAP Financial Measure: Cash Flow Before Share Repurchases and Changes in Debt The following table reconciles net increase (decrease) in cash and cash equivalents to cash flow before share repurchases and changes in debt, which is presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands) ​ 2022 2021 2020 2019 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by/(used in): ​ ​ ​ ​ ​ Operating activities ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ $ 2,128,513 ​ $ 2,080,292 Investing activities ​ (648,099) ​ (601,778) ​ (497,875) ​ (491,846) ​ (521,860) Financing activities ​ (3,470,497) ​ (3,500,417) ​ (643,636) ​ (1,674,088) ​ (1,632,154) Effect of exchange rate changes on cash ​ ​ 506 ​ 4,172 ​ (4,082) ​ (4,103) ​ (1,724) Net (decrease)/increase in cash and cash equivalents ​ ​ (906,955) ​ (579,480) ​ 1,574,515 ​ (41,524) ​ (75,446) Less: increase/(decrease) in debt, excluding deferred financing costs ​ ​ 853,400 ​ (250,000) ​ 320,000 ​ 204,700 ​ (79,800) Plus: Share repurchases ​ 4,359,991 ​ 3,378,321 ​ 930,903 (1) ​ 2,004,896 ​ 1,592,013 Cash flow before share repurchases and changes in debt ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ $ 1,758,672 ​ $ 1,596,367 ​ (1) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to COVID-19. ​ ​ ​ ​ ​ ​ 36 Table of Contents Reconciliation of Non-GAAP Financial Measure: Adjusted After-tax ROIC The following table calculates the percentage of ROIC.
Reconciliation of Non-GAAP Financial Measure: Cash Flow Before Share Repurchases and Changes in Debt The following table reconciles net increase (decrease) in cash and cash equivalents to cash flow before share repurchases and changes in debt, which is presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands) ​ 2023 2022 2021 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by/(used in): ​ ​ ​ ​ ​ Operating activities ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ $ 2,128,513 Investing activities ​ (876,178) ​ (648,099) ​ (601,778) ​ (497,875) ​ (491,846) Financing activities ​ (2,060,082) ​ (3,470,497) ​ (3,500,417) ​ (643,636) ​ (1,674,088) Effect of exchange rate changes on cash ​ ​ 8,146 ​ 506 ​ 4,172 ​ (4,082) ​ (4,103) Net (decrease)/increase in cash and cash equivalents ​ ​ 12,674 ​ (906,955) ​ (579,480) ​ 1,574,515 ​ (41,524) Less: increase/(decrease) in debt, excluding deferred financing costs ​ ​ 1,556,200 ​ 853,400 ​ (250,000) ​ 320,000 ​ 204,700 Plus: Share repurchases ​ 3,699,552 ​ 4,359,991 ​ 3,378,321 ​ 930,903 (1) ​ 2,004,896 Cash flow before share repurchases and changes in debt ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ $ 1,758,672 ​ (1) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic. ​ ​ ​ ​ ​ ​ 37 Table of Contents Reconciliation of Non-GAAP Financial Measure: Adjusted After-tax ROIC The following table calculates the percentage of ROIC.
We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​ Off-Balance Sheet Arrangements The following table reflects outstanding letters of credit and surety bonds as of August 27, 2022: ​ ​ ​ ​ ​ Total ​ ​ Other (in thousands) ​ Commitments ​ ​ ​ ​ Standby letters of credit ​ $ 130,494 Surety bonds ​ ​ 46,018 ​ ​ $ 176,512 ​ A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers’ compensation carriers.
We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​ Off-Balance Sheet Arrangements The following table reflects outstanding letters of credit and surety bonds as of August 26, 2023: ​ ​ ​ ​ ​ Total ​ ​ Other (in thousands) ​ Commitments ​ ​ ​ ​ Standby letters of credit ​ $ 133,953 Surety bonds ​ ​ 43,076 ​ ​ $ 177,029 ​ A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers’ compensation carriers.
Extended payment terms from our vendors have allowed us to continue our high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 129.5% at August 27, 2022 and 129.6% at August 28, 2021.
Extended payment terms from our vendors have allowed us to continue our high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 124.9% at August 26, 2023 and 129.5% at August 27, 2022.
For the fiscal year ended August 27, 2022, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.1:1 as compared to 2.0:1 as of 33 Table of Contents the comparable prior year end.
For the fiscal year ended August 26, 2023, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.3:1 as compared to 2.1:1 as of the comparable prior year end.
During fiscal 2022, 2021 and 2020 our capital expenditures increased by approximately 8% and 36% and decreased 8%, respectively.
During fiscal 2023, 2022 and 2021 our capital expenditures increased by approximately 18%, 8% and 36%, respectively.
As of August 27, 2022, and August 29, 2021, cash and cash equivalents of $86.8 million and $80.4 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.
As of August 26, 2023, and August 27, 2022, cash and cash equivalents of $108.5 million and $86.8 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.
Our self-insurance reserve estimates totaled $264.3 million at August 27, 2022, and $284.0 million at August 28, 2021. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable.
Our self-insurance reserve estimates totaled $268.8 million at August 26, 2023, and $264.3 million at August 27, 2022. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 27, 2022, operated 6,168 stores in the U.S., 703 stores in Mexico and 72 stores in Brazil.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 26, 2023, operated 6,300 stores in the U.S., 740 stores in Mexico and 100 stores in Brazil.
Interest expense, net for fiscal 2022 was $191.6 million compared with $195.3 million during fiscal 2021. Average borrowings for fiscal 2022 were $5.8 billion, compared with $5.4 billion for fiscal 2021. Weighted average borrowing rates were 3.29% and 3.28% for fiscal 2022 and 2021, respectively.
Interest expense, net for fiscal 2023 was $306.4 million compared with $191.6 million during fiscal 2022. Average borrowings for fiscal 2023 were $7.0 billion, compared with $5.8 billion for fiscal 2022. Weighted average borrowing rates were 3.78% and 3.29% for fiscal 2023 and 2022, respectively.
As of August 27, 2022, we held $264.4 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings.
As of August 26, 2023, we held $277.1 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings.
Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future. ​ One macroeconomic factor affecting our customers and our industry during fiscal 2022 was gas prices.
Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future. ​ One macroeconomic factor affecting our customers and our industry is gas prices. We believe fluctuations in gas prices impact our customers’ level of disposable income.
As of August 27, 2022, our $603.4 million of commercial paper borrowings, the $300 million 2.875% Senior Notes due January 2023 and the $500 million 3.125% Senior Notes due July 2023 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility.
As of August 26, 2023, the $1.2 billion of commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility.
Net income for fiscal 2022 increased by 11.9% to $2.4 billion, and diluted earnings per share increased 23.1% to $117.19 from $95.19 in fiscal 2021. The impact on the fiscal 2022 diluted earnings per share from stock repurchases was an increase of $5.27.
Net income for fiscal 2023 increased by 4.1% to $2.5 billion, and diluted earnings per share increased 12.9% to $132.36 from $117.19 in fiscal 2022. The impact on the fiscal 2023 diluted earnings per share from stock repurchases was an increase of $1.15.
This growth was driven primarily by a domestic same store sales increase of 8.4% and net sales of $290.7 million from new stores. Domestic commercial sales increased $885.0 million, or 26.5%, over domestic commercial sales for fiscal 2021.
This growth was driven primarily by a domestic same store sales increase of 3.4% and net sales of $327.8 million from new domestic and international stores. Domestic commercial sales increased $368.0 million, or 8.7%, over domestic commercial sales for fiscal 2022.
The ROIC percentages are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August ​ (in thousands, except percentage) ​ 2022 2021 2020 2019 (1) 2018 (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,429,604 $ 2,170,314 $ 1,732,972 $ 1,617,221 $ 1,337,536 ​ Adjustments: ​ ​ ​ ​ ​ ​ ​ Impairment before tax ​ — ​ — ​ — ​ — ​ 193,162 ​ Pension termination charges before tax ​ — ​ — ​ — ​ — ​ 130,263 ​ Interest expense ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ 174,527 ​ Rent expense (3) ​ 373,278 ​ 345,380 ​ 329,783 ​ 332,726 ​ 315,580 ​ Tax effect (4) ​ (119,197) ​ (114,091) ​ (115,747) ​ (105,576) ​ (211,806) ​ Deferred tax liabilities, net of repatriation tax (5) ​ — ​ — ​ — ​ (6,340) ​ (132,113) ​ Adjusted after-tax return ​ $ 2,875,323 ​ $ 2,596,940 ​ $ 2,148,173 ​ $ 2,022,835 ​ $ 1,807,149 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average debt (6) ​ $ 5,712,301 ​ $ 5,416,471 ​ $ 5,375,356 ​ $ 5,126,286 ​ $ 5,013,678 ​ Average stockholders’ deficit (6) ​ (2,797,181) ​ (1,397,892) ​ (1,542,355) ​ (1,615,339) ​ (1,433,196) ​ Add: Rent x 6 (3)(7) ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 ​ 1,996,358 ​ 1,893,480 ​ Average finance lease liabilities (6) ​ 284,453 ​ 237,267 ​ 203,998 ​ 162,591 ​ 156,198 ​ Invested capital ​ $ 5,439,241 ​ $ 6,328,126 ​ $ 6,015,695 ​ $ 5,669,896 ​ $ 5,630,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted after-tax ROIC ​ 52.9 % 41.0 % 35.7 % 35.7 % 32.1 % ​ Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDAR The following table calculates the ratio of adjusted debt to EBITDAR.
The ROIC percentages are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August ​ (in thousands, except percentage) 2023 2022 2021 2020 2019 (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972 $ 1,617,221 ​ Adjustments: ​ ​ ​ ​ ​ ​ ​ Interest expense 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ Rent expense (2) 406,398 ​ 373,278 ​ 345,380 ​ 329,783 ​ 332,726 ​ Tax effect (3) (143,980) ​ (119,197) ​ (114,091) ​ (115,747) ​ (105,576) ​ Deferred tax liabilities, net of repatriation tax (4) — ​ — ​ — ​ — ​ (6,340) ​ Adjusted after-tax return $ 3,097,216 ​ $ 2,875,323 ​ $ 2,596,940 ​ $ 2,148,173 ​ $ 2,022,835 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average debt (5) $ 6,900,354 ​ $ 5,712,301 ​ $ 5,416,471 ​ $ 5,375,356 ​ $ 5,126,286 ​ Average stockholders’ deficit (5) (4,042,495) ​ (2,797,181) ​ (1,397,892) ​ (1,542,355) ​ (1,615,339) ​ Add: Rent x 6 (2)(6) 2,438,388 ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 ​ 1,996,358 ​ Average finance lease liabilities (5) 296,599 ​ 284,453 ​ 237,267 ​ 203,998 ​ 162,591 ​ Invested capital $ 5,592,846 ​ $ 5,439,241 ​ $ 6,328,126 ​ $ 6,015,695 ​ $ 5,669,896 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted after-tax ROIC 55.4 % 52.9 % 41.0 % 35.7 % 35.7 % ​ Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDAR The following table calculates the ratio of adjusted debt to EBITDAR.
The adjusted debt to EBITDAR ratios are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands, except ratio) ​ 2022 2021 2020 2019 (1) 2018 (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,429,604 $ 2,170,314 $ 1,732,972 $ 1,617,221 $ 1,337,536 Add: Impairment before tax ​ — ​ — ​ — ​ — ​ 193,162 Pension termination charges before tax ​ — ​ — ​ — ​ — ​ 130,263 Add: Interest expense ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ 174,527 Income tax expense ​ ​ 649,487 ​ ​ 578,876 ​ ​ 483,542 ​ ​ 414,112 ​ ​ 298,793 EBIT ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ 2,216,137 ​ 2,134,281 Add: Depreciation and amortization expense ​ 442,223 ​ 407,683 ​ 397,466 ​ 369,957 ​ 345,084 Rent expense (1) ​ 373,278 ​ 345,380 ​ 329,783 ​ 332,726 ​ 315,580 Share-based expense ​ 70,612 ​ 56,112 ​ 44,835 ​ 43,255 ​ 43,674 EBITDAR ​ $ 4,156,842 ​ $ 3,753,702 ​ $ 3,189,763 ​ $ 2,962,075 ​ $ 2,838,619 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ $ 6,122,092 ​ $ 5,269,820 ​ $ 5,513,371 ​ $ 5,206,344 ​ $ 5,005,930 Financing lease liabilities ​ 310,305 ​ 276,054 ​ 223,353 ​ 179,905 ​ 154,303 Add: Rent x 6 (3)(7) ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 ​ 1,996,358 ​ 1,893,480 Adjusted debt ​ $ 8,672,065 ​ $ 7,618,154 ​ $ 7,715,420 ​ $ 7,382,607 ​ $ 7,053,713 Adjusted debt to EBITDAR ​ 2.1 ​ 2.0 ​ 2.4 ​ 2.5 ​ 2.5 ​ ​ 37 Table of Contents (1) The fiscal year ended August 31, 2019 consisted of 53 weeks.
The adjusted debt to EBITDAR ratios are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended August (in thousands, except ratio) ​ 2023 2022 2021 2020 2019 (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972 $ 1,617,221 Add: Interest expense ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 Income tax expense ​ ​ 639,188 ​ ​ 649,487 ​ ​ 578,876 ​ ​ 483,542 ​ ​ 414,112 EBIT ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ 2,216,137 Add: Depreciation and amortization expense ​ 497,577 ​ 442,223 ​ 407,683 ​ 397,466 ​ 369,957 Rent expense (2) ​ 406,398 ​ 373,278 ​ 345,380 ​ 329,783 ​ 332,726 Share-based expense ​ 93,087 ​ 70,612 ​ 56,112 ​ 44,835 ​ 43,255 EBITDAR ​ $ 4,471,048 ​ $ 4,156,842 ​ $ 3,753,702 ​ $ 3,189,763 ​ $ 2,962,075 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ $ 7,668,549 ​ $ 6,122,092 ​ $ 5,269,820 ​ $ 5,513,371 ​ $ 5,206,344 Financing lease liabilities ​ 287,618 ​ 310,305 ​ 276,054 ​ 223,353 ​ 179,905 Add: Rent x 6 (2)(6) ​ 2,438,388 ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 ​ 1,996,358 Adjusted debt ​ $ 10,394,555 ​ $ 8,672,065 ​ $ 7,618,154 ​ $ 7,715,420 ​ $ 7,382,607 Adjusted debt to EBITDAR ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ 2.5 ​ ​ 38 Table of Contents (1) The fiscal year ended August 31, 2019 consisted of 53 weeks.
As of August 27, 2022, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.
As of August 26, 2023, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.
See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations. (10) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense.
(10) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense.
(6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset (“ROU asset”) and a corresponding lease liability on the balance sheet. (7) 26 IMC branches were sold on April 4, 2018.
(6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset (“ROU asset”) and a corresponding lease liability on the balance sheet. (7) Inclusive of excise tax of $23.7 million for the year ended August 26, 2023.
The Revolving Credit Agreement will terminate, and all amounts borrowed will be due and payable, on November 15, 2026, but we may make up to two requests to extend the termination date for an additional period of one year each.
On November 15, 2022, we amended the Revolving Credit Agreement, extending the termination date by one year. As amended, the Revolving Credit Agreement will terminate, and all amounts borrowed will be due and payable, on November 15, 2027, but we may make one additional request to extend the termination date for an additional period of one year .
During fiscal 2023, we expect to increase the investment in our business as compared to fiscal 2022. Our investments are expected to be directed primarily to our supply chain initiatives, which includes expanded hub and mega hubs, as well as distribution center expansions and new stores.
We did not have any commercial paper or short-term borrowing activity during fiscal 2021. During fiscal 2024, we expect to increase the investment in our business as compared to fiscal 2023. Our investments are expected to be directed primarily to our supply chain initiatives, which includes expanded hub and mega hubs, as well as distribution center expansions and new stores.
For instance, a 10% change in our self-insurance liability would have affected net income by approximately $18.2 million for fiscal 2022.
A 10% change in our self-insurance liability would have affected net income by approximately $19.3 million for fiscal 2023.
We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $56.0 million, $63.7 million and $90.9 million in fiscal 2022, 2021 and 2020, respectively.
We had net new store openings of 197, 176 and 218 for fiscal 2023, 2022 and 2021, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $66.9 million, $56.0 million and $63.7 million in fiscal 2023, 2022 and 2021, respectively.
(2) For fiscal 2018, after-tax operating profit was adjusted for impairment charges and pension settlement charges. (3) Effective September 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), the new lease accounting standard that required the Company to recognize operating lease assets and liabilities in the balance sheet.
(2) Effective September 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), the new lease accounting standard that required the Company to recognize operating lease assets and liabilities in the balance sheet.
On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the “2022 Shelf Registration Statement”).
On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the “2022 Shelf Registration Statement”).
This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents.
This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 26, 2023 was 6.3:1.
Stock Repurchases During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the “Board”). On March 23, 2021, the Board voted to increase the repurchase authorization from $24.7 to $26.2 billion.
Stock Repurchases During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the “Board”).
Since the beginning of the fiscal year and through July 2022 (latest publicly available information), miles driven in the U.S. increased by 4.6% compared to the same period in the prior year.
Since the beginning of the fiscal year and through July 2023 miles driven in the U.S. increased by 1.3% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.
Revolving borrowings under the Revolving Credit Agreement may be base rate loans, Eurodollar loans, or a combination of both, at our election. The Revolving Credit Agreement includes (i) a $75 million sublimit for swingline loans, (ii) a $50 million individual issuer letter of credit sublimit and (iii) a $250 million aggregate sublimit for all letters of credit.
The Revolving Credit Agreement includes (i) a $75 million sublimit for swingline loans, (ii) a $50 million individual issuer letter of credit sublimit and (iii) a $250 million aggregate sublimit for all letters of credit.
For the fiscal year ended August 27, 2022, cash flow before share repurchases and changes in debt was $2.6 billion as compared to $3.0 billion during the comparable prior year period.
Cash flow before share repurchases and changes in debt was $2.2 billion, $2.6 billion and $3.0 billion for the fiscal year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively.
On March 30, 2020, we issued $500 million in 3.625% Senior Notes due April 2025 and $750 million in 4.000% Senior Notes due April 2030 under the 2019 Shelf Registration Statement. Proceeds from the debt issuance were used to repay a portion of the outstanding commercial paper borrowings and for other general corporate purposes.
On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used to repay a portion of the Company’s outstanding commercial paper borrowings and for other general corporate purposes.
As of August 27, 2022, we had $23.6 million in letters of credit outstanding under the letter of credit facility. In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $105.1 million in letters of credit outstanding as of August 27, 2022.
As of August 26, 2023, we had $25 million in letters of credit outstanding under the letter of credit facility. In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $107.2 million in letters of credit outstanding as of August 26, 2023.
Our consolidated interest coverage ratio as of August 27, 2022 was 7.4:1. 32 Table of Contents We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our behalf up to an aggregate amount of $25 million.
We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our behalf up to an aggregate amount of $25 million.
Additionally, to the extent we prevail in matters for which a liability has been established, or must pay in excess of recognized reserves, our effective tax rate in any particular period could be affected. ​ Vendor Allowances We receive various payments and allowances from our vendors through a variety of programs and arrangements, including allowances for warranties, advertising and general promotion of vendor products.
Additionally, to the extent we prevail in matters for which a liability has been established, or must pay in excess of recognized reserves, our effective tax rate in any particular period could be affected.
We do not derive revenue from automotive repair or installation services. Executive Summary For fiscal 2022, we achieved record net income of $2.4 billion, an 11.9% increase over the prior year, and sales growth of $1.6 billion, an 11.1% increase over the prior year. Domestic commercial sales increased 26.5%, which represents 28.8% of our domestic auto parts sales.
We do not derive revenue from automotive repair or installation services. Executive Summary For fiscal 2023, we achieved record net income of $2.5 billion, a 4.1% increase over the prior year, and sales growth of $1.2 billion, a 7.4% increase over the prior year.
At August 27, 2022, in 5,342 of our domestic stores, we also had a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. We also have commercial programs in all stores in Mexico and Brazil.
At August 26, 2023, in 5,682 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts.
The effective tax rate during fiscal 2018 was 24.2% for impairment, 28.1% for pension termination and 26.2% for interest and rent expense. (5) For fiscal 2019 and fiscal 2018 after-tax operating profit was adjusted for the impact of the revaluation of deferred tax liabilities, net of repatriation tax. (6) All averages are computed based on trailing five quarters.
(4) For fiscal 2019 after-tax operating profit was adjusted for the impact of the revaluation of deferred tax liabilities, net of repatriation tax. (5) All averages are computed based on trailing five quarters.
All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis.
Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs.
The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road. 26 Table of Contents ​ Miles Driven We believe as the number of miles driven increases, consumers’ vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items.
The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road.
Our experience is that at this point in a vehicle’s life, most vehicles are not covered by warranties and increased maintenance is needed to keep the vehicle operating.
Department of Transportation – Federal Highway Administration, vehicles are driven an average of approximately 13,500 miles each year. In seven years, the average miles driven equates to approximately 94,500 miles. Our experience is that at this point in a vehicle’s life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating.
For fiscal 2018, net income was adjusted for impairment charges and pension termination charges before tax impact. See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
For fiscal 2019, after-tax operating profit was adjusted for the impact of the average revaluation of deferred tax liabilities, net of repatriation tax. See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Subsequent to August 27, 2022 and through October 17, 2022, we have repurchased 203,856 shares of common stock at an aggregate cost of $442.6 million.
Subsequent to August 26, 2023 and through October 16, 2023, we have repurchased 200,303 shares of common stock at an aggregate cost of $512.4 million.
The increase in capital expenditures from fiscal 2021 to fiscal 2022 was primarily driven by our growth initiatives, including hub and mega hub expansion projects and new stores. We had net new store openings of 176, 218 and 138 for fiscal 2022, 2021 and 2020, respectively.
We invested $796.7 million, $672.4 million and $621.8 million in capital assets in fiscal 2023, 2022 and 2021, respectively. The increase in capital expenditures from fiscal 2022 to fiscal 2023 was primarily driven by our growth initiatives, including new stores, hub and mega hub expansion initiatives and supply chain projects.
The increase in net cash used in investing activities in fiscal 2022 was primarily due to an increase in capital expenditures. We invested $672.4 million, $621.8 million and $457.7 million in capital assets in fiscal 2022, 2021 and 2020, respectively.
Our net cash flows used in investing activities were $876.2 million, $648.1 million and $601.8 million in fiscal 2023, 2022 and 2021, respectively. The increase in net cash used in investing activities in fiscal 2023 was primarily due to an increase in capital expenditures.
As of August 27, 2022, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.
Interest is paid on a semi-annual basis. 34 Table of Contents As of August 26, 2023, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.
Our senior management has identified the critical accounting policies for the areas that are materially impacted by estimates and assumptions and have discussed such policies with the Audit Committee of our Board.
Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions while income taxes and valuation allowances have been identified as critical accounting policies. These policies have been discussed with the Audit Committee of our Board.
During the year ended August 27, 2022, we repaid our $500 million 3.700% Senior Notes due April 2022 and issued $750 million of new debt compared to none in 2021 and $1.850 billion in 2020. In fiscal years 2022 and 2020 the proceeds from the issuance of debt were used for general corporate purposes.
During the year ended August 26, 2023, we repaid our $300 million 2.875% Senior Notes due January 2023 and our $500 million 3.125% Senior Notes due July 2023 and issued $1.8 billion of new debt compared to $750 million in 2022 and none in 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSuch fair value is less than the carrying value of debt by $182.8 million and greater than the carrying value of debt by $413.1 million at August 27, 2022 and August 28, 2021, respectively, which reflects its face amount, adjusted for any unamortized debt issuance costs and discounts.
Biggest changeSuch fair value is less than the carrying value of debt by $406.6 million and $182.8 million at August 26, 2023 and August 27, 2022, respectively, which reflects its face amount, adjusted for any unamortized debt issuance costs and discounts. We had $1.2 billion in variable rate debt outstanding at August 26, 2023 and $603.4 million in August 27, 2022.
Our interest rate hedge instruments are designated as cash flow hedges. As of August 27, 2022 and August 28, 2021, no such interest rate swaps were outstanding. Unrealized gains and losses on interest rate hedges are deferred in stockholders’ deficit as a component of Accumulated Other Comprehensive Loss.
Our interest rate hedge instruments are designated as cash flow hedges. As of August 26, 2023 and August 27, 2022, no such interest rate swaps were outstanding. Unrealized gains and losses on interest rate hedges are deferred in stockholders’ deficit as a component of Accumulated Other Comprehensive Loss.
The fair value of our debt was estimated at $5.9 billion as of August 27, 2022, and $5.7 billion as of August 28, 2021, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities.
The fair value of our debt was estimated at $7.3 billion as of August 26, 2023, and $5.9 billion as of August 27, 2022, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities.
A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $230.5 million at August 27, 2022. Foreign Currency Risk Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities’ functional currencies.
A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $264.7 million at August 26, 2023. Foreign Currency Risk Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities’ functional currencies.
The year-end exchange rates with respect to the Mexican peso decreased less than 1.0% with respect to the U.S. dollar during fiscal 2022 and increased by approximately 10% with respect to the U.S. dollar during fiscal 2021.
The year-end exchange rates with respect to the Mexican peso increased by 15.7% with respect to the U.S. dollar during fiscal 2023 and decreased by less than 1.0% with respect to the U.S. dollar during fiscal 2022.
The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 27, 2022 and August 28, 2021, would have been approximately $24.6 million and approximately $28.2 million, respectively.
The potential loss in value 41 Table of Contents of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 26, 2023 and August 27, 2022, would have been approximately $37.3 million and approximately $24.6 million, respectively.
The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end 40 Table of Contents exchange rates was $270.2 million at August 27, 2022 and $310.1 million at August 28, 2021.
The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $409.8 million at August 26, 2023 and $270.2 million at August 27, 2022.
We had $603.4 million in variable rate debt outstanding at August 27, 2022 and none in August 28, 2021. We had outstanding fixed rate debt of $5.5 billion, net of unamortized debt issuance costs of $31.3 million, at August 27, 2022, and $5.3 billion, net of unamortized debt issuance costs of $30.2 million, at August 28, 2021.
We had outstanding fixed rate debt of $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023, and $5.5 billion, net of unamortized debt issuance costs of $31.3 million, at August 27, 2022.
A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations. ​ 41 Table of Contents Item 8. Financial Statements and Supplementary Data Index TABLE OF CONTENTS Error! Bookmark not defined. PART I Error! Bookmark not defined. Item 1. Business Error! Bookmark not defined. Introduction Error! Bookmark not defined.
A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations. ​ 42 Table of Contents
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Human Capital Resources Error! Bookmark not defined. Store Operations Error! Bookmark not defined. Store Formats Error! Bookmark not defined. We believe our stores are “destination stores,” generating their own traffic rather than relying on traffic created by adjacent stores. Therefore, we situate most stores on major thoroughfares with easy access and good parking. Error! Bookmark not defined.
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Store Personnel and Training Error! Bookmark not defined. Store Support Centers Error! Bookmark not defined. All store support functions are centralized in our store support centers located in Memphis, Tennessee; Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil.
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We believe that this centralization enhances consistent execution of our merchandising and marketing strategies at the store level, while reducing expenses and cost of sales. Error! Bookmark not defined. Store Automation Error! Bookmark not defined. Commercial Error! Bookmark not defined. Store Development Error! Bookmark not defined. Marketing and Merchandising Strategy Error! Bookmark not defined. Customer Service Error! Bookmark not defined.
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Information about our Executive Officers Error! Bookmark not defined. William C. Rhodes, III, 57—Chairman, President and Chief Executive Officer, Customer Satisfaction ‌ Error! Bookmark not defined. Preston B. Frazer, 46—Executive Vice President – Store Operations, Commercial and Loss Prevention, Customer Satisfaction Error! Bookmark not defined. Thomas B. Newbern, 60—Executive Vice President – International, Information Technology and ALLDATA, Customer Satisfaction Error!
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Bookmark not defined. Domingo J. Hurtado, 61—Senior Vice President – International, Customer Satisfaction ‌ Error! Bookmark not defined. Kristen C. Wright, 46—Senior Vice President – General Counsel & Secretary, Customer Satisfaction Error! Bookmark not defined. Item 1B. Unresolved Staff Comments Error! Bookmark not defined. Item 2. Properties Error! Bookmark not defined. Item 3. Legal Proceedings Error! Bookmark not defined.
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Item 4. Mine Safety Disclosures Error! Bookmark not defined. PART II ‌ 24 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ‌ 24 Stock Performance Graph ‌ 25 Item 6. Reserved Error! Bookmark not defined. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ‌ Error!
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Bookmark not defined. Executive Summary Error! Bookmark not defined. For fiscal 2022, we achieved record net income of $2.4 billion, an 11.9% increase over the prior year, and sales growth of $1.6 billion, an 11.1% increase over the prior year. Domestic commercial sales increased 26.5%, which represents 28.8% of our domestic auto parts sales.
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Both our retail sales and commercial sales grew this past year as we made progress on our initiatives aimed at improving our ability to say “Yes” to our customers more frequently and accelerating our commercial growth. Error! Bookmark not defined.
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Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, fuel costs, wage rates, supply chain disruptions, hiring and other economic conditions.
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Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future. ‌ Error! Bookmark not defined. Miles Driven Error! Bookmark not defined. Seven Year Old or Older Vehicles Error! Bookmark not defined. Results of Operations Error!
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(1) The fiscal year ended August 31, 2019 consisted of 53 weeks. Error! Bookmark not defined. Recent Accounting Pronouncements Error! Bookmark not defined. Critical Accounting Policies and Estimates Error! Bookmark not defined. Self-Insurance Reserves Error! Bookmark not defined. Income Taxes Error! Bookmark not defined. Vendor Allowances Error! Bookmark not defined. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Error!
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Other AZO 10-K year-over-year comparisons