Author Topic: AZO - Autozone  (Read 29678 times)

kab60

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Re: AZO - Autozone
« Reply #80 on: May 21, 2019, 10:18:45 AM »
Yep, fascinating really. Who would've thought something as boring as an auto parts retailer coupled with near perfect capital allocation could be such a huge winner. I excited back in December for something that seemed more attractive but this is probably something I should've just held onto.


Okonomen

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Re: AZO - Autozone
« Reply #81 on: September 12, 2019, 07:41:36 AM »
Anyone with an opinion on LIFO vs FIFO accounting? In general I prefer the latter. AZO uses LIFO and weighted averages.

"Merchandise inventories are stated at the lower of cost or market. Merchandise inventories include related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out (“LIFO”) method for domestic inventories and the weighted average cost method for Mexico and Brazil inventories. Due to price deflation on the Company’s merchandise purchases, the Company has exhausted its LIFO reserve balance. The Company’s policy is not to write up inventory in excess of replacement cost, which is based on average cost. The difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases, was $431.1 million at May 4, 2019 and $452.4 million at August 25, 2018."

frank87

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Re: AZO - Autozone
« Reply #82 on: September 12, 2019, 12:49:18 PM »
Anyone with an opinion on LIFO vs FIFO accounting? In general I prefer the latter. AZO uses LIFO and weighted averages.

"Merchandise inventories are stated at the lower of cost or market. Merchandise inventories include related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out (“LIFO”) method for domestic inventories and the weighted average cost method for Mexico and Brazil inventories. Due to price deflation on the Company’s merchandise purchases, the Company has exhausted its LIFO reserve balance. The Company’s policy is not to write up inventory in excess of replacement cost, which is based on average cost. The difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases, was $431.1 million at May 4, 2019 and $452.4 million at August 25, 2018."

LIFO generally provides the most up to date information on cost "latest inventory cost goes into cost of goods sold" and in an inflationary environment (which is usually the case), is the more conservative method. Of course, it also allows a company to dip more into a LIFO reserve during a period of declining costs.

Okonomen

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Re: AZO - Autozone
« Reply #83 on: September 12, 2019, 01:20:03 PM »
Anyone with an opinion on LIFO vs FIFO accounting? In general I prefer the latter. AZO uses LIFO and weighted averages.

"Merchandise inventories are stated at the lower of cost or market. Merchandise inventories include related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out (“LIFO”) method for domestic inventories and the weighted average cost method for Mexico and Brazil inventories. Due to price deflation on the Company’s merchandise purchases, the Company has exhausted its LIFO reserve balance. The Company’s policy is not to write up inventory in excess of replacement cost, which is based on average cost. The difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases, was $431.1 million at May 4, 2019 and $452.4 million at August 25, 2018."

LIFO generally provides the most up to date information on cost "latest inventory cost goes into cost of goods sold" and in an inflationary environment (which is usually the case), is the more conservative method. Of course, it also allows a company to dip more into a LIFO reserve during a period of declining costs.

I just prefer FIFO for retailers as it minimizes the risk of stock becoming obsolete

Okonomen

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Re: AZO - Autozone
« Reply #84 on: February 06, 2020, 02:53:12 AM »
Trying to find the gross margins for their commercial sales. Anyone got the numbers?

Commercial grew to 22% of total company sales in 2019. Company GM was 53,9% - up from the prior year, but I still think commercial sales have lower GM's than DIY sales, so maybe the GM improvement was more a result of product mix shift within DIY