AutoZone Perseveres in Recession Climate

(MoneyWatch)  Anyone hankering for a positive retail story in this economy need look no further than AutoZone. The Memphis, Tenn.-based auto-parts chain turned in a great financial quarter and is actually opening stores, while most retailers' sales are abysmal and store closings are rampant.

More consumers are holding on to their cars longer, leading to the need for regular maintenance, and gas prices are cheaper, so people are more willing to drive farther than they they were when pump prices soared. "Our business may be benefiting from the general slowdown in the economy," CEO Bill Rhodes said during Autozone's second-quarter conference call earlier this week.

I'd call that an understatement.

The retailer's sales during the quarter ended Feb. 14 rose 8.1 percent, to $1.4 billion, while net income hit $115.9 million, an 8.6 percent gain. Same-store sales, or revenue at locations open at least a year, increased 6 percent. Management plans to open 28 new stores during its current quarter and opened 19 in the immediately preceding period, bringing its total U.S. store count to 4,141. More will follow.

"We continue to see ample opportunity to opening stores in the US," said William Giles, AutoZone's chief financial officer. "We believe opening stores during this more difficult economic time can be beneficial over the long term."

But that benefit to them is probably not much of a comfort right now to landlords trying to make money off of rents. And probably more importantly, the success of AutoZone is directly correlating with the downfall of the industry from which it takes its name.