AutoZone Inc (NYSE:AZO) shares have descended into the red after the auto parts and accessories retailer reported an increase in third quarter earnings that missed analysts’ expectations.
Shares tanked in New York 10.56% to $589.09 each.
The company reported third quarter net income of US$33.7mln, or US$11.44 per share, compared to US$327.5mln, or US$10.77 per share a year ago. Analysts had expected earnings per share of US$11.99.
Revenue rose to US$2.62bn from US$2.59bn but also fell short of market forecasts of US$2.71bn. Domestic same store sales fell 0.8%, below estimates for a 2.7% increase. AutoZone blamed a delay in tax refunds for the unexpected drop in sales.
“Our sales performance for the first five weeks of our quarter was significantly below our expectations, challenged by the well-publicized timing delays in IRS tax refunds,” said chairman Bill Rhodes.
“The last seven weeks of sales demonstrated improvement, but not enough to make up for our soft start.”
The US Internal Revenue Service is scrutinising tax returns that claim earned income tax credit or additional-child tax credits more carefully following a law that passed in 2015 and comes into effect this year.
Low-to middle-income households have to wait longer for tax refunds under the new law, meaning they are delaying purchases.