AutoZone Inc. Group 26

Dylan Hudson, Aaron Johnson, Nathan Katzaman, Caroline Miller, Hongping Song


New Mission

At AutoZone, our mission is to provide our customers quality automotive parts and accessories at reasonable prices backed with outstanding customer service from our knowledgeable staff operating globally. We use the latest technology so our customers can easily search for our products on the web and in stores. AutoZoners always put customers first, cares about people and strive for exceptional service.

New Vision

AutoZone's vision is to be the most well-known retail auto parts store in the world, offering outstanding customer service, the best merchandise at unequaled prices and an exceptional in-store experience.

Internal Assessment


  • Largest market share in after market auto parts sales at 16.6%
  • 3 private label brands: Valuecraft, Duralast, and Duralast Gold
  • Significant Cash Flows, $1.57 billion from operating activities in 2016


  • Current liabilities of $4.69 billion and long-term debt of $4.924 billion and increasing
  • Same store revenues have gone flat for Q1-Q2 2017, 33 new store openings and only 1% increase in revenue
  • Debt to equity at -5.81 at YE 2016

External Assessment


  • International markets should be a major growth driver going forward
  • 3% forecast industry growth for 2017-2022
  • Average age of car on U.S. roads increased from 11 in 2010 to 11.5 in 2015
  • President Trump pledged to lower corporate tax rates from max 35% to 20%


  • Auto parts store industry is currently in a period of long-term stagnation
  • Price-sensitive customers will turn to online retailers to get the best prices
  • Intense competition can potentially impact sales and profits
  • Looming prospect of a 20% Trump tariff on products arriving from Mexico

SWOT Matrix

SO Strategies

  • Slow down new store expansion, and budget more of net income from cash flows to pay expenses and long-term debt
  • Advertising campaign for popular part brands Valucraft and Duralast to increase revenue and foot traffic in stores

WO Strategies

  • Cut down the stock repurchase plan free hundreds of millions in cash flows, and use to increase payments of long-term debt and fund a slower expansion
  • Pay off long-term debt with additional profits from impending corporate tax rate cut

ST Strategies

  • Open new store locations domestically and in expand into Canada
  • Advertise for AutoZone's online ordering and in store pick-up to stay ahead of other online auto parts vendors

WT Strategies

  • Curb some cash outflows and utilize that cash to advertise for AutoAnything and
  • Improve efficiency in which inventory is shipped to stores to lower overall costs

Recommended Strategy

Slow domestic expansion and expand internationally into Canada, increase debt payoff, and increase advertising for online and store components

Expand in Canada, slow U.S. Expansion

  • Open 50 stores per year in Canada from 2017-2019
  • Canadian consumer debt has led to older cars becoming more prevalent on the road, which increases demand for auto parts, and harsh weather provides more part failures
  • Slow U.S. expansion from nearly 200 stores per year to 50 per year for 2017-2019
  • Auto parts market in the U.S. is expanding slower than top companies are building new stores

Slow Stock Buyback

  • Has tied up significant amounts of cash flows to artificially increase EPS
  • In 2016 $1.452 billion in financing outflows from buyback program
  • Only buy back $250 million of shares per year for 2017-2019

Increase pay off of long-term debt

  • Y/E 2016 LTD stood at $4.9 billion and increasing
  • Use cash flows now free from slowing the stock buyback to increase the pay off of long-term debt from $500 million per year to $1.25 billion per year for 2017-2019
  • Should result in a large decrease in LTD and decrease stockholder's deficit eventually turning it back into stockholder's equity through the course of 2017-2019

Increase advertising for online and in store components

  • Increase advertising from $97 million a year in 2016 to $150 million per year for 2017-2019
  • Specific ads relaying advantages of in-store visits and shopping with,, and
  • Will keep AutoZone's brand and mission at the forefront of the industry for consumers

Projected Financial Statements

Financial Statements with strategy

  • Increase revenues from advertising campaign and international expanison
  • Additional $50 million per year in advertising expense
  • Improved NPM , ROA, and ROE by 2019 with strategy vs. without
Thank You!
Created By
Nathan Katzaman

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