AZO
#It's always difficult to really measure with any precision on that.
Clearly the lower gas prices we believe have been helpful.
And they certainly have probably contributed at some level to our comp.
I don't think significantly, but they certainly have been helpful.
So we try to weigh in all the things between gas and tax refunds, et cetera.
From a maintenance perspective, we think that as we ---+ obviously, this has been a longer winter and it's dragging on.
But clearly spring will be here hopefully in the next couple of weeks.
And then we'll get back to our core maintenance categories and things like that and we expect those businesses to perform well.
So we'll have to get a little further down the road to look in the rearview mirror to see exactly what the impacts are of gas and weather, but we expect it to be favorable in the spring.
Yes, <UNK>.
As you know, I guess we launched the first part of the loyalty program nine or 10 years ago.
And then we took it to the digital program probably seven years ago.
This past year ---+ we used to have different programs in different parts of the country; this past year we went to one consolidated nationwide program.
And the program has worked very well since the beginning.
It continues to work well and it's growing, although it's growing at a lower rate just because it's more mature.
Now there have been two of our competitors that have launched the loyalty programs in the last year, but both are different than ours.
So far, we continue to be very happy with our loyalty program and we continue to grow.
We haven't seen material changes in our loyalty acceptance rate versus where we were before.
The way we think about it is that, as <UNK> highlighted in his remarks, we are very proud of the ROIC number that we have and we recognize that it's probably one of the highest in hardline retail.
At the same time, we are very focused on investing in initiatives that we believe will generate very strong returns and, more importantly, will capture market share and grow earnings.
So I think as we look at the model on a longer-term basis that we'll focus on those kinds of initiatives and they may or may not have some pressure on ROIC and bring it down a little bit.
But again, we're focused on growing operating profit dollars, capturing market share, and investing in activities that generate very strong returns.
Yes, could I add to that too.
If we held ourselves to a standard where we wouldn't make investments unless they were at 32% return on invested capital, we wouldn't do a lot of things that would be very important to our business and would, frankly, put ourselves at a competitive disadvantage.
That's why we've held to this long time internal hurdle rate and it's worked very well.
Remember when we implemented the internal hurdle rate, our ROIC was around 20%.
So we've been able to grow it over time by being very disciplined but, at the same time, we can't hold single initiatives to a 30% plus return.
I would say that, first and foremost, biggest short- to medium-term opportunity is just growing the commercial business.
It's a very low capital required to grow that business.
So anything that we can do, enhance our sales force, continue to improve our execution, that is, by far and away, the single biggest way to drive ROIC.
I think most of the other initiatives, based upon our modeling today, would be slightly dilutive to return on invested capital, but they have very good returns and they're going to accelerate the growth of the operating profit dollars, which is one of our objectives.
First of all, I think, to some extent, gas is probably a more longer-term one.
Obviously we're going to get some increases in gas prices, but on a relative basis, they would be well below last year and I suspect that they will continue to be so for at least the immediate future.
Relative to tax refunds, you're right, as we called out, we think maybe that was 100 basis points of impact on Q2.
We'll have a better feel for that as we move our way through Q3.
And then excluding that, I think that the way we look at it is that that really is the underlying core trends of the business.
I don't think that we see anything necessarily structurally changing in the business.
If you look at the competitive landscape from a pricing promotional activity, even from a capital investment perspective, it continues to be pretty consistent and rational industry overall.
And you were right, we have not been the beneficiary of inflation over the last almost, at this point, I'd say 18 plus months, maybe pushing 24 months, and it doesn't appear as though there's a lot of inflation in the horizon either.
There's a couple of categories here and there that have some inflation, but for the most part, we've been generating these sales out of a no-inflation kind of environment.
So it really is the strength of the customer, the strength of our offering that is really driving that.
I think it's still yet to be determined.
We just went over and implemented 300 stores.
Obviously, that's the biggest thing that we've done at this point in time.
We did it over about three weeks and so far it's gone pretty well.
But there has to be a tremendous amount of efforts in the distribution centers to ramp up for that increase of activity, both inside the warehouse and the transportation team.
So we'll learn from this newest rollout and we'll plan for future ones.
But, more importantly, now we've got about 500 stores on the program and we are hopeful that we can quickly confirm our expectations today.
Won't alter our philosophy at all.
We believe that it is a great way to add value back to the shareholders and return capital back to the shareholders through the share repurchase program.
We've been very disciplined about it.
We operate at a very defined credit metric and we'll continue to do so.
A different group.
It's under 10.
Yes.
We've been doing this for six or seven weeks so far, <UNK>.
And we did a lot of work around systems piece, but even now, at this point in time, we're muscling it.
We're just trying to get a sense for it.
So far we've been really encouraged.
That's about right, yes.
I would say probably about that.
We're certainly going to be right around about a $500 million number or so I think on an annualized basis.
So it will be a little bit of a step-up but not significantly.
I think the latter.
I think hopefully we were somewhat consistent two or three quarters ago when we began to add more inventory and we tried to call out that will put a little bit of pressure on AP to inventory when you fast-forward three or four quarters and here we are.
So it was certainly down this quarter.
We don't anticipate it going down further necessarily for the next two quarters.
But we expect it to hang around that kind of number.
Thank you.
I think we said that it was probably around 15 basis points.
I would say all three of those categories that we identified accounted for about 45 basis points.
Are you talking about the most recent cold snap.
So about half of that was in our results.
Remember the cold snaps, as you get later in the winter, the cold snaps are more of a headwind than they are a benefit.
Early in the season, it spurs activity of people trying to get their vehicles ready for the winter.
Once that happens late in the winter most of the parts that are going to fail have already failed and, frankly, customers have winter fatigue and they're not doing things getting ready for the winter, so they are generally not beneficial later in the year or later in the season as they are.
Great.
Before we conclude the call, I'd like to take a moment to reiterate that we have a long and strong heritage of consistent impressive performance.
While we are excited about our growth prospects for the year, we will not take anything for granted as we understand our customers have choices.
We have a solid plan to succeed this fiscal year.
But I want to stress this is a marathon and not a sprint.
As we continue to focus on the basics and focus on optimizing long-term shareholder value, we are confident AutoZone will continue to be very successful.
Thank you for participating in today's call.
