William C. Rhodes
Chairman, President and Chief Executive Officer, Customer Satisfaction at AutoZone
Good morning, and thank you for joining us today for AutoZone's 2022 Third Quarter Conference Call. With me today are Jamere Jackson, Executive Vice President and Chief Financial Officer; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax.
Regarding the third quarter, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, are available on our website, www.autozone.com under the Investor Relations link. Please click on quarterly earnings conference calls to see them.
As we begin, we want to continue to stress that our highest priority remains the safety and well-being of our customers and AutoZoners. Everyone, everyone across the organization continues to take this responsibility seriously and I'm very proud of how our team continues to respond to COVID-19 and subsequent variants. While mass mandates have abated, we continue to make sure the environment our AutoZoners are working in and our customers are shopping in are as safe as possible for these times.
Since the start of the pandemic, we have consistently recognized our AutoZoners in our stores and distribution centers, especially for giving exceptional service in the face of all the challenges COVID-19 has meant for all of us. This quarter, we will start the same by, again, thanking our AutoZoners for their dedication to providing exceptional customer service, while helping our customers with their automotive needs.
This morning, we will review our overall same-store sales, DIY versus DIFM trends, our sales cadence over the 12 weeks of the quarter, merchandise categories that drove our performance and any regional discrepancies. We will also share how inflation is affecting our costs and retails, and how we think they will impact our business for the remainder of the fiscal year. Our domestic same-store sales were a solid 2.6% this quarter, on top of last year's very strong 28.9%. On both a 2-year and 3-year stack comp sales basis, our trends accelerated. Our team, once again, executed at an exceptionally high level and delivered amazing results despite the difficult comparisons. Our growth rates for retail and commercial were both strong, with domestic commercial growth north of 26%.
Commercial set a third quarter record with $1.044 billion in sales, an incredible accomplishment. We generated $216 million more in sales this quarter than in Q3 of just last year. On a trailing 4-quarter basis, our commercial sales are just under $4 billion versus $3.1 billion a year ago, up 27%. We also set a record in average weekly sales per store for any quarter at $16,600 versus $13,500 last year.
On a 2-year basis, our sales accelerated from last quarter. Domestic commercial sales represented 30% of our domestic auto parts sales, another record for us compared to just 24.8% last year. Our commercial sales growth continues to be driven by a host of key initiatives. We've been working on for the last several years, improved satellite store availability, massive improvements in hub and mega hub coverage, the strength of the Duralast brand, better technology to make us easier to do business with, improve delivery times, enhancing our sales force effectiveness and living consistent with our pledge by being "priced right" for the value proposition we deliver.
We continue to execute very well in commercial, and we are extremely proud of our team and their performance. We're also very proud of our organization's performance in domestic DIY. As a reminder, it was last year's Q3 that had the massive stimulus payments that were distributed to consumers in the U.S. We ran a negative 4.5% comp this quarter on top of last year's record positive comps of 24.8%. While our DIY 2-year comp decelerated slightly from Q2's 2-year DIY comp, perhaps the more relevant comp is the DIY 3-year comp, which did accelerate. We were very proud of our DIY results considering we had such a tough comparison to last year.
From the data we have available to us, we continue to not only retain the enormous share gains in dollars and units we built during the initial stages of the pandemic, but modestly build on those gains. Our performance, considering the amount of time from the last stimulus and the ending of the enhanced unemployment benefits, has substantially exceeded our expectations and gives us continued conviction about the sustainability of the massive elevated sales levels we have experienced since the beginning of the pandemic.
Now let's focus on the sales cadence. Our quarter spans at 12-week period. Our same-store sales increased materially over the first 4 weeks, up 11.8%. Then they were down over the middle 4 weeks by 5.2%. But remember, we were comping against the stimulus payments made during this time last year. And our same-store sales then accelerated over the last 4 weeks, up 3%. All of these year-over-year comparisons are really difficult to interpret us so much is going on last year and even the year before.
For Q3, our 2-year comp was 31.5%, and the 4-week periods for the quarter increased 23.4%, 65.4% and 17%, respectively. But our 3-year comp was 30.5%, and the 4-week periods for the quarter increased 29.7%, 44.7% and 29.8%, respectively. What I want to stress is that our 2-year and 3-year comp accelerated for the quarter from Q2's 2 and 3-year comparison. We are encouraged by the sustainability of these enormous sales gains.
Regarding weather, in February and March, we experienced normal weather trends across the country. April, however, was a little cooler and a little wetter than normal. Overall, we feel weather did not play a material role in our sales performance. As we look forward to the summer months, we anticipate normal weather patterns. As a reminder, historically, extreme weather, hot or cold, drives parts failure and accelerated maintenance. Regarding the quarter's traffic versus ticket growth in retail, our traffic was down roughly 8.5%, while our ticket was up 4%. Our transaction count decline was correlated to last year's Q3 meaningful 16% traffic count increase.
While we had expected a decline in transactions this quarter, we were pleased to exceed our beginning of the quarter assumptions on transaction count declines. We're also quite pleased with the ongoing growth in unit share we are seeing in our market share data. We're very encouraged by the sales trends we continue to experience in commercial. Most of the sales growth is coming from transaction growth from new and existing customers. I've visited our stores and commercial customers extensively this quarter and find it very encouraging to hear the positive comments from our customers and AutoZoners on our comprehensive offerings. The tone of our sales calls has changed meaningfully over the last few years as we continue to implement and execute our commercial acceleration strategy.
As we start our final quarter of the fiscal year, we continue to be pleased with the momentum we are seeing in both domestic businesses heading into the summer months. During the quarter, there were some geographic regions that did better than others as there always are. This quarter, we saw a 54 basis points difference between the Northeast and Midwest compared to the balance of the country, with the Northeast and Midwest performing lower. As the Northeast and Midwest were cooler in weather in April, their sales were below last year's results. We do not believe there will be lasting effects on sales performance in the Northeast and Midwest due to the slightly cooler April weather. Heading into the fourth quarter, we continue to believe weather will have a minimal effect on summer sales.
Now let's move into more specifics on our performance for the quarter. Our same-store sales were up 2.6% versus last year's third quarter. Our net income was $593 million, and our EPS was $29.3 a share, increasing 9.6%. Regarding our merchandise categories in the retail business, our hard parts outperformed our sales floor categories, but there was less than a 1% difference between them. As gas prices jumped recently, our sales results in certain hard parts categories performed below our plan. This is unlike the sales floor categories, which were on plan. We've been especially pleased with our growth rates in many of our categories like batteries that have successfully left very strong performance last year, and easily exceeded our planned assumptions for the quarter. We believe our hard parts business will strengthen as our customers return to driving more.
Let me also address inflation and pricing. This quarter, we saw our sales increase by 7.8% from inflation, in line with the cost of goods inflation, which was up similarly at 7.2% on a like-for-like basis. We believe both numbers for the fourth quarter could be slightly higher than this past quarter's increases. As rising raw material pricing, labor and transportation costs are all impacting us and our suppliers, inflation has been prevalent in the aftermarket space. We have no way to say how long this will last, but our industry has been disciplined about pricing for decades, and we expect that to continue. It is also notable that following periods of higher inflation, our industry has historically not reduced pricing to reflect lower ultimate cost.
While we continue to be encouraged with the current sales environment, it remains difficult for us to forecast near to midterm sales. What I have previously said is that the past 5 quarter sales have all been consistent on both a 2-year stacked comp basis and a 3-year stacked comp basis. While it's difficult to predict absolute sales levels going forward, we are excited about our growth initiatives, our team's exceptional execution and the tremendous share gains we have achieved in both sectors. Currently, the macro environment, while uncertain, remains favorable for our industry. And even if these near-term trends fade, we believe that we are in an industry that is positioned for solid growth over the long term.
For our fourth quarter, we expect our sales performance to be led by the continued strength in our commercial business as we continue executing on our differentiating initiatives. We will, as always, be transparent about what we are seeing, and provide color on our markets and outlook as trends emerge.
Before handing the call over to Jamere, I'd like to make sure the listeners know what our key business priorities are for the remainder of the fiscal year and give some color on those. First, we are focusing on our supply chain. We have 2 initiatives in place to drive improved availability. One is our expanded Hub and Mega-Hub rollouts. We believe intelligently placing more inventory in local markets will lead to our ability to continue to say yes to our customers more frequently, and, in turn, continue to drive our sales performance. Secondly, we are expanding our distribution center footprint. We announced opening 2 new domestic DCs and 1 additional DC in Mexico.
These DCs will allow us to not only reduce drive times to stores and market service by the new DCs, but they, being larger than the previous DCs, will allow us to carry inventory that is slower turning yet in demand across the country. We previously relied on our vendor community to carry these SKUs and shipped them once ordered by our stores. Our DC strategy is focused on carrying more product in our supply chain that was not available previously. These SKUs will smartly expand our stocked inventory across all 50 states. And lastly, we plan on continuing to grow our Mexico business, while accelerating growth in Brazil, and we are leveraging many of the learnings we have in the U.S. to refine our offerings in Mexico and Brazil.
Now I'll turn the call over to Jamere Jackson. Jamere?