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Autozone

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AutoZone
Case Study Analysis

Executive Summary:
A case brief on AutoZone,Inc is being presented in this article. The paper briefly discusses the history and progress strategy of the company so far. The main idea of the paper is the dilemma faced by a portfolio manager- Mark Johnson- and the wise decision he could make in order to safeguard his client’s portfolio. The paper examines the current position of AutoZone in the market and its growth potential which would help Johnson in making his decision.
At the closure of the paper, recommendations are being presented not only to the portfolio manager but also to the AutoZone. Interestingly, how much of an impact can an interference of a corporate raider have on the growth of a company …show more content…

In the short-run share repurchases might look good in order to increase the share price in the market and increasing the Earnings Per Share of the stock. Even though the act of share repurchases might be an elusive move, no doubt that it is a sophisticated move as well. Most of the time management is well aware of its decisions and makes judgments in the best interest of the shareholders. But, AutoZone was pushing its luck by accumulating debt and somehow seemed like the management wasn’t concerned about the credit rating of the company.
Another alternative would be to use the cash to increase number of stores or expansion of its business in Brazil. There is always a first mover advantage that AutoZone could capture in the Brazil market. AutoZone had already captured the market in Mexico, Canada and Puerto Rico.Yet again, autoparts industry seems to have slowed down its number of store in the last year but the distance travelled by light trucks has remained the same while the average age of these vehicles has increased (Appendix - Figure 4 & 5). This means that these vehicles require maintenance in the long run. Also, AutoZone could be the first to capture new markets.
Conventionally, AutoZone could also utilize its cash flow in acquisition transaction. Although, acquiring a budding or established counterpart might increase the cash flow of the firm, additional legal formalities

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