eshell's Comments

Americans Will Prove to Be Formidable Do-It-Yourself Mechanics

Thu, 10 Jul 2008 12:35:43 -0400

Didn't the new found demand come from the "agreement"? The fact that the agreement forces the management to buy back its own stock at a time mit does not have the money to do so and at a time that the CEO's own account is dumping azo shares is not a sign that the price is supported by public view that the business is going strong and thus massive retail investors buy orders coming in. Using the balance sheet to buy bak is nothing more than forcing the bond holders to buy some of your shares.
I have a better idea, why don't all the hedges buy some of the large ticket items and let them sit on the hedge funds balance sheet for 9 months. By the time the call options make money, you can return the copies of ALL-DATA CD's (unopened) back to AZO. You are happy, they are happy. Employees get focked just like the sears employees are getting now.

Americans Will Prove to Be Formidable Do-It-Yourself Mechanics

Thu, 10 Jul 2008 11:49:21 -0400

The money saved from not buying a new car should be morenthan enough to repair the current car in a shop. So this argument about notbuying a new one brings business to azo is false. The real potential comes from those that normally brings to shop and now are doing it themselves. The main problem in this total picture is the aggregate reduction of miles driven by >7 yr cars.
Following the logic of the auther, one would expect cooper tire to go up as more people would opt for the lower end tire rather than the name brands. Although this is happening, the total ware and tear on the tires are way down. Thus, a sightly larger share of a swiftly shinking pie is not too helpful. Check CTB for yourself. You may see a short term boost of people putting on break pads to their existing cars. But, by not driving them as much as before, these new oes will last a long LONG time. Think about it: at a time 1 tank gas will cost you the change of a pair of breaks, what do you do? You do the breaks yourself and keep driving, or you cut down on driving? When you do it, I do it, she does it, what happens to the tire ware? By inference, what happens to other parts on car?

AutoZone Earnings: Is It Time To Be Bullish in Automotive?

Thu, 22 May 2008 15:15:39 -0400

I hope there are real statisticians reading this blog and have access to better data than the CEO gave at the CC. I find that miles&7yr stats not satisfactory. Historically, miles and number of 7 yr cars went in the same direction. Thus the factors to take into account for AZO top line can be as follows:

top line = (F1)x(M1, miles from >=7ners) + (F2)x(M2, miles from <7ners)

where the f1 and f2 are weight multipliers factoring in a. service contract effect, b. degree of difficulty in DIY for newer cars and c. older car owners tend to go more with DIY for pocket book reasons. thus, generally, f1 out weights f2. Within each group, the miles driven is the product of number of cars and the average miles per car. Number of cars is hard data and has been cited by the CEO. Average miles is more subjective and should be fair game for speculation based on the guestimated driving pattern of an imaginary average guy/family.

Now, under the current gas pricing condition, two events are happening (at least). 1. people buy new smaller gas savers (hard data) while gas gussler trading prices are not good. So they hold on to the bigger older cars. 2. miles are down due to gas pricing pressure (hard data). but it is logical to suggest that the pressure on older car owners to be much greater than that on newer car owners. As a result, the combined effect would be a less drop in the miles for M2 but more likely drop for m1 as average miles/car is likely down more in that group.

It is interesting that the CEO chose to hedge the number of >7ners having an increase against the number of miles down and called it a wash. In reality the two may infact be compounding. Let me cite another piece of data to my point. If people held on to their >7ner cars AND kept the milage down, what is the immediate result? You will have a TRUE drop in their tire ware. Go check out CTB, that is a proxy for the >7yr car tire usage. Newer cars (owners) will likely use name brands or are on their original sets.

Lets push the logic to the extreme, lets say gas price were to go up :-) and more people choose car pooling. Miles driven will be down. But which car would your drive for car pooling? the newer safer gas saver, that is my bet. You will still keep your SUV, having saved on gas during the week days, to drive your kids to socker on weekends. So what will the CEO say then? "Miles are down, but off set by much higher number of greater than 7 year cars registered". And that translate to more AZO dollars to buy back.

The mixture of vinage of cars in registration equals the mixtures on the roads? that is my statistical question, I guess.

disclosure: long 10 mill shares of TOL