Capital Allocation: Principles, Strategies, and Processes for Creating Long-Term Shareholder Value

CHAPTER 10

AutoZone: The Power of Intelligent Share Repurchase

AutoZone serves as a prime example of how a sound strategy and an intelligent stock repurchase plan created enormous value for long-term shareholders.

If one examines AutoZone’s sales from 1999–2018 (Figure 10.1), it would be fair to say that they looked fine but not spectacular at a 5.4% compound annual growth rate (CAGR). Similarly, the company grew its store base by a modest 4.3% CAGR over this time period.

FIGURE 10.1

AutoZone: Modest Sales Growth over Much of the Last Two Decades¹

Then how in the world did AutoZone (AZO) produce a 2,445% return relative to 198% for the S&P 500 ...