Putting the fundamentals and a slight Street miss aside, how could we not zero in on the irony of the repurchase activity? AutoZone continued its aggressive share buyback during its fiscal fourth quarter and for the full year. Over the course of the quarter, the company repurchased 3.8 million shares at a cost of $587 million. For the year the tally was 9.3 million shares at a cost of $1.3 billion, leaving total shares outstanding down 15% year over year. Of course, aggressive share repurchase is nothing new for AZO, nor is using leverage to fund such purchases.
Over the same time, the company’s largest shareholder, ESL Investments, disposed 3.78 million shares of its holdings on the open market. Now we know Eddie Lampert did resign from his position on the board, but the relationship between the company and its largest shareholder obviously remains tight. With ESL’s sales offset by AZO’s purchases, ESL reduces its ownership stake by 5% after taking in almost $600 million in proceeds.