Then there are the companies that, entirely focused on rapid expansion, devote all their resources - and sometimes more via capital increases and debt - to their growth drive.
And then there are companies like AutoZone, which combine the best of both worlds and manage to grow entirely self-financed and cannibalize themselves at the same time. The American group, it has to be said, is located in the best segment of the entire automotive industry: the retail sale of spare parts, a business that is both low-capital-intensive and high-margin.
AutoZone, which reported its annual results yesterday, has almost doubled its sales over the last decade, while maintaining its impressive operating margins to the nearest decimal point. At the same time, the group has almost halved the number of shares in circulation through massive share buy-backs. This enabled it to quadruple earnings per share over the period.
By 2024, this had risen by a further 13%. It's the quality of the business model - superior profitability - that has made this feat possible, as AutoZone achieved $8 billion in additional sales between 2015 and 2024 by reinvesting less than $1.5 billion in its expansion effort. All profits generated are then redirected to share buybacks.
Last year, AutoZone announced a change of CEO. Bill Rhodes was succeeded by company veteran Philip B. Daniele, who took up his post after 29 years' experience in various marketing and logistics capacities.
Daniele is returning to an aggressive expansion strategy. Over the past twelve months, AutoZone has opened 117 new sales outlets in the USA, Mexico and Brazil. These Latin American markets are a new growth driver for the group, with sales rising by 9.9% this year, compared with stagnation in the domestic North American market.
King of the "cannibals", AutoZone has bought back a cumulative $37 billion worth of its own shares since this value-creation strategy was put in place. The average repurchase price is $238 per share, with the current price in excess of $3,000.