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EXHIBIT 99.1
CSK AUTO CORPORATION COMMENTS ON EXPECTATIONS FOR ITS FISCAL SECOND
QUARTER AND FULL-YEAR 2000
Phoenix, AZ, June 23, 2000 - CSK Auto Corporation (NYSE: CAO) announced today
that it anticipates its earnings per diluted common share for the fiscal year
ending February 4, 2001 ("fiscal 2000") will be approximately 20 percent above
those of fiscal 1999, but below current analyst estimates.
Specifically, CSK Auto expects to report earnings for the second quarter ending
July 30, 2000 that will be approximately $0.09 to $0.13 below the current
consensus of analysts' estimates of $0.61 per diluted common share (which
excludes anticipated one-time charges related to acquisitions and store
conversions), as compiled by First Call/Thompson Financial. Furthermore, the
Company anticipates full-year 2000 earnings will be approximately $2.05 per
diluted common share (excluding one-time charges), as compared to $1.69 per
diluted common share in fiscal 1999.
The revision of expectations is the result of:
- a planned reduction of organic growth for late 1999 and fiscal 2000 as a
result of the Big Wheel/Rossi and Al's and Grand Auto Supply store
acquisitions;
- soft sales trends;
- higher interest rates;
- higher costs and softer sales associated with acquired automotive service
centers that will be leased or closed; and,
- a slower than anticipated ramp-up of sales levels in the acquired Big
Wheel/Rossi stores.
The original forecast of fiscal 2000 sales assumed that the impact on sales of
the Company's reduced organic growth in existing and overlapping markets would
be compensated by increased sales in its acquired stores. To date, this has not
occurred. Additionally, the sales trend at the acquired Big Wheel/Rossi stores
is slower than anticipated due to the Company's decision to defer the conversion
of the stores to the CSK format until late in fiscal 1999 and early fiscal 2000
so as not to disrupt the stores' operations during 1999's prime selling season.
These acquired stores are performing at a post-conversion rate that is
consistent with CSK Auto's experience with the Trak stores that were acquired in
1997 and the Company currently is pleased with the performance of the former
Trak stores.
Sales in the second quarter have slowed in comparison to the first quarter
trend. The softness in sales is reflected in both do-it-yourself (DIY) and
commercial sales levels. Product categories that have been most heavily affected
have been maintenance replacement parts, while chemicals, waxes and accessories
have continued to perform well. The Company believes the slowing of
replacement-part sales in both the DIY and commercial businesses suggests a
short-term trend reflecting a decrease in miles driven due to high gasoline
costs. Additionally, as the Company completes the exit of the automotive service
business, sales of service labor have been slower than anticipated reflecting
difficulty in retaining qualified service technicians.
The Company had anticipated that interest rates would rise in fiscal 2000,
however, the actual rate of increase realized to date has been greater than that
expectation.
"Currently, we are five weeks from the end of the second quarter and our
preliminary analysis has identified certain factors that we believe investors
and analysts should consider as they form their outlook for the current quarter
and full-year 2000," said Maynard Jenkins, Chairman and Chief Executive Officer
of CSK Auto Corporation. "We believe the Company is taking appropriate actions
to address these issues. Even after this reduction of expectations, the Company
believes that sales will return to more normalized levels and anticipates
full-year sales growth of over 25%, operating income increases of 26%,
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the generation of significant cash flow in the second half of the year, flat
inventory levels year-over-year, and an earnings per share increase of over
20%."
CSK Auto Corporation is the parent of CSK Auto, Inc., a specialty retailer in
the automotive aftermarket. As of June 21, 2000, the Company operated 1,139
stores in 19 states under the brand names Checker Auto Parts, Schuck's Auto
Supply and Kragen Auto Parts.
Certain statements contained in this release are forward-looking statements.
They discuss, among other things, expected growth future store development and
relocation strategy, business strategies, future revenue and future performance.
The forward-looking statements are subject to risks, uncertainties and
assumptions, including, but not limited to, competitive pressures, demand for
the Company's products, the state of the economy, inflation, consumer debt
levels, and the weather. Actual results may differ from anticipated results
described in these forward-looking statements.
Contact: Don Watson (602) 631-7224
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