Welcome to the AutoZone Conference Call. [Operator Instructions] Please be advised, today's call is being recorded. If you have any objections, please disconnect at this time. This conference call will discuss AutoZone's second quarter financial results. Bill Rhodes, the company's Chairman, President and CEO, will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10 a.m. Central Time, 11 a.m. Eastern Time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements.

Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy and similar expressions. These are based on assumptions and assessments made by our management in light of experience, perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 28, 2010, and these risk factors should be read carefully.

Mr. Rhodes, you may now begin.

Good morning, and thank you for joining us today for AutoZone's Fiscal 2011 Third Quarter Conference Call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer, Store Development and IT; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax. Regarding the third quarter, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, is available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. We are very pleased to announce another very strong quarter of performance financially and operationally. Our EPS for the third quarter increased by 28.5%, another exceptionally strong quarter for us as our domestic same-store sales increased 5.3%. This marks the 10th consecutive quarter of EPS growth in excess of 20% and the 19th consecutive quarter of double-digit EPS growth. I'd like to start our call this morning by thanking all our AutoZoners across North America for their continued efforts on our 1TEAM Going the Extra Mile 2011 operating theme. We have made consistent progress on each of our initiatives, which include hiring, retaining and training the best AutoZoners, enhancing our hub network, leveraging the Internet, profitably growing Commercial and improving our product assortment and inventory management efforts. I'll go into more detail later on many of these initiatives. Our focus remains on the fundamentals. We're committed to having the right AutoZoners providing the right customer service, along with the right products at the right price every day. Our past successes give us confidence that our strategies have and will continue to position AutoZone for continued growth both in sales and earnings in each of our businesses: Domestic Retail, Domestic Commercial, Mexico and ALLDATA. Regarding our third quarter…

Thanks, Bill. Good morning, everyone. To start, let me take you -- a few moments to talk more specifically about our Retail, Commercial and Mexico results for the quarter. For the quarter, Total Auto Parts sales increased 8.5% versus last year's third quarter's growth of 10%. This segmentation includes our Domestic Retail and Commercial businesses and our Mexico stores. This quarter, we completed category line reviews in 12 of our categories of our 40-plus major merchandise categories. Improving our parts coverage remains a key priority. Regarding macro trends during the quarter, unleaded gas prices started out at $3.14 a gallon and rose steadily, finishing the quarter at $3.97 a gallon. Last year, gas prices rose during the third quarter starting at $2.61 and ending at $2.91 a gallon. As Bill mentioned, the increase in gas prices is reducing discretionary spending for all consumers and particularly, our customers. At the same time, it is an opportunity for us to communicate with our customers steps they can take to improve their gas mileage. We remain mindful of the moves in oil prices and how they ultimately can correlate to prices at the pump. Miles driven remains less of a story to our near-term sales results than in previous years. Recently, January and February showed positive upward trends, up 0.2% and 0.9%, respectively. March showed a decrease in miles driven of 1.4%. While recently, we have seen no correlation in our sales performance with miles driven, historically, it has been one of the key statistics, which correlate to our sales results over the long term. The other is a number of 7-year-old and older vehicles on the road, which continues to trend in our industry's favor. For the trailing 4 quarters, Total Auto Parts sales per square foot were $257. This statistic continues…

Thanks, Bill. Before we conclude, I want to congratulate our entire organization for a very solid performance this past quarter and reiterate that our team's commitment to our culture and our customers, combined with our initiatives, have contributed significantly to our success, as evidenced by our continuing growth in market share in both Retail and Commercial. I also want to congratulate our organization for achieving $1 billion in Commercial sales on a trailing 4-quarter basis, a key milestone for us and hopefully, just the first of many significant new records we set in this business. Lastly, we're excited about the new quarter ahead and believe we're well positioned to meet our customers’ needs heading into the summer driving season. While we currently have the challenge of higher gas prices before us, we believe our stores look great and the strategies we have in place will allow us to have a successful fourth quarter. While our AutoZoners across the organization deserve credit for our past successes, we promise to remain committed to continuing to improve our business model and our operations, focusing on continual refinements but not radical change. We have an exceptional business model that still has tremendous opportunities for further improvements. For the last quarter of fiscal 2011, we will continue to focus on our key priorities: great people providing great service; continual refinements and improvements in our hub strategy; leveraging the Internet; profitably growing Commercial; ever-improving inventory management; and improving our product assortment. While we routinely measure our performance week-to-week, quarter-to-quarter and year-to-year, we find it instructive to assess our performance over longer periods of time, and we'd like to compare our performance to other highly successful companies. Recently, FORTUNE Magazine released the Fortune 500. This year, it highlights that from 2000 to 2010, our earnings per share grew 22.3% on an annualized basis, ranking us 31st for the 10-year period. Even more impressive, our total return to investors over this 10-year period grew from 25.3% ranking us 16th. These are impressive results and highlight the strength and consistency of our business model. I believe these results are attributable to operating in a healthy industry, having a very disciplined business model and approach and having a very strong culture of customer satisfaction that is operational-ized by an incredibly committed and passionate team of over 60,000 AutoZoners. Finally, before we move to Q&A, I want to again thank and congratulate our entire organization for their dedication to our customers, fellow AutoZoners, stockholders and communities. Our approach remains consistent. We're focused on succeeding in the fourth quarter of 2011, and we are optimistic and excited about our future. Now I'd like to open up the call for questions.

[Operator Instructions] Our first question today is from Gary Balter with Crédit Suisse. Gary Balter - Crédit Suisse AG: It's Gary and Simeon. I'd like to delve in on the things that didn't work well, but then I'd have no questions. So I'll ask you something else. Could you talk -- one of your competitors reported last week and there's some indication that maybe some of the pricing is sticky. It's very hard to see from your gross margin, which was so strong, but could you talk about that if you're seeing any inflationary pressures that are impacting the gross margin or potentially could be impacting the gross margin?

Clearly, Gary, as we said in our prepared remarks, in some areas where there's specific commodity increases, we are seeing some increased cost. In many of those areas, we’ve passed those costs along to the consumer. We will continue to do that. That's been our history, but we're also going to be mindful to make sure that we are priced right. So we have taken leadership roles at times and moved pricing up. As long as we stay competitive, we'll stay there. Gary Balter - Crédit Suisse AG: On the Commercial side, you've done superb. Do you think now like basically the investments are done or could you mention like you've got all the hub stores set up and obviously, you're driving fantastic numbers. So from an expense point of view, is there a lot more spending to do or now not maybe reaping the rewards, but are we going to see even stronger margins going forward? You talked about how solid the margins are already.

Yes, I think that we're going to continue invest in the business, and we are starting reap some of the benefits from it. And again, we believe that this is a fairly immature business for us, and we have a very small market share. So we see opportunities for us to continue to add new programs, to continue to invest in the field organization, so that we'll continue to invest. But there is no question that we're gaining momentum in this industry, and we're starting to reap some of the benefits now. But we're going to continue to invest, and we're going to continue to take market share.

And actually, one more from Simeon. Can you maybe sort of separate out some of the better weather markets from some of the non- better weather -- the poorer weather markets, just what the comp spread may have been, the difference in that in the period so we can get a sense of how different markets performed?

Yes, it's difficult always to peel out gas and peel out weather and all those things. And we believe that weather will even itself out over time, as Bill indicated. When we look at it by category and by region, it's clearly some of the regions that were less affected and then we'd have to define what less meant. Those performed better. So, we just look forward, and we look at what we can do to continue to educate the consumer on how to save money and continue to stick to our knitting.

Our next question is from John Lawrence with Morgan Keegan. John Lawrence - Morgan Keegan & Company, Inc.: Bill, would you comment just a little bit, staying on the commercial program for just a second. If you look at these -- the hub stores, when they're relocated, what's the proper metric? I mean, does it take a period of time to get this strong return as far as setting the inventory and then is the metric how productive those routes are or fine tuning that inventory per route so you see a maturity curve for a period of time in terms of return?

Sure. Yes, I mean as far as the maturity curve, we're still seeing our -- all these hub stores continuing to grow, and that's encouraging to us. On the ones -- as far as relocating them, we really haven't relocated many of them at this point in time, but we have expanded several of them. And because, maybe a store that only has 70% or 80% of the parts that we want in it because it's just simply not large enough physically. And so, when we are able to expand it and put that product assortment in there, we actually reap the awards very quickly because the demand is already there in the market place. So, we've been very encouraged. We can also very scientifically determine what do we think the sales are going to be because we see how those SKUs are performing in other hub stores, and it's very easy to extrapolate that to the market where they don't exist. John Lawrence - Morgan Keegan & Company, Inc.: Great. And secondly, would you just peel it back a little bit on Duralast? Tell us where we are and some of those categories you still think you have some room?

We had very good penetration this quarter and the quarter before that as well as we indicated. We continue to believe that there's opportunity for us to expand the Duralast branded name in other categories. And it's been very well-received by our customer base, both DIY and the Commercial customers. So we feel terrific about how well that brand has grown, and how well it's been accepted into the marketplace. And there is continued opportunity for us to increase our penetration in other categories as well, John. So that's an ongoing effort.

Our next question is from Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer & Co. Inc.: First question on sales, and I know you spoke -- like lot of retailers, where you spoke about the weather through the quarter, sounds like the weather was on balance, a slight or modest negative for you through the quarter. Question I have is how should we think about now weather-related sales going forward? Weather started to get better in most parts of the country. Is there some type of pent-up demand or some sales lost and then conversely, with the very negative weather in some parts of the country, it actually can be a driver of sales as we look forward into either the next quarter or the next several months?

Yes, I think number one, the spring weather is always choppy. I mean, spring is inherently choppy. So the fact that we had weather challenges in certain markets is not to be unexpected. Was it a little more, a little less this year, I'm not sure that we see can really get in that scientifically and ferret it out because we do operate across the country. As far as looking forward, the summertime weather patterns are generally more consistent now. We were going up against a very, very hot summer last year. So as we go up against those really hot weeks, it will be interesting to see, and those could present some modest challenges for us. But overall, weather effects are not going to impact our business over the long term. We operate in such a large geography and at the end of the day, we're going to control our destiny. And we just need to make sure we keep doing the things that are resonating with the customers. Brian Nagel - Oppenheimer & Co. Inc.: Okay. Then the second question I have, and I think I asked a similar question on the last quarter's call, but on the shrink, you again called out shrink as an outsized driver of gross margins. How should we think about the sustainability of that benefit into the coming quarters?

Yes. I mean, we're very pleased. Obviously, we had a benefit in Q2 and we had a benefit in Q3, and it certainly feels as though we have momentum going forward. But shrink is one of those things that it's very difficult to predict too far out into the future. We have very good momentum now, and I think the loss prevention in the field organization have done an outstanding job undertaking several initiatives to really putting a lot more science around reducing shrink. And they've done a very good job and we've had good benefits. Is that sustainable? We'd like to think so. But there can be no guarantee. So we feel good about the results that we've got in both Q2 and Q3, and we believe that there will be continued improvement in Q4. A little bit beyond that, it's very difficult to know for sure.

Our next question is from Aram Rubinson with Nomura.

A question I'm hoping you can help us figure out on Mexico a little bit, you say in your 10-K that you've got 2 operating segments, but only one reportable. Can you give us some metrics in terms of what Mexico -- the opportunity looks like in terms of growth off the 260 or so stores you've got? What the profit equation looks like? Just trying to get a sense if there's an analog there for what Brazil could ultimately look like.

Yes, let me jump in there first. Just be very, very careful on Brazil. We were very hesitant to even mention it, but as we were doing research down there, news that we're snooping around is getting out, and we wanted to make sure you heard it from us here first. But it will be a long time -- use Mexico as an analog for Brazil. We've been there 11 years. We have 261 stores out of 4,700 stores. As far as an analog for the Mexico business, we haven't disclosed all the details of the Mexico business, but we have been very pleased with the profitability of that business segment over -- since we've been down there, certainly over the last many years. It operates very similar to the way we operate in the United States. It is really remarkable how well our model has translated to Mexico. As far as the ultimate store count, we really haven’t determined that. We certainly look at it and think we can continue to grow at this 50 stores per year basis for the foreseeable future. I think we'll continue to learn down there. As the middle class continues to emerge, hopefully, we'll have more opportunities. But we think we can grow for quite a period of time at this current store count growth rate.

So basically, I mean, you're really growing your Mexican business at 23% store growth per annum. You think something like that is sustainable because that's quite a rapid rate of growth?

Yes. I don't know it will be -- I don't know if we'll continue to grow at the percent. I think we'll -- more than likely, we'll be in this 50 store count range, plus or minus 5 stores as we go forward. Obviously, when you're growing -- we grew at 25% last year. It puts a tremendous strain on the people engine. And we've got to make sure that we've got the right people that understand our culture and our operating model. And so we're going to kind of cap it here for now. If we see an opportunity to expand it, we would. But I really don't suspect that will happen.

Our next question is from Greg Melich with ISI.

Bill, you mentioned average ticket and transactions. I just wanted to get a little bit more. If average ticket was better than in the prior quarters, how much of that was mix? Was there a little bit of inflation in there, or was it a shift to more Commercial versus DIY? And then similarly, on the transactions, if they slowed a bit from prior quarters, is that simply the fact that Commercial is growing faster than DIY or -- help us out on that?

Yes. I'd focus more on DIY solely. The Commercial market is certainly quite a bit different on the transaction and ticket basis. But in DIY, we clearly have seen some benefit to average ticket of inflation. But I don't want you to think about it as regular, normal inflation. This industry has 2 kinds of inflation, it has the normal inflation, but it also has inflation of comparable parts. The starter for a 2010 model is much more expensive than the starter for a 2000 model because it has enhanced technology, and that is going to last longer. I've used the spark plug example for many, many times. You used to be able to buy a copper class spark plug for $0.99. Today, you buy a platinum spark plug for $3.99. It lasts 3x as long. That hurts transactions and that benefits average ticket. So constantly in these numbers, you always have that benefit going on. On the transaction side, we did slow down, but we're still positive. For many, many, many years, we ran negative in transaction count and really attributed it to that change in the quality of products that we sell. We felt like that was driving that.

Great. So basically, when you were describing that, that was all about DIY? That was -- that's not...

That's correct.

Okay and the...

Then obviously, our transaction count in Commercial was up tremendously.

Right. Got it. And then on that deceleration, was it -- if it's fair to say given the inflationary mix is helping the average ticket, was the deceleration 100% traffic or transactions?

Well, I would say it was over 100%. As I said, our ticket was actually better. It was up more than it was last quarter.

Our next question is from Matthew Fassler with Goldman Sachs.

Two questions and the first one relates to inventory. You spoke earlier on the call about doing business, I guess, with a broader range of cars as the number of older cars on the road grows and I guess the variety increases as well. And you also spoke to this probably being -- if I heard you right, your quarter's biggest inventory increases. So can you just talk about, in a little more detail, your decision to ramp the inventory up this quarter, and what you think you need to do to cater to perhaps the evolving demographics in the marketplace?

Yes, and I think as part of this continuing process of having a disciplined category line review throughout the year that we're finding more opportunities to add inventory and improve our coverage overall. Obviously, we're heading into the busiest season of the year, so this is an optimal time for us to be able to make sure that we're both in-stock and that we've maximized our coverage the best we can, so that's part of the reason that we would do it in this quarter. But overall, as we continue to leverage the hub network, et cetera, we believe that there's opportunities for us to be able to add inventory and improve coverage. So although the inventory level's a little bit higher than we might have expected, overall, we're pretty pleased with the complexion and the composition of the inventory that we have today, and we think we're in a pretty healthy position.

And my second question relates to gross margin. Last quarter, you had a pretty big gross margin pop, and it was a pretty clean number. When you look at this May quarter and you take out the shrink, you came back to the kind of trend that you've been accustomed to seeing. As you contemplate the mix shift towards Commercial and you contemplate what you're seeing with commodity prices, and understanding, finally that you don't manage through a gross margin rate, do you feel like you have the opportunity to continue to drive gross margin higher, or should we be more subdued in our thought process there?

We do believe that we have the opportunity to continue to drive gross margin. And keep in mind that you're right, Commercial business operates at a slightly lower gross margin. So as that mathematically becomes a larger piece of the puzzle, then it will put some pressure on gross margin. But, overall, the gross margin rates have been relatively healthy. You're right, we've had some commodity price pressures. But we've been successful in passing those prices along and managing our way through it. So, overall, we feel pretty good about the merchandise team and what they've done. And we believe margin is healthy and there is opportunity for it to continue to increase.

Our next question is from Tony Cristello with BB&T Capital Markets. Anthony Cristello - BB&T Capital Markets: First question I had was with respect to the initiatives. You've had a lot, and it seems like you've taken advantage of what's been a very robust operating environment for the aftermarket. And I guess what I'm wondering is, once we enter a more normalized environment and again, you might have a better idea for that than I do, but at some point, whether it's a year or 2 or 3 years down the road, how do we think about your need to grow, your need to spend versus what we think the initiatives put into place today will drive from a top line perspective?

Yes, it's a great question. And obviously, we have been much more aggressive over the last 2 1/2 years on our initiatives. Many of those initiatives we would have done, we would have completed them, but we would have completed them over a longer period of time. As we mentioned last year, we accelerated our hub stores and complete over a year in advance of when we anticipated doing it because the strength of the market. Our hope is that from the development of these initiatives, that whether the market strengthens or slips a little bit, that we're going to come out of it in a stronger position than we came into it. And I think we're doing just that. And clearly, the market share information is showing us that. Over time, if the market -- if the industry did slow, I am highly confident that our company and our AutoZoners can effectively manage our cost structure. All you have to do is go back and look at 2006, 2007, 2008 and I think we've proved at that point in time that we know how to manage costs. Anthony Cristello - BB&T Capital Markets: And maybe on that, the market share gains that are quite apparent in your numbers, is it simply a function of the success you've had with the ongoing initiatives? Or does it get back to just sort of the core fundamentals of how you approach an existing market? Can you maybe just differentiate a little bit between the 2, and why you think you've had such great success?

Yes. Obviously, you got to split it into both businesses. In Commercial, we've had a step function change in the effectiveness of the way we go to market. We created a new strategy about 4 years ago. Our team has implemented it flawlessly. And we still have a long, long way to go in the Commercial business, but we're very pleased with the progress we're making there. On the DIY side, we've been in this business for almost 32 years now. So we have a very well refined business model that works incredibly well, and what we're constantly doing is fine-tuning it. I'm very happy with our organization. They have a testing mentality. So, we don't go out and roll out big initiatives all at once. We come up with big ideas or big initiatives or small initiatives, and we go test them, and once we prove that they're successful, we look at the other things that we want to do. We prioritize them, and we implement them over time. Anthony Cristello - BB&T Capital Markets: That's very helpful.

Our next question is from Chris Horvers with JPMorgan. Christopher Horvers - JP Morgan Chase & Co: First, a follow-up question on the investment side earlier. As you think about the pace of expansion of hub and new commercial programs, once you anniversary the big hub investment in August, do you get any of that back? Or is it just upfront cost that you potentially get back, or is it just kind of goes into the base and then you manage around how the top line shapes up?

Yes, the latter. I would say that it goes into the base. We've changed the operating structure a little bit from how we manage the hubs. And so we've increased the frequency of deliveries. The next phase will be to expand some of the hubs. That'll be more onetime in nature. But the operating structure that we have we'll anniversary in August will stay with us. That’s how we're going to operate it. Now to your point, that as we continue to see how sales trend and perform, we will adjust our total cost structure to those sales, not just hubs, but we'll adjust our total cost structure to match up to that. But at the moment, we're getting great return on the hubs, and we've been very pleased with the results that we've had, and we believe that, that new operating structure is the right one. Christopher Horvers - JP Morgan Chase & Co: And it sounds like, I mean, if you're on pace, for like, I guess, 130 I think new programs year-to-date, based on your success, you would think that as you look into the next fiscal year that you would keep that kind of pace up going forward?

We would keep up the pace relative to the operating structure that we have in place. Is that what you mean? Christopher Horvers - JP Morgan Chase & Co: Yes, I mean, the number of new programs, new Commercial programs.

We'll see. We've had good luck with the commercial programs. We've certainly accelerated the number of commercial programs that we had this year and then we'll continue to evaluate how many we'll open. But obviously, as we've talked about before, we have a very small market share. And it's only 57% of our overall stores. So there is a significant opportunity for us to expand our number of commercial programs. Christopher Horvers - JP Morgan Chase & Co: And then you mentioned the maintenance category ticked down a bit year-over-year, and you did point out, saying, "Hey, there were some regional differences that varied by weather." In the regions where you didn't see a weather impact, perhaps at West or other regions of the country, was maintenance more flat year-over-year and the tick down was really driven off of the wet areas of the country?

We believe it was a little bit more weather focused and some of the other regions, it was a little bit flatter. So it gave us an indication that it was a little bit more weather. Christopher Horvers - JP Morgan Chase & Co: And then final question is a lot of retailers have talked about the swing down in April and a nice resumption in May in terms of comp trend. Is that something you saw in your business as well?

We're 2 weeks and 2 days into a 16-week quarter. So we just really don't want to get into what our trends are doing currently. Christopher Horvers - JP Morgan Chase & Co: Fair enough.

Our next question is from Colin McGranahan with Bernstein. Colin McGranahan - Sanford C. Bernstein & Co., Inc.: First question on the Commercial business and the margin pressure. Understanding, obviously, that the gross margin rate is 400 or 500 basis points lower, but I would have thought -- and I know you have increased costs associated with the more frequent delivery in the hubs and salespeople and whatnot. But I would have thought that the contribution margin and the ability to leverage against fixed rent, depreciation and store overhead would maybe result in a contribution margin closer to your EBIT margin. It sounds like that's not the case. Can you help us understand how much lower it is?

Yes, I don’t want to necessarily go out and quantify specifically, Colin. But as we said, over a long period of time, both the gross margin and the operating expenses or SG&A are worse than our DIY business. And they are both fairly significantly worse today. Now a lot of that is because we've made tremendous investments from adding a sales force we didn't have 3 years ago, technological advances, the significant labor components for those deliveries that we have to do or ordered [ph] to do. So, there is a big SG&A difference as well. Colin McGranahan - Sanford C. Bernstein & Co., Inc.: Okay. And just in terms of the magnitude of that, if it's 500 to 1,000 basis points lower, it’s 13% of the business, it’s growing at 15% faster, are we talking about an annual pressure something in the 10 to 20 basis point range?

Well, I would just say, we've had the pressure over -- this business has really accelerated over the last 10 quarters or so. And we've had that pressure over time, and we've been able to manage it. We've had other things that we specifically called out such as hub stores and other things over time. So that will give you some order of magnitude. Colin McGranahan - Sanford C. Bernstein & Co., Inc.: Okay, that's helpful. And then just finally, on market share, I know you don't have a complete set of market data given NPD is only a subset. But any sense of whether you're taking a share within the NPD set within the market not captured by NPD or both?

We are definitely taking share year-over-year in DIY and Commercial in the NPD set. We can say that factually because we have the data. We don't have the data for the pieces that's not in the NPD share, but I think our suspicion is that the entire NPD group is probably growing its rate versus the people that are outside with more independence in both Retail and Commercial. Colin McGranahan - Sanford C. Bernstein & Co., Inc.: Okay, great.

Our next question is from Scot Ciccarelli with RBC Capital Markets.

I understand you not wanting to talk about the first 2 weeks, but you did mention that you had a tremendous amount of sales variability week-to-week, geographic basis, et cetera. Any chance we could get a better feel for the cadence during the quarter, sales cadence?

Yes. I mean, we had a really fantastic first period of the quarter. But we came out of a period or January where we were talking about how challenging it was and the weather broke. This period of time is always highly volatile. The last couple of periods were not as strong, and there's a lot of reasons why. And clearly, one of them was the weather was much choppier.

Okay. That's helpful. And then when you look at the -- you guys have gross margins increasing, as well as your accounts payable and inventory ratio increasing. Sometimes, that actually turns out to the trade-off, depending on what you're doing with your vendors. How much of the improvement of both of those metrics comes from the growing penetration of private label? Is there any way to help size it for us?

Well, I would look at it a couple of different ways. One is there's maybe a little bit on private label, but our inventory is more productive. I mean, our inventory turn actually improved, and that in and of itself is going to help AP-to-inventory ratio. So, part of it is really continued negotiations in working with our vendors. But a chunk of it is just the improvement in inventory turn. So as we improve our inventory productivity, that's going to help the AP-to-inventory ratio as well.

Our next question is from Michael Lasser with UBS.

Bill, can you expand on your comments about the change in distribution of the age of parts sold? It’s widening at both ends. Is that because of the inventory coverage, or is that because of the nature of the customer requests that you've been getting?

Yes, it's a fantastic question. And I think it depends, it's yes and yes. Our inventory coverage, particularly because we're in the Commercial business now gives us enough demand that we can add parts earlier in the vehicle life cycle. As we add those parts, it's been really remarkable to us -- certainly, we get the sales in the Commercial business, but we also get them in the Retail business, always more than we would have thought. Then on the other side of the vehicle life cycle, people are just holding on to their cars longer. So the demand is higher than it was 3 or 4 years ago. And you can see that in the average age of vehicle. We see it in the average age of look ups that we get that would reference customer demand.

And can you tease out both those points such that it happened concurrently with the really fantastic growth of the industry you’ve seen over the last couple of years?

Clearly on the older side, that is absolutely correct. On the newer side, I don’t think it's a function of what's happened in the market. It’s a function of the fact that we have inventory coverage that we didn't have in our satellite stores, and we have substantially more in our hub stores.

Okay. And last question, are you seeing any wage pressure? You and your competitors are really going after the Commercial segment aggressively, and at some point, the competition for these workers is going to increase. So has that been an issue as of yet?

No, we haven't seen any abnormal issues regarding wage pressures.

Okay, good luck.

Okay. Before we conclude the call, I'd like to take a moment to reiterate that our business model remains very solid. We remain excited about our growth prospects for the balance of the year and beyond. We cannot, and won't take anything for granted as we understand our customers have alternatives. Our culture remains our key point of differentiation from our competition, and we must not lose sight of the importance of basic store execution in order to remain very successful. We'd also like to wish everyone a happy and safe upcoming Memorial Day. It is a time for us to recognize the U.S. soldiers who have died while in military service, and to thank those who are currently serving in our military. As we operate our business as a marathon and not a sprint, we will continue to focus on the basics and never take our eye off of optimizing long-term shareholder value. We remain confident AutoZone will continue to be incredibly successful. And we thank you for participating in today's call.

Thank you. This does conclude today's conference. Thank you for participating. You may disconnect at this time.