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AutoZone Halts Buyback, Provides ETO Benefits to Employees

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The novel coronavirus outbreak has not only claimed human lives but is also wreaking havoc on the global economy. Companies across the globe are facing unprecedented challenges and taking stringent measures to tackle the crisis. Suspension of production, forced leaves/layoffs and cost cutting are becoming increasingly commonplace. With closure of factories, lower footfall at dealerships and disruptions in global supply chains, the auto industry is in turmoil.

Auto parts retailer, AutoZone, Inc. (AZO - Free Report) has temporarily suspended the stock buyback program to conserve cash amid coronavirus-led uncertainty. Other auto firms including Group 1 Automotive (GPI - Free Report) , Lear Corporation (LEA - Free Report) and Genuine Parts (GPC - Free Report) have also called off their buybacks in an attempt to shore up the balance sheet, as they brace for a period of revenue slump amid the virus mayhem.

AutoZone is implementing stringent cleaning regimens, imposing restrictions on access to stores, introducing curbside pickup options and taking other steps to keep workplaces safe for employees. The company also announced new Emergency-Time Off (ETO) benefit enhancement for employees and restructured credit arrangements to assure liquidity. This additional bank of hours, 80 hours for full-time and up to 40 hours for part-time employees in the United States and Puerto Rico, was created to extend benefits for the overall wellbeing of employees amid the coronavirus pandemic.

AutoZone recently closed the 364-day senior unsecured revolving credit facility with a principal amount of $750 million, following the sale of five-year and 10-year senior notes totaling $1.25 billion on Mar 26. The company has $1.9 billion available under the existing $2-billion multi-year credit facility.This apart, the recent series of transactions boosted the firm’s financial flexibility.

Investors should note that the company has already warned investors that coronavirus-induced disruption might dent demand for its products, in turn dimming earnings and revenue prospects in the near future. AutoZone currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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