AutoZone's (AZO) share price fell more than 2% on Sept. 28, after the Memphis, Tenn. auto parts maker said that Edward S. Lampert will not be standing for re-election on its board.
Lampert, who is chairman and chief executive officer of the hedge fund ESL Investments, Inc. (ESL) as well as chairman of the retailer Sears Holdings Corporation, is leaving AutoZone in order to devote more time to his other duties (see BW, 11/22/04, "The Next Warren Buffett?"). The board has nominated Theodore W. Ullyot, executive vice president and general counsel of ESL, to take his place.
"I plan to remain involved with the company, and ESL currently plans to remain a significant shareholder in AutoZone for the foreseeable future," Lampert said in a press release.
The stock was trading at $103.23 per share in early afternoon trading on the New York Stock Exchange. Standard & Poor's Corp. downgraded its opinion on the company to hold from buy, explaining that AutoZone's shares have risen more than 20% during the past two months.
But S&P, which like BusinessWeek.com is owned by The McGraw-Hill Companies, kept its 12-month target price on the stock at $115 per share. "We expect news of Edward Lampert's departure from AZO's board to fuel speculation" about how this impacts the company, analyst Michael Souers said in a research note. While fears can "drag the shares lower over the near term, we think AZO will ultimately trade on its fundamental merits," Souers added.
AutoZone sells auto and light truck parts, chemicals and accessories through stores in the U.S., Puerto Rico and Mexico. It also sells the ALLDATA brand automotive diagnostic and repair software.