Moody's on Dec. 19 affirmed all ratings of auto parts retailer AutoZone Inc., including its Baa1 senior unsecured rating and Prime-2 commercial paper rating. The outlook is stable.

The agency said the affirmation reflects the company's strong operating performance and "predictable" financial policy, while the stable outlook reflects its favorable credit profile and Moody's expectation that AutoZone's share repurchases will be executed such that this profile is maintained.

Moody's said it could upgrade the company's ratings if it keeps adequate liquidity and maintains its debt-to-EBITDA levels around 2.25x.

Meanwhile, the agency said that it could lower AutoZone's ratings if liquidity weakens or if either operating performance or financial policy actions weaken credit metrics.

Moody's expects AutoZone to keep spending on its stores to ensure competitiveness. The company reported a 2.7% increase in same-store sales and a 34.7% increase in diluted EPS for the first quarter ended Dec. 4.