AutoZone (AZO) Q3 FY26 earnings call: guidance and Q&A

How does second-half FY26 same-SKU inflation look, and could supply concerns around lubricants push it higher than expected?

Phil said inflation and ticket rates should be more muted than Q3, in roughly the 4% range, with same-SKU inflation continuing into Q4. On lubricants he deferred to oil specialists, expecting some constraints but nothing material.

“We think there's probably going to be some constraints, but we don't think that it's going to be that material.”

asked by Bret Jordan · answered by Philip Daniele

With a peer pulling back on national accounts, is there incremental opportunity, and what is the profit spread versus up-and-down-the-street?

Phil said AutoZone is under-shared across national accounts and up-and-down-the-street, both growing strongly and both grew double digits last quarter. He acknowledged a spread between the two but said both are attractive with room to gain share.

“Yes, there's a little bit of a spread between the 2, but both of those are great businesses.”

asked by Bret Jordan · answered by Philip Daniele

Have trends improved later in May, what are Q4 domestic comp expectations, and how should gross margin perform in Q4?

Phil said May has been cooler but they expect a normal-to-hotter summer, with strong initiatives and Mega-Hub openings supporting a normal summer volume increase. Jamere said Q3 had ~42 bps of gross-margin improvement offsetting ~22 bps of commercial mix drag, with positive merchandise margins, improving shrink and supply-chain productivity, and expects a solid Q4 with a bit more mix drag.

“we had probably 42 basis points of gross margin improvements that offset a commercial mix drag of about 22 basis points.”

asked by Steven Zaccone · answered by Jamere Jackson

Is DIY softness more about energy prices than near-term weather, can expenses be flexed if DIY weakens, and why wouldn't the back-half inflation outlook be higher given steel tariffs and resin/energy cost pressure?

Phil pointed to strength out West, Midwest and Northeast as evidence of a good winter and expects a normal-to-hot summer; Jamere emphasized continued expense discipline and productivity initiatives. On inflation, Phil said steel and auto-parts tariffs have been in place a while and the ramp began in last year's Q4, so inflation stays elevated but muted by lapping; Jamere called it a fluid situation to manage with suppliers and pricing.

“those tariffs that are on steel and automotive parts have been in place for quite some time.”

asked by Christopher Horvers · answered by Philip Daniele

How are the latest Mega-Hubs performing versus legacy ones, and is competitive emulation of the strategy creating a headwind? Also, what confirms weather versus a fading tax-refund benefit drove the late-quarter slowdown?

Jamere said there are 100+ Mega-Hubs in the pipeline toward ~300 (possibly more), continuing to outperform expectations and unaffected by competitors mirroring the strategy. Phil said category-level data (e.g., air conditioning) in cool, wet markets clearly shows weather, not tax refunds, drove the slowdown, and expects a rapid rebound into summer.

“we have over 100 Mega-Hubs currently in the pipeline today.”

asked by Brian Nagel · answered by Jamere Jackson

Is the narrower performance spread versus competitors a sign that the bulk of share gains are behind AutoZone, and can share gains reaccelerate? Can SG&A be flexed to protect EPS across comp scenarios?

Phil and Jamere argued they are only about halfway through Hub/Mega-Hub expansion and hold only ~5% commercial share, so there is substantial runway on both DIY and commercial. They emphasized commercial (34% of mix) as the #1 priority and reaffirmed a long track record of flexing SG&A/payroll to sales to sustain EPS growth.

“we're still roughly 5% of the market share opportunity that's out there.”

asked by Michael Lasser · answered by Philip Daniele

If same-SKU inflation steps down 250-300 bps in Q4, why wouldn't domestic comp slow by a similar amount?

Jamere said the step-down mainly reflects lapping last year's Q4 tariff-driven inflation, not a market change. He argued commercial will grow via transactions as well as ticket, DIY share is progressing, and traffic (down mid-3s) has room to recover, so there is no direct read-through from lapping inflation to slower comps.

“I wouldn't have a direct read-through that says that the lapping of the of the inflation sort of creators comps.”

asked by Scot Ciccarelli · answered by Jamere Jackson

How does the latest Mega-Hub cohort compare to historical openings on per-store sales and nearby-store lift, and could DIY volumes improve as the deferral cycle laps in Q4?

Jamere credited a stronger commercial base (letting new Mega-Hubs open hotter) and more direct-to-customer utilization, plus demand drivers like parts proliferation and aging vehicles. On DIY, he said transaction counts fell more than the historical low-single-digit norm (a 'three handle' across multiple quarters), creating an opportunity for traffic/transaction improvement as the deferral laps.

“There have not been very many periods where we've seen those transaction counts be down with a three handle in multiple quarters.”

asked by Zachary Fadem · answered by Jamere Jackson