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    AZO
    Earnings call· Aug 2025(Q4 FY25)

    AUTOZONE INC AZO

    Sep 23, 2025 Source

    Executive summary

    AutoZone Q4 FY25 — Strong Commercial Growth and Accelerated Store Expansion

    AutoZone delivered robust Q4 FY25 results, driven by strong commercial sales and accelerated store expansion, particularly in Mega-Hubs. The company is strategically investing in new stores and supply chain capabilities to capture market share, despite ongoing LIFO charges and foreign currency headwinds. Management is bullish on future growth, focusing on a resilient DIY business, a fast-growing international segment, and continued domestic commercial momentum.

    Highlights

    5

    • Domestic commercial sales accelerated to 12.5% on a 16-week basis.

    • Total sales grew 6.9% on a 16-week comparable basis.

    • EPS grew 8.7% on a 16-week comparable basis, excluding a noncash $80 million LIFO charge.

    • Opened a record 304 net new stores globally in FY25, a 43% increase year-over-year.

    • Commercial traffic was up 6.2% on a same-store basis.

    Concerns

    5

    • Gross margin was 51.5%, down 103 basis points year-over-year, primarily due to an $80 million LIFO charge.

    • Foreign currency headwinds resulted in a $36 million sales headwind and $0.57 EPS drag in Q4 FY25.

    • DIY traffic count was down 1.9% for the quarter.

    • SG&A as a percentage of sales deleveraged 53 basis points due to investments in growth initiatives.

    • Anticipate a LIFO charge of approximately $120 million for Q1 FY26, with continued pressure in subsequent quarters.

    Guidance & targets

    12
    CategoryTargetConfidence
    LIFO charge
    $120 million
    high materiality
    High
    LIFO charge
    $80 million to $85 million per quarter
    high materiality
    Medium
    Ticket inflation (DIY)
    up at least 3%
    medium materiality
    High
    FX impact on revenue
    $32 million benefit
    medium materiality
    High
    FX impact on EBIT
    $9 million benefit
    medium materiality
    High
    FX impact on EPS
    $0.38 a share benefit
    medium materiality
    High
    Tax rate
    approximately 23.2%
    low materiality
    High
    New store openings (Americas)
    325 to 350 stores
    high materiality
    High
    Capital expenditure
    approximately $1.5 billion
    high materiality
    High
    Mega-Hub openings
    25 to 30 Mega-Hub locations
    medium materiality
    High
    SG&A growth
    mid-single-digit ZIP code
    medium materiality
    High
    Total store openings
    500 stores a year
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Domestic Commercial
    Sales accelerated significantly, driven by improved execution, expanded parts availability, and speed of delivery. Mega-Hubs are performing well and contributing to sales lift.
    Average weekly sales per program: $18,200 (up 9% vs last year)Commercial program penetration: 92% of domestic storesTotal programs: 6,098 (up 87 net new programs)Mega-Hubs: 133 (up 14 opened in Q4)
    		$1.8 billion12.5%——
    Domestic DIY
    Comp sales performed well despite declining traffic, supported by higher average ticket and improved product mix. Discretionary categories showed positive growth for the first time since FY23.
    Average ticket growth: 3.9%Traffic count: -1.9%
    		—2.2%——
    International
    Constant currency same-store sales remained solid. The company is bullish on growth opportunities and plans to accelerate store openings, particularly in Mexico.
    Total stores: 1,030 (up 51 new stores in Q4)Mexico stores: 883 (up 45 new stores in Q4)Brazil stores: 147 (up 6 new stores in Q4)
    		—7.2%——

    Operational metrics

    54
    Total sales
    $6.2 billionup 0.6% vs 17-week prior year
    Q4 FY25

    Reported total sales for the quarter, comparing to a 17-week prior year period.

    Total sales
    6.9%up 6.9% vs 16-week prior year
    Q4 FY25

    Total sales growth on a comparable 16-week basis.

    Earnings per share
    5.6%decreased 5.6% vs 17-week prior year
    Q4 FY25

    Reported EPS decrease for the quarter, comparing to a 17-week prior year period.

    Earnings per share
    $48.71up 1.3% vs 16-week prior year
    Q4 FY25

    Reported EPS on a comparable 16-week basis.

    Earnings per share (ex-LIFO)
    8.7%up 8.7% vs 16-week prior year
    Q4 FY25

    EPS growth excluding the noncash LIFO charge, on a comparable 16-week basis.

    LIFO charge
    $80 million
    Q4 FY25

    Noncash LIFO charge impacting margins and EPS.

    EBIT
    $1.2 billiondown 1.1% vs 16-week prior year
    Q4 FY25

    Total company EBIT for the quarter on a comparable 16-week basis.

    EBIT (ex-LIFO)
    5.5%up 5.5% vs 16-week prior year
    Q4 FY25

    EBIT growth excluding the noncash LIFO charge, on a comparable 16-week basis.

    EBIT (ex-LIFO and FX)
    6.6%up 6.6% vs 16-week prior year
    Q4 FY25

    EBIT growth excluding the noncash LIFO charge and foreign currency impacts, on a comparable 16-week basis.

    Gross margin (ex-LIFO)
    25improvement
    Q4 FY25

    Improvement in gross margin driven by merchandise margin, excluding the LIFO charge.

    SG&A growth
    8.7%up 8.7% vs 16-week prior year
    Q4 FY25

    Operating expenses growth on a comparable 16-week basis.

    SG&A as percentage of sales
    53deleverage
    Q4 FY25

    Deleveraging of SG&A as a percentage of sales, driven by investments.

    SG&A per store
    4.4%up 4.4% vs 16-week prior year
    Q4 FY25

    SG&A growth on a per store basis, on a comparable 16-week basis.

    FX headwind (sales)
    $36 million
    Q4 FY25

    Sales headwind due to weakening Mexican Peso versus U.S. dollar.

    FX headwind (EBIT)
    $14 million
    Q4 FY25

    EBIT headwind due to weakening Mexican Peso versus U.S. dollar.

    FX headwind (EPS)
    $0.57
    Q4 FY25

    EPS drag due to weakening Mexican Peso versus U.S. dollar.

    Interest expense
    $148 millionup 2.7% vs 16-week prior year
    Q4 FY25

    Interest expense for the quarter on a comparable 16-week basis.

    Debt outstanding
    $8.8 billionvs $9 billion a year ago
    Q4 FY25

    Total debt outstanding at the end of the quarter.

    Tax rate
    20.1%down from 21% last year
    Q4 FY25

    Effective tax rate for the quarter, benefiting from stock option exercises.

    Net income
    $837 milliondown 0.5% vs 16-week prior year
    Q4 FY25

    Net income for the quarter on a comparable 16-week basis.

    Diluted share count
    17.2 million1.8% lower than last year
    Q4 FY25

    Diluted share count at quarter end.

    Inventory per store
    9.6%up 9.6% vs prior year
    Q4 FY25

    Increase in inventory per store year-over-year.

    Total inventory
    14.1%increased 14.1% vs prior year
    Q4 FY25

    Total inventory increase year-over-year, driven by new stores, investment, and inflation.

    Net inventory per store
    -$131,000vs -$163,000 last year and -$142,000 last quarter
    Q4 FY25

    Net inventory (merchandise inventories less accounts payable) on a per store basis.

    Accounts payable as percentage of gross inventory
    114.2%vs 119.5% last year
    Q4 FY25

    Accounts payable as a percentage of gross inventory at quarter end.

    Domestic commercial sales
    $5.2 billion
    FY25

    Total domestic commercial sales for the full fiscal year.

    Average weekly sales per store (domestic)
    $48,000
    FY25

    Average weekly sales per domestic store, equating to over $2.5 million annually.

    Total sales
    $18.9 billionup 4.5% vs prior fiscal year
    FY25

    Total sales for the full fiscal year on a 52-week basis.

    EBIT
    $3.6 billiondown 4.7%
    FY25

    Total EBIT for the full fiscal year.

    EBIT (ex-LIFO and FX)
    2.7%up 2.7%
    FY25

    EBIT growth for the full fiscal year, excluding LIFO and currency headwinds.

    Net income
    $2.5 billiondown 6.2%
    FY25

    Net income for the full fiscal year.

    Earnings per share
    $144.87down 3.1%
    FY25

    Earnings per share for the full fiscal year.

    Domestic commercial sales growth (Q3 FY25)
    10.7%
    Q3 FY25

    Commercial sales growth in the prior quarter, used as a comparison point for Q4 acceleration.

    Domestic same-store sales cadence (first 4 weeks)
    4.4%
    Q4 FY25

    Sales cadence for the first four weeks of the quarter.

    Domestic same-store sales cadence (second 4 weeks)
    2.4%
    Q4 FY25

    Sales cadence for the second four weeks of the quarter, impacted by holiday timing.

    Domestic same-store sales cadence (middle 8 weeks combined)
    4.2%
    Q4 FY25

    Combined sales cadence for the middle eight weeks to adjust for holiday timing.

    Domestic same-store sales cadence (third 4 weeks)
    6%
    Q4 FY25

    Sales cadence for the third four weeks of the quarter.

    Domestic same-store sales cadence (last 4 weeks)
    6.4%
    Q4 FY25

    Sales cadence for the last four weeks of the quarter.

    DIY average ticket growth
    3.9%
    Q4 FY25

    Average ticket growth for the DIY business.

    Commercial average ticket growth
    3.7%
    Q4 FY25

    Average ticket growth for the commercial business.

    DIY average ticket range
    $35 to $40
    Q4 FY25

    Typical average ticket range for DIY transactions.

    Commercial average ticket range
    $60 to $90
    Q4 FY25

    Typical average ticket range for commercial transactions.

    DIY traffic count
    -1.9%down 1.9%
    Q4 FY25

    DIY traffic count for the quarter.

    Commercial traffic growth
    6.2%up 6.2%
    Q4 FY25

    Commercial traffic growth on a same-store basis.

    Total new stores opened
    304over 43% more than prior year
    FY25

    Record number of net new stores opened globally in FY25.

    Domestic new stores opened
    195
    FY25

    Most domestic stores opened annually since FY2004.

    International new stores opened
    109
    FY25

    Record number of international stores opened in FY25.

    International store base percentage
    13%
    Q4 FY25

    Percentage of total store base located outside the U.S.

    Same SKU inflation (DIY)
    2.8%
    Q4 FY25

    Like-for-like same SKU inflation for the DIY business.

    Same SKU inflation (Commercial)
    2.7%
    Q4 FY25

    Like-for-like same SKU inflation for the commercial business.

    Car park age (Mexico vs US)
    3 yearsolder
    Q4 FY25

    The car park in Mexico is older than in the U.S. by roughly 3 years.

    DIY sales mix
    40%
    Q4 FY25

    Roughly 40% of U.S. volume is DIY.

    Commercial sales mix
    60%
    Q4 FY25

    Roughly 60% of U.S. volume is commercial.

    Mexico commercial sales mix
    65%
    Q4 FY25

    Roughly 65% of Mexico volume is commercial, inverse of U.S. mix.

    Industry KPIs

    10
    MetricValueDetails
    Sg a OPEX ratio8.7%%
    Comparable sales4.8%%
    Store count growth304stores
    Gross margin drivers51.5%%
    Pro vs diy performanceDIY comp up 2.2%, Commercial comp up 12.5%%
    Net debt to adjusted EBITDA2.5xx
    Share buyback capital return$447 millionUSD
    Inventory position markdown risk9.6%%
    Same sku like for like inflation2.8%%
    Distribution supply chain cost economics2 new distribution centerscount

    Risks & headwinds

    5
    LIFO Charges due to TariffsFY26

    $80 million in Q4 FY25; $120 million expected in Q1 FY26; $80 million-$85 million per quarter for Q2-Q4 FY26

    Mitigation: Vendor negotiations, sourcing changes, retail price adjustments to cover incremental costs and maintain gross margins.

    Foreign Currency HeadwindsQ4 FY25

    $36 million sales headwind, $14 million EBIT headwind, $0.57 EPS drag in Q4 FY25

    Mitigation: Management reports constant currency to reflect operating performance; no explicit mitigation actions stated beyond reporting impact.

    Lower-End Consumer PressureOngoing

    Unquantified, but noted as still 'under quite a bit of pressure', impacting DIY sales floor

    Mitigation: Focus on value proposition and the essential nature of 'break-fix' and maintenance repairs, which have low elasticity.

    SG&A DeleverageNear-term

    53 basis points deleverage in Q4 FY25

    Mitigation: Strategic investments in growth initiatives (new stores, supply chain) are expected to drive future sales growth, with a commitment to manage expenses in line with sales growth over time.

    DIY Traffic DeclineQ4 FY25

    Down 1.9% for the quarter

    Mitigation: Focus on growth initiatives, improved product mix, and leveraging macro tailwinds like an aging car park to drive overall DIY sales.

    What to watch in Q1 FY26

    5

    LIFO Charge for Q1 FY26

    Q1 FY26
    Current$80 million (Q4 FY25)
    Target$120 million

    Why it matters

    Significant impact on gross margin and EPS; serves as a bellwether for ongoing inflation and tariff impact🌐s.

    Next quarter, we anticipate continued benefits from merchandise margins that should offset the rate headwind from the mix shift to a faster-growing commercial business. As I mentioned, we had an $80 million LIFO charge in Q4, we're planning a LIFO charge of approximately $120 million for next quarter as we're continuing to experience higher costs due to tariffs that impact our LIFO layers.

    Q&A highlights

    7

    Given the 'at least 3%' inflation guidance, and higher pricing seen elsewhere, is AutoZone using price as a share gain lever, or expecting more tariff-driven inflation?

    Management expects inflation to likely increase beyond 3% due to tariffs, and will use pricing to cover costs and remain competitive, noting the industry's disciplined approach.

    “I think, Bret, we suspect it will probably, we said kind of at least 3%, probably goes up from here. I mean at the end of the day, we've talked for years about this industry being pretty disciplined and rational in pricing.”

    asked by Bret Jordan · answered by Philip Daniele

    2 min read6 chapters

    Detailed Narrative

    01

    Commercial Business Acceleration

    AutoZone's domestic commercial sales accelerated to 12.5% on a 16-week basis in Q4 FY25, building on momentum from previous quarters (10.7% in Q3, 7.3% in Q2). This growth is attributed to improved execution, expanded parts availability, and faster delivery to professional customers. Mega-Hub stores, with 133 locations and a target of 300 at full build-out, are a key component, driving significant sales lift and providing expanded assortment for surrounding stores. Commercial programs are now in 92% of domestic stores, with 6,098 total programs.

    02

    DIY Business Resilience and Discretionary Category Trends

    The domestic DIY business posted a 2.2% comparable sales increase for the quarter, despite a 1.9% decline in traffic. This was offset by a positive 3.9% average ticket growth, driven by an improved product mix. Management noted positive growth in discretionary categories, a trend not seen since FY23, suggesting a potential bottoming out. The company believes the aging car park and challenging new/used car sales market provide a tailwind for a resilient DIY business.

    03

    International Expansion and Market Opportunity

    AutoZone opened 51 new international stores in Q4 FY25 (45 in Mexico, 6 in Brazil), bringing the total to 1,030. International same-store sales grew 7.2% on a constant currency basis. The company plans to accelerate international store openings, particularly in Mexico, where the car park is older than in the U.S. by approximately three years, and the competitive landscape is fragmented, offering significant market share growth opportunities. International stores now represent over 13% of the total store base.

    04

    LIFO Charges and Tariff Impact

    A noncash $80 million LIFO charge negatively impacted Q4 FY25 gross margin by 128 basis points and EPS by $0.57. Management anticipates a $120 million LIFO charge for Q1 FY26, with subsequent quarters expected to see $80 million to $85 million charges, primarily due to tariffs. The company's playbook involves negotiating with vendors, moving sourcing, and adjusting retail prices to mitigate these costs and maintain gross margins, expecting same-SKU inflation to accelerate.

    05

    Strategic Investments in Growth Initiatives

    AutoZone invested approximately $1.4 billion in CapEx in FY25 and plans a similar amount, around $1.5 billion, for FY26. These investments are primarily directed towards accelerating new store growth, especially hubs and Mega-Hubs, and enhancing supply chain capabilities. The goal is to place more inventory closer to customers, improve service levels, and drive market share gains, with a long-term target of 500 new stores annually by 2028.

    06

    Pricing Strategy and Demand Elasticity

    Management believes the auto parts industry remains disciplined and rational in pricing. Despite expected increases in same-SKU inflation due to tariffs, they do not foresee significant demand destruction. This is because most categories are essential 'break-fix' or maintenance-related, and the dollar amount of price increases on average tickets ($35-$40 for DIY, $60-$90 for commercial) is relatively small compared to other consumer goods, making it easier for consumers to absorb.

    AI-generated summary of the company’s earnings call. Not investment advice.