AUTOZONE Q4 FY26 earnings call AZO

AutoZone invested approximately $1.5 billion in CapEx in FY26, with a similar amount planned for FY27, primarily for accelerated store growth, including Hubs and Mega Hubs. The company has completed major U.S. DC expansions, a new Brazil DC, and expanded its Monterrey, Mexico DC, which is now more than double its previous size and fully operational. A third Mexico DC broke ground in August, expected to come online in late FY28, further supporting international expansion and supply chain efficiency. These investments are aimed at improving product assortment, in-stock positions, and speed of delivery.

AutoZone opened a record 374 new stores in FY26, bringing its total store count to over 8,000 globally, including 1,001 in Mexico. The company plans to open approximately 400 new stores in FY27, nearing its long-term goal of 430 annual openings. New stores are performing slightly ahead of original forecasts, with average first-year sales of roughly $1.7 million, ramping to $2.7 million by year six. These new stores are expected to achieve approximately 15% ROIC by year four and over 20% by year six, contributing to long-term value despite near-term ROIC pressure.

The Mega Hub network is a critical component of AutoZone's commercial growth strategy. In FY26, 39 new Mega Hubs were opened, bringing the total to 172. These hubs typically carry over 100,000 SKUs and provide a significant sales lift to both commercial and DIY businesses, with commercial programs linked to a Mega Hub network selling 16% more annually. AutoZone targets approximately 300 Mega Hubs over the next three years, aiming to accelerate market share gains, particularly with

Domestic DIY same-store sales declined 0.6% in Q4 FY26, primarily due to traffic declines, which management attributes to higher inflation, especially in fuel prices, impacting consumer spending. While transactions were soft, average ticket was up roughly 5% due to mid-single-digit like-for-like SKU inflation. Management expects transactions to rebound as inflation moderates, supported by an aging car park and higher new/used car prices, which historically provide a tailwind for the business. The company noted evidence of deferrals and trade-down among financially challenged DIY customers.

International same-store sales grew 1.3% on a constant currency basis in Q4 FY26, with 68 new stores in Mexico and 10 in Brazil. While Mexico faced continued macroeconomic softness^🌐, sales showed an uptick late in Q4. AutoZone plans to open approximately 400 new stores in FY27 but will reduce its FY28 target from 500 to 430, specifically slowing Brazil expansion to concentrate on the U.S. and Mexico. This strategic shift aims to double down on performance in markets where returns on invested capital are strong and stores are maturing well.