AZO

• Overall Quarterly Performance

  • Total company sales growth accelerated to 8.4% YoY, the highest growth rate since Q2 FY2023, with the company gaining overall market share
  • 82 new stores were opened globally this quarter, bringing the total global store count to 7160 (6770 in the US, 390 internationally). Full year 2026 global store openings are on track to hit ~365, up from 305 openings in FY2025
  • New store sales productivity is exceeding original pro forma expectations, enabling AutoZone to hit return targets faster than planned
  • Domestic same store sales cadence softened to 2.9% in the final 4 weeks of the quarter, with just 1.3% comp growth in the final two weeks, driven by unseasonably cool wet weather that suppressed demand for heat-related categories (air conditioning, starting, charging)

• Strategic Growth Priorities

  • The top priority for FY2026 is growing market share in the domestic commercial segment, where AutoZone remains significantly underpenetrated at roughly 5% market share
  • AutoZone is accelerating Mega Hub expansion: 156 Mega Hubs are currently open, with a target of ~300 total Mega Hubs at full build out, and at least 40 new Mega Hubs planned for FY2027. Mega Hubs carry over 100,000 SKUs, improve parts availability for the entire local market, deliver faster service to both DIY and commercial customers, and drive sales lifts across both segments
  • International expansion continues, with 14% of total stores currently operating outside the US, and this share expected to grow over time. Even with soft current sales growth, international returns on capital remain strong
  • Capital expenditure for FY2026 is nearly $1.6 billion, with a similar level planned for FY2027. The majority of CapEx is allocated to accelerated store and Mega Hub expansion, with additional investment in technology to improve customer service and operational efficiency

• Capital Allocation

  • AutoZone generated $455 million in free cash flow this quarter, with $1.1 billion in free cash flow year-to-date. The company maintains a strong balance sheet with a 2.5x EBITDAR leverage ratio
  • $586 million in shares were repurchased this quarter, with $800 million remaining in the current share repurchase authorization. AutoZone has repurchased over 100% of outstanding shares since the program began in 2000, while continuing to invest in organic growth

• Industry Fundamentals

  • The ongoing expansion of the overall car park, combined with an aging vehicle fleet and challenging new/used vehicle sales markets, continues to provide a structural tailwind for the aftermarket auto parts business

• Full year 2026 global store opening guidance is maintained at ~365 new stores, with ~160 new stores expected to open in Q4 FY2026
• A $30 million LIFO charge is expected for Q4 FY2026, which will reduce EBIT by $30 million, lower gross margin by 45 basis points, and reduce EPS by ~$1.40 per share. Total expected FY2026 LIFO charges are $207 million, up from $64 million in FY2025
• If Q4 2026 foreign exchange rates hold at current spot levels, AutoZone expects a $62 million revenue tailwind, a $19 million EBIT tailwind, and a $0.78 per share EPS benefit from translation
• Domestic DIY average ticket growth is expected to moderate to the mid-4% range in Q4 FY2026, as the company laps the inflation ramp that began in Q4 FY2025
• International same store sales growth on a constant currency basis is expected to remain in a similar range to Q3 FY2026, with continued caution around weak macroeconomic conditions in international markets
• SG&A growth per store is expected to remain in a similar range to Q3 FY2026 in Q4, with disciplined expense management continuing. No reacceleration of SG&A growth is expected
• The full year effective tax rate for FY2026 is guided to approximately 22%
• 38 new Mega Hubs are expected to be opened in FY2026, with 15 new Mega Hubs planned for Q4 FY2026, and at least 40 planned for FY2027
• Management expects sustained long-term top line growth acceleration, driven by ongoing share gains in domestic commercial, new store expansion, and eventual rebound in international sales, with new stores outperforming original forecasts and enabling faster achievement of return targets

Total company: Q3 2026 total sales were $4.8 billion, up 8.4% year-over-year (YoY); total EBIT was $924 million, up 6.6% YoY; diluted EPS was $38.07, up 7.7% YoY. Excluding a $20 million noncash LIFO charge this quarter and a $16 million LIFO credit last year, adjusted EBIT grew 11% and adjusted EPS grew 12.5% YoY. Gross margin was 52.2%, down 57 basis points YoY, 20 basis points up YoY when excluding the LIFO comparison.

Domestic DIY (Do-It-Yourself): Same store sales grew 2.2% YoY. This segment makes up ~66% of domestic auto parts sales and ~71% of total company sales. Like-for-like same SKU inflation was just above 7%, average ticket grew 5.6%, while same store traffic declined 3.6% YoY.

Domestic Commercial (DIFM): DIFM sales were $1.4 billion, up 10.4% YoY. This segment represents just under 34% of domestic auto parts sales and 29% of total company sales. Like-for-like same SKU inflation was above 7%, average ticket grew 6%, and average transaction count grew 2% YoY. Average weekly sales per program were $18,500, up 4.5% YoY. 14 new Mega Hubs were opened this quarter, bringing the total to 156 Mega Hubs nationwide.

International: Same store sales grew 1.6% YoY on a constant currency basis (16.6% unadjusted, with a 1490 basis point tailwind from positive foreign exchange translation). AutoZone finished the quarter with 933 stores in Mexico and 157 stores in Brazil, for a total of 1090 international stores, representing 14% of AutoZone's total global store base. International operations continued to gain market share despite a soft macroeconomic environment in both Mexico and Brazil.

• Unseasonable weather can negatively impact demand for seasonal categories (such as air conditioning parts) and suppress short-term same store sales growth, as seen in the final two weeks of Q3 FY2026
• Soft macroeconomic conditions in Mexico and Brazil create headwinds for near-term international same store sales growth
• Inflationary cost pressures from energy prices, resin, and existing steel tariffs may continue to pressure input costs, though management expects these impacts to be manageable
• A shift to faster growing commercial business, which has a slightly lower margin profile than DIY, creates ongoing mix drag on overall gross margins that must be offset by other operational efficiency improvements
• Sustained high inflation has driven a decline in DIY transaction volumes that may persist until inflation pressures moderate further

Q: Analyst asks how AutoZone views 2H 2026 same SKU inflation, whether supply chain/lubricant constraints could push inflation higher than expected, and if a peer pulling back from national accounts creates incremental opportunity, plus the profit spread between national accounts and local up-and-down-the-street customers. / A: Management expects inflation to moderate to the 4% range in Q4 2026, slightly lower than Q3 levels. Management notes there may be some lubricant supply constraints but expects the impact to be immaterial. AutoZone is underpenetrated in commercial across both national accounts and local customers, both segments grew double digits last quarter. While there is a small profit spread between the two, management views both as attractive businesses and expects to gain share in both. (339 characters)

Q: Analyst asks why domestic comp growth would not slow by a similar magnitude as the step-down in same SKU inflation in Q4, and asks for detail on the comp contribution from new stores. / A: The step-down in inflation is primarily due to lapping the large inflation increase that occurred in Q4 of last year, not a material change in current market conditions. Commercial transaction growth and ongoing market share gains offset the moderation in inflation. Accelerated new store openings create a larger comp contribution than historical levels, and the entire strategy of accelerated new store growth is designed to drive comp acceleration over time, with performance exceeding management's expectations to date. (442 characters)

Q: Analyst asks if the recent narrowing of AutoZone's performance spread versus competitors means that most market share gains are behind the company, or if share gains can accelerate from here, and if AutoZone can maintain EPS growth if top line growth faces disruptions. / A: Management states there is still ample opportunity for share gains in both DIY and commercial. AutoZone is only halfway through its hub and mega hub expansion, which improves performance for both segments, and execution (including supply chain efficiency, delivery times, and turnover) continues to improve. With commercial only 34% of current mix, it is the top growth priority, and double digit commercial growth is meaningful progress. Management has a long track record of flexing SG&A to offset top line volatility, and new stores are outperforming original projections, driving faster returns. (521 characters)

Q: Analyst asks how recent Mega Hub openings are performing versus historical cohorts, and whether competitors emulating the mega hub strategy is creating competitive headwinds. / A: Management states new mega hubs are outperforming historical openings, driven by a stronger existing commercial business today and improved utilization that leverages mega hubs for direct customer access as well as wholesale fulfillment. There is a robust pipeline of over 100 additional mega hubs planned, and total may exceed the current 300 target. Competitors copying the strategy has not impacted performance, as improved inventory access and faster service continues to drive strong results for AutoZone. (408 characters)