AutoZone · AZO
AutoZone's 15% profit jump is a refund and a lighter inventory charge; underneath, per-share profit was flat
Without a $96 million tariff refund and with LIFO stripped from both years, fourth-quarter earnings per share were about flat; management also guided comps below the 4% level it named in May, cut its store target and put a figure on new-store returns.
Published · Updated · Inve Research Desk
0%
EPS growth last quarter without refund and LIFO
Reported growth was 15.1%; take out the one-time $96 million refund and the LIFO charge in both years, and profit per share did not move, with buybacks carrying the figure.8
How they did last quarter
Worse than the headline: reported earnings per share rose 15.1%, but without the refund and LIFO profit was flat and domestic sales growth slowed to 1.6%.
Earnings per share $56.05, +15.1% on a year ago
vs $48.70 a year earlier, and about flat once the refund is removed and LIFO is stripped from both years The gain is the one-time refund plus a smaller share count, not a stronger business.7Domestic same-store sales +1.6%
vs +4.8% a year ago and +4.1% the quarter before Growth in existing stores fell by more than half in one quarter.3Do-it-yourself same-store sales -0.6%, traffic down 5% or more
vs management's March guidance that traffic would improve by late summer Customers came less often; a ticket about 5% higher nearly offset the drop, but not all of it.17Operating margin without refund and LIFO about 18.7%
vs about 20.4% a year earlier The core business earned less on each dollar of sales.8A 15% earnings jump that rests on one refund
AutoZone reported earnings per share up 15.1% for the August 2026 quarter, its fiscal fourth7. Inside the quarter sat a $96 million refund of tariffs the company had paid on inventory it had already sold, booked in gross margin7. The refund is real money. It is also not repeatable, and only a small remainder is left to arrive next year7.
Take it out, and take out the LIFO inventory charge in both years (management's own adjusted figure strips the LIFO charge but not the refund), and earnings per share were about flat8. The share count was smaller, so buybacks, not the business, carried the per-share number8. Management disclosed the refund and its per-share size in its prepared remarks. Its adjusted figures strip the LIFO charge in both years and leave the refund in; we strip both7.
Underneath, traffic fell and costs kept rising
The business underneath was slower. Domestic same-store sales, meaning sales at stores open a year or more, rose 1.6% last quarter, against 4.8% a year earlier3,16. The do-it-yourself side fell 0.6%: traffic was down 5% or more, after a 3.6% fall in the quarter before, and customers paid more per visit9. Earlier this year management said traffic would improve by late summer17 and expected a normal or hotter summer18. Instead the executive on the call said: "our domestic business was below our expectations, driven largely by the underperformance in DIY for most of the quarter"9. Management pointed to mild early-quarter weather and higher fuel prices; it said sales bottomed in June, and August domestic comparable sales improved, with the do-it-yourself side about flat9.
Costs did not slow with sales. Operating expenses grew faster than sales7,9, and without the refund and LIFO, operating margin was lower than a year earlier8. That fits a pattern already in the filed results: each of the last three quarters filed ran below the same quarter a year before2.
Operating margin, eight quarters to the last one filed
Each of the last three filed quarters earned a lower margin than the same quarter a year before, before the refund lifted the fiscal fourth.
Operating margin, %
- Feb '24 19.3%
- May '24 21.3%
- Nov '24 19.7%
- Feb '25 17.9%
- May '25 19.4%
- Nov '25 16.9%
- Feb '26 16.3%
- May '26 19.1%
The guide, the store plan and returns disclosure all shifted
In May the finance chief said comparable sales near 4% were where the returns needed to be11. The guidance for next fiscal year is flat to up low single digits10. Asked in September whether the model for leveraging SG&A is built on 4% comps, he said: "I wouldn't say that it's built on a 4% leverage point."10 That answer was to a question about SG&A leverage, and the May remark was about returns, so it is not a reversal; but next year's guide sits below the level management said it needed.
The store plan moved too. The company had held a goal of about 500 new stores a year, with a large share of them abroad4. It is now 430, because fewer will open internationally12. That leaves international openings about where they were this year, so the leg meant to grow has stopped growing12.
This call, management put figures on a new store: about a 15% return by year four, against a company return in the mid-30s13. Each store opened now sits below that average for years. Buybacks ran ahead of free cash flow, and free cash flow itself was flat this year15,5.
Free cash flow, four fiscal years to 2025
Free cash flow fell in each year after FY22, from $2,538.7M in FY22 to $1,790.1M in FY25, and was about flat in FY26 by the company's account.
Free cash flow, $ million
- Aug 2022 2,539
- Aug 2023 2,144
- Aug 2024 1,931
- Aug 2025 1,790
What would have to be true, and what we do not know
Three things would have to hold. Do-it-yourself traffic has to stop falling faster; the guidance needs transactions to fall far more slowly9. Domestic same-store sales have to grow faster than per-store costs, which are guided up about 3%, or the deleverage seen this year is the base case10. And gross margin has to improve on a base the refund lifted. The refund is about 0.47 points of last fiscal year's sales, by our arithmetic14. Asked whether the coming year's range assumed a drag from lapping it, the CFO said no drag was expected, and did not say how underlying gains would replace it. We do not know how the range was built14.
We do not know Brazil's return, or how the mid-30s company figure is defined. The fourth-quarter filing is not yet in Inve's data, so every figure for that quarter here comes from the call and our arithmetic, and the filed numbers may differ slightly7.
In one call the company kept a one-time gain inside its adjusted profit, guided comps below the 4% level it had named in May11, and trimmed a store target it had long held. Each move is defensible alone. Companies seldom announce that a yardstick has been dropped. They offer a new one and let the old one go unmentioned.
Sources
- 1. Year-earlier quarter EPS, EBIT, sales · Q4 FY25: EPS 48.70; EBIT 1,196.1M; sales 6,242.7M; SG&A 2,020.4M; gross margin 51.52% · Q4 FY25 · Inve data · income statement
- 2. Operating margin, last eight quarters · 19.1% (May 2026 quarter) vs 19.4%; 16.3% vs 17.9%; 16.9% vs 19.7% a year earlier · Q1-Q3 FY26 · Inve data · income statement
- 3. Domestic comps by call · Domestic comps by call, Q4 FY25 to Q4 FY26: +4.8%, +4.8%, +3.4%, +4.1%, +1.6%; DIY: +2.2%, +1.5%, +1.5%, +2.2%, -0.6% · Q4 FY25 to Q4 FY26 · Inve call summaries
- 4. Store-opening target in guidance record · 24 Sep 2024 and 10 Dec 2024 calls set about 500 openings a year by FY28, about 200 international · FY28 target · Inve Guidance Tracker
- 5. FY25 free cash flow and capex · FY25 operating cash flow 3,117.3M; capex 1,327.3M; free cash flow 1,790.1M · FY25 · Inve data · cash flow
- 6. Equity and debt · Equity -3,414.3M to -2,784.6M; long-term debt 8,799.8M to 9,016.5M · Aug-2025 to May-2026 · Inve data · balance sheet
- 7. Q4 EPS growth and the tariff refund · Q4 EPS $56.05, +15.1%; EBIT +10.1%; includes $96M tariff refund (about $4.43 a share) in gross margin and $15M LIFO charge; sales +5.6%; management-adjusted EBIT +4.4%, EPS +8.5% (LIFO stripped both years, refund kept); CFO Q&A: a little over $100M of IEEPA refunds, most received in Q4, remainder to trickle out over FY27 · call 2026-09-22 · the company's results call
- 8. EPS and margin without refund and LIFO · EPS ex-LIFO ex-refund 52.31 vs 52.29 = about 0% (0.0% to +0.1%) vs +15.1% reported; diluted shares 3.3% lower; operating margin 18.7% vs 20.4%, about 1.7 points lower (Inve arithmetic on call figures) · Q4 FY26 · the company's results call
- 9. DIY traffic, comps and expenses in the quarter · Domestic comp +1.6%, DIY -0.6%, DIY traffic down 5% or more, ticket about +5%, commercial +8.6%; expenses +8.9%; FY27 needs DIY transactions down only 1-3%; DIY traffic -3.6% in the May quarter (Q3 FY26), Q4 -5% or worse; reasons: mild early-quarter weather and higher fuel prices; sales bottomed in June; August domestic comp +2.1%, DIY about flat · call 2026-09-22 · the company's results call
- 10. FY27 comp guidance and 4% answer · Domestic comps flat to up low single digits; SG&A per store up about 3% (about 8% in total dollars, with about 5% more stores); CFO: 'I wouldn't say that it's built on a 4% leverage point.' · call 2026-09-22 · the company's results call
- 11. May remark on 4% comps and returns · CFO said comps around 4% or better were where the company needs to be to drive its returns on invested capital · call 2026-05-26 · the company's results call
- 12. FY28 store target cut · FY27 about 400 openings; FY28 target 430 (from about 500): about 300 U.S., 120 Mexico, 20 Brazil; FY26 openings 374, of which 236 domestic, so 138 international (Inve arithmetic) · call 2026-09-22 · the company's results call
- 13. New-store returns · New store costs about $2.9M; about 15% ROIC by year 4, over 20% by year 6; company ROIC mid-30s; FY27 capex about $1.65B vs about $1.5B in FY26 · call 2026-09-22 · the company's results call
- 14. FY27 gross-margin guide and refund base · FY27 gross margin ex-LIFO flat to up 25 bps in prepared remarks (Q&A: flat to up 20 on a GAAP basis); refund about 47 bps of FY26 sales (Inve arithmetic); asked whether the range is inclusive of the refund benefit with no drag expected, CFO: 'That's right', then 'we're expecting to lap those tariff benefits and not have that be a call out'; Q1-Q3 FY26 ex-LIFO gains +9 bps, slightly positive, +20 bps · call 2026-09-22 · the company's results call
- 15. Buybacks against free cash flow · FY26 buybacks $2.0B; Q4 buybacks $697M vs Q4 free cash flow $684M; FY26 free cash flow about $1.8B, flat on FY25 · FY26 · the company's results call
- 16. Q4 FY25 domestic comp · Q4 FY25 domestic comp +4.8% · call 2025-09-23 · the company's results call
- 17. March traffic outlook · Daniele: "we expect traffic to improve as ticket growth begins to slow by late summer" · call 2026-03-03 · the company's results call
- 18. May summer outlook · Daniele: "we're expecting a normal, if not hotter than normal summer" · call 2026-05-26 · the company's results call
- 19. March new-store maturity · Jackson: "most of these stores will mature in the 4- to 5-year kind of time frame" · call 2026-03-03 · the company's results call
The record: notes, full financial tables, guidance history
Notes
Impact 4/5 One-off Negative
AutoZone Q4 EPS up 15.1%, but about flat without a $96M tariff refund and LIFO
AutoZone's CFO reported earnings per share of $56.05 for the August 2026 quarter, up 15.1%, with a $96 million tariff refund inside gross margin. Removing the refund and the LIFO inventory charge in both years leaves earnings per share about flat, and operating margin about 18.7% against 20.4% a year earlier, by our arithmetic.
“Our results included a $96 million tariff refund and a $15 million LIFO charge this quarter.”— Jamere Jackson, CFO
Sources (3)
Claim Value Period From Year-earlier quarter EPS, EBIT, sales Q4 FY25: EPS 48.70; EBIT 1,196.1M; sales 6,242.7M; SG&A 2,020.4M; gross margin 51.52% Q4 FY25 Inve data · income statement Q4 EPS, $96M refund and LIFO Q4 EPS $56.05, +15.1%; EBIT +10.1%; includes $96M tariff refund (about $4.43 a share) in gross margin and $15M LIFO charge; sales +5.6% call 2026-09-22 the company's results call EPS and margin ex-refund, ex-LIFO EPS ex-LIFO ex-refund 52.31 vs 52.29 = about 0% (0.0% to +0.1%) vs +15.1% reported; diluted shares 3.3% lower; operating margin 18.7% vs 20.4%, about 1.7 points lower (Inve arithmetic on call figures) Q4 FY26 the company's results call Impact 4/5 Guidance Negative
AutoZone guides FY27 comps flat to low single digits, under the 4% it named in May
For FY27 AutoZone guided domestic same-store sales to flat to up low single digits, with SG&A per store up about 3%. Domestic comps were 1.6% in the August 2026 quarter, from 4.8% a year earlier. On 26 May the CFO had said comps of about 4% or better were where returns needed to be; asked on 22 September whether the model for SG&A leverage is built on 4% comps, he said it is not, and that SG&A can be grown in line with sales.
“I wouldn't say that it's built on a 4% leverage point.”— Jamere Jackson, CFO
Sources (4)
Claim Value Period From Domestic comps by call Domestic comps by call, Q4 FY25 to Q4 FY26: +4.8%, +4.8%, +3.4%, +4.1%, +1.6%; DIY: +2.2%, +1.5%, +1.5%, +2.2%, -0.6% Q4 FY25 to Q4 FY26 Inve call summaries Q4 FY25 domestic comp Q4 FY25 domestic comp +4.8% call 2025-09-23 the company's results call FY27 comp guidance and 4% answer Domestic comps flat to up low single digits; SG&A per store up about 3% (about 8% in total dollars); CFO: 'I wouldn't say that it's built on a 4% leverage point.' call 2026-09-22 the company's results call May remark on 4% comps CFO said comps around 4% or better were where the company needs to be to drive its returns on invested capital call 2026-05-26 the company's results call Impact 4/5 Guidance Mixed
AutoZone cuts FY28 new-store goal to 430 a year from about 500, on fewer overseas
AutoZone said it will open about 400 stores in FY27 and lowered its FY28 target from roughly 500 to 430 a year, because fewer international stores will open. The FY28 split is about 300 in the U.S., 120 in Mexico and 20 in Brazil, so about 140 international openings, close to the 138 opened in FY26, against about 200 set on the 24 September 2024 call.
“we will slow the pace of our Brazil expansion to concentrate on the U.S. and Mexico in the near term”— Philip Daniele, AutoZone
Sources (2)
Claim Value Period From Store-opening target in guidance record 24 Sep 2024 and 10 Dec 2024 calls set about 500 openings a year by FY28, about 200 international FY28 target Inve Guidance Tracker FY28 store target and split FY27 about 400 openings; FY28 target 430 (from about 500): about 300 U.S., 120 Mexico, 20 Brazil; FY26 openings 374, of which 236 domestic, so 138 international (Inve arithmetic) call 2026-09-22 the company's results call Impact 3/5 Demand Negative
AutoZone DIY traffic fell 5% or more last quarter; DIY same-store sales down 0.6%
Domestic do-it-yourself same-store sales fell 0.6% in the August 2026 quarter, with traffic down 5% or more (down 3.6% in the May quarter) and ticket up about 5%. On 3 March management said it expected traffic to improve by late summer, and on 26 May it expected a normal or hotter summer. Commercial sales rose 8.6%, and the FY27 guide needs DIY transactions to fall only 1% to 3%.
“our domestic business was below our expectations, driven largely by the underperformance in DIY for most of the quarter”— Philip Daniele, AutoZone
Sources (4)
Claim Value Period From Domestic comps by call Domestic comps by call, Q4 FY25 to Q4 FY26: +4.8%, +4.8%, +3.4%, +4.1%, +1.6%; DIY: +2.2%, +1.5%, +1.5%, +2.2%, -0.6%; DIY traffic -3.6% (Q3 FY26, call 2026-05-26) Q4 FY25 to Q4 FY26 Inve call summaries DIY traffic, comps and expenses Domestic comp +1.6%, DIY -0.6%, DIY traffic down 5% or more, ticket about +5%, commercial +8.6%; expenses +8.9%; FY27 needs DIY transactions down only 1-3% call 2026-09-22 the company's results call March traffic outlook Daniele: "we expect traffic to improve as ticket growth begins to slow by late summer" call 2026-03-03 the company's results call May summer outlook Daniele: "we're expecting a normal, if not hotter than normal summer" call 2026-05-26 the company's results call Impact 3/5 Capex Mixed
AutoZone puts a number on new stores: about 15% return by year four, over 20% by year six
AutoZone gave new-store economics on the call: an average store costs about $2.9 million, sells about $1.7 million in its first year and about $2.7 million by year six. Management expects about a 15% return on invested capital by year four and over 20% by year six, against a company return in the mid-30s, though the call did not say whether the two are measured the same way. FY27 capex is guided at about $1.65 billion, which Philip Daniele called slightly higher than about $1.5 billion in FY26. On 3 March the CFO had said stores mature in four to five years but gave no figures.
“By the end of the fourth year, we expect to achieve approximately 15% ROIC.”— Philip Daniele, AutoZone
Sources (3)
Claim Value Period From FY25 free cash flow and capex FY25 operating cash flow 3,117.3M; capex 1,327.3M; free cash flow 1,790.1M FY25 Inve data · cash flow New-store returns and FY27 capex New store costs about $2.9M; about 15% ROIC by year 4, over 20% by year 6; company ROIC mid-30s; FY27 capex about $1.65B vs about $1.5B in FY26 call 2026-09-22 the company's results call March new-store maturity Jackson: "most of these stores will mature in the 4- to 5-year kind of time frame" call 2026-03-03 the company's results call
Financials
Income statement, last 8 quarters
| Quarter end | Sales | Operating profit | Op. margin | PBT | Net profit |
|---|---|---|---|---|---|
| May 2026 | 4,841 | 924 | 19.1% | 813 | 642 |
| Feb 2026 | 4,274 | 699 | 16.3% | 591 | 469 |
| Nov 2025 | 4,629 | 784 | 16.9% | 678 | 531 |
| May 2025 | 4,464 | 866 | 19.4% | 755 | 608 |
| Feb 2025 | 3,952 | 707 | 17.9% | 598 | 488 |
| Nov 2024 | 4,280 | 841 | 19.7% | 734 | 565 |
| May 2024 | 4,236 | 900 | 21.3% | 796 | 652 |
| Feb 2024 | 3,859 | 743 | 19.3% | 641 | 515 |
Balance sheet
| As of | Equity | Debt | Cash | Fixed assets | Total assets |
|---|---|---|---|---|---|
| May 2026 | −2,785 | 9,017 | 254 | 7,797 | 20,917 |
| Feb 2026 | −2,909 | 8,907 | 286 | 7,555 | 20,439 |
| Nov 2025 | −3,229 | 8,623 | 288 | 7,236 | 19,666 |
| Aug 2025 | −3,414 | 8,800 | 272 | 7,063 | 19,355 |
Cash flow
| Year end | Operating | Investing | Financing | Free cash flow |
|---|---|---|---|---|
| Aug 2025 | 3,117 | −1,400 | −1,747 | 1,790 |
| Aug 2024 | 3,004 | −1,287 | −1,684 | 1,931 |
| Aug 2023 | 2,941 | −876 | −2,060 | 2,144 |
| Aug 2022 | 3,211 | −648 | −3,471 | 2,539 |
Guidance history
| Metric | Target | Due | Verdict | By quarter |
|---|---|---|---|---|
| Q4 FY25 DIY and commercial sales trend | both DIY and commercial trends to remain solid | Q4 FY25 | Achieved |
|
| Q3 FY25 DIY and commercial sales trend | both DIY and commercial sales trends to improve | Q3 FY25 | Achieved |
|
| Q2 FY25 DIY and commercial sales trend | both DIY and commercial sales trends to modestly improve | Q2 FY25 | Achieved |
|
| Q1 FY25 DIY and commercial sales trend | both DIY and commercial sales trends to modestly improve | Q1 FY25 | Missed |
|
| FY26 DIY and commercial sales trend | remain solid, gaining momentum and market share | FY26 | On Track |
|
| FY26 SG&A dollar growth rate | mid-single-digit percentage growth | FY26 | On Track |
|
| Q4 FY26 LIFO P&L impact | approximately $30 million LIFO charge | Q4 FY26 | New |
|
| Q3 FY26 LIFO P&L impact | approximately $60 million LIFO charge | Q3 FY26 | Achieved |
|
| Q2 FY26 LIFO P&L impact | approximately $60 million LIFO charge | Q2 FY26 | Achieved |
|
| Q1 FY26 LIFO P&L impact | approximately $120 million LIFO charge | Q1 FY26 | Achieved |
|
| Q4 FY25 LIFO P&L impact | no LIFO credits expected | Q4 FY25 | Missed |
|
| Q3 FY25 LIFO P&L impact | no LIFO impacts anticipated | Q3 FY25 | Achieved |
|