Executive Summary

Q1 FY2025 delivered modest topline growth ($4.28B, +2.1% YoY) with diluted EPS flat at $32.52 amid FX headwinds and SG&A deleverage; gross margin expanded 16 bps to 53.0% on merchandising gains .
Same-store sales were +0.4% reported and +1.8% constant currency; domestic +0.3%, international +13.7% constant currency (1.0% reported) as a stronger USD depressed reported sales and EPS by ~$0.68 per share; Mexico FX rates weakened 13% vs USD, causing ~$58M sales and ~$17M EBIT drag .
Management expects Q2 FY2025 FX drag of ~$95M revenue, ~$30M EBIT, ~$1.30 EPS and full-year FY2025 FX drag of ~$355M revenue, ~$120M EBIT, ~$4.90 EPS; no LIFO credit expected in Q2; tax rate suggested at ~23.4% and interest expense ~$108M .
Strategic catalysts: accelerated Mega-Hub rollout (new objective “just under 300”), ~100 international store openings in FY2025, and >$1B capex focused on inventory proximity, DCs, and technology to lift customer service and delivery speed .
Wall Street consensus (S&P Global) was unavailable due to a data access limit, so we cannot assess beats/misses versus estimates for this quarter [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

International strength: same-store sales up ~13.7% constant currency; reported comps were +1% but FX headwinds masked strong local performance .
Gross margin expansion: 53.0% (+16 bps YoY; +21 bps ex-LIFO) driven by merchandising margin improvement despite freight inflation and new DC start-up drag .
Commercial momentum: domestic DIFM sales +3.2% to $1.13B with improving end-of-quarter trends; Mega-Hub strategy driving outsized growth and higher sales per program in those markets .
Quote: “We feel we are well positioned for growth heading into the remainder of the fiscal year… initiatives to improve customer service and grow market share are on track.” – CEO Phil Daniele .

What Went Wrong

FX headwinds: Mexico FX rates weakened 13% vs USD, depressing reported sales, EBIT, and EPS; ~$0.68 EPS drag in Q1 .
SG&A deleverage: operating expenses rose 4.5% YoY; SG&A as % of sales increased 75 bps to 33.3% amid ongoing growth investments in IT and capex .
DIY softness continues: domestic DIY comp down 0.4%; discretionary categories (~17% of mix) underperformed; traffic down ~1.8% despite +1.3% ticket growth; Northeast/Mid-Atlantic/Rust Belt weaker (down ~1.8% vs -0.1% elsewhere) .
Calendar shift headwind: comp methodology impacted comps by ~1 point this quarter; expected to drag Q2 and reverse in Q3–Q4 .

Financial Results

Metric	Q3 2024	Q4 2024 (Adj. 16w)	Q1 2025
Net Sales ($USD Billions)	$4.235	$5.840	$4.280
Diluted EPS ($USD)	$36.69	$48.11	$32.52
Gross Profit Margin %	53.5%	52.6% adj context (Q4 GAAP 52.5%)	53.0%
Operating Expenses % of Sales	32.2%	31.8% adj context (Q4 GAAP 31.6%)	33.3%
Operating Profit (EBIT, $USD Millions)	$900.2	$1,209.9 (Adj)	$841.1
Net Income ($USD Millions)	$651.7	$841.5 (Adj)	$564.9

Notes: Q4 FY2024 was a 17-week quarter; adjusted 16-week figures shown for comparability .

YoY (Q1 FY2025 vs Q1 FY2024):

Net sales $4.280B vs $4.190B (+2.1%) .
Diluted EPS $32.52 vs $32.55 (-0.1%) .
Net income $564.9M vs $593.5M (-4.8%) .

Same-Store Sales and Mix KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Domestic SSS (%)	0.0%	0.2% (16w comparable)	0.3%
International SSS (%)	18.1%	4.9% (16w comparable)	1.0%
Total Company SSS (%)	1.9%	0.7% (16w comparable)	0.4%
Intl SSS Constant Currency (%)	9.3%	9.9%	13.7%
Total SSS Constant Currency (%)	0.9%	1.3%	1.8%
Sales per Avg Store ($, period)	$576 (12w)	$835 (17w)	$570 (12w)
Sales per Avg Sq Ft ($, period)	$86 (12w)	$124 (17w)	$85 (12w)
AP/Inventory (%)	119.7%	119.5%	119.5%
Inventory Turns (x)	1.4x	1.5x	1.4x

Segment/Category Mix – Q1 FY2025

Segment	Q1 2025 ($USD Thousands)	% YoY
Total Auto Parts Sales	$4,199,732	+2.0%
Domestic Commercial Sales	$1,128,237	+3.2%
All Other (incl. ALLDATA)	$79,909	+7.1%

Balance Sheet and Cash Flow – Q1 FY2025

Metric	Q1 2025	Q1 2024	Q4 2024
Cash & Equivalents ($USD Thousands)	$304,018	$282,981	$298,172
Merchandise Inventories ($USD Thousands)	$6,274,070	$5,774,467	$6,155,218
Total Assets ($USD Thousands)	$17,465,762	$16,292,570	$17,176,538
Accounts Payable ($USD Thousands)	$7,498,696	$7,182,948	$7,355,701
Total Debt ($USD Thousands)	$9,012,539	$8,583,523	$9,024,381
Cash Flow from Operations ($USD Thousands, period)	$811,803 (12w)	$830,259 (12w)	$1,070,250 (17w)
Capital Spending ($USD Thousands, period)	$247,035 (12w)	$235,428 (12w)	$346,786 (17w)

Share Repurchases – Q1 FY2025

Repurchased 160k shares at avg price $3,156; total $505.2M; remaining authorization $1.7B; cumulative program $37.5B since 1998; shares outstanding end of quarter 16,810k .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Interest Expense ($USD Millions)	Q2 FY2025	Not provided	~$108	New
Tax Rate (%)	Q2 FY2025	Not provided	~23.4% (pre option credits)	New
LIFO Credits	Q2 FY2025	N/A	No credits expected	New
FX Drag – Revenue ($USD Millions)	Q2 FY2025	Not provided	~$95	New
FX Drag – EBIT ($USD Millions)	Q2 FY2025	Not provided	~$30	New
FX Drag – EPS ($USD)	Q2 FY2025	Not provided	~$1.30	New
FX Drag – Revenue ($USD Millions)	FY2025	Not provided	~$355	New
FX Drag – EBIT ($USD Millions)	FY2025	Not provided	~$120	New
FX Drag – EPS ($USD)	FY2025	Not provided	~$4.90	New
CapEx ($USD)	FY2025	N/A	>$1B	New
International Store Openings (#)	FY2025	N/A	~100	New
Mega-Hub Target (#)	Long-term	Prior target lower	New objective “just under 300”	Raised ambition

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev)	Q4 2024 (Prev)	Q1 2025 (Current)	Trend
FX impact	Not primary focus; constant currency comps referenced	FX weighed on reported comps; intl constant currency strong	Material headwind; Mexico FX weakened 13%; ~$0.68 EPS drag	Worsening
DIY demand & discretionary mix	DIY comp -1%; discretionary categories weak; traffic -2%, ticket +1%	Domestic SSS +0.2% (16w comparable)	DIY comp -0.4%; discretionary ~17% of mix underperforming; traffic -1.8%, ticket +1.3%	Mixed/soft
Commercial growth & delivery speed	DIFM +3.3%; Mega-Hubs >3x growth vs overall; rollout underway	Domestic commercial +10.9% in Q4 (17w), average program $16.7/week	DIFM +3.2%; hurricanes hurt first 4 weeks; improving exit rate; speed initiatives ongoing	Improving late-quarter
Merchandising margins & LIFO	+102 bps GM; $24M LIFO credit; ~$19M remaining to reverse	Q4 GM 52.5%; LIFO headwind YoY; FY LIFO net favorability	GM +16 bps; +21 bps ex-LIFO; no Q1 LIFO credit; none expected Q2	Stable to modestly positive ex-LIFO
Supply chain/DC capacity	Two new US DCs on track for Q2 FY25; forward inventory deployment	N/A in PR	New DCs starting up causing minor drag; continued optimization	In ramp-up
Mega-Hub/Hubs strategy	>200 at full build-out; strong pipeline	N/A in PR	Target “just under 300”; density tests show low cannibalization	Accelerating
Regional trends (Rust Belt)	NE/Midwest underperformed ~100 bps in last 8 weeks	N/A in PR	Rust Belt underperformed; -1.8% vs -0.1% elsewhere	Persistent headwind
Tariffs/macro & inflation	Hyperinflation moderated; muted ticket growth; industry disciplined pricing	N/A in PR	Section 301 tariff uncertainty; freight inflation picking up; pricing discipline maintained	Watchlist

Management Commentary

“We delivered positive 1.8% total company same-store sales with domestic same-store sales growth of 0.3%… International same-store sales up 13.7% on a constant currency basis.” – CEO Phil Daniele .
“For Mexico, FX rates weakened 13%… resulting in a $58 million headwind to sales, a $17 million headwind to EBIT and a $0.68 a share drag on EPS.” – CFO Jamere Jackson .
“We expect to open around 100 international stores [in FY2025]… and invest more than $1 billion in CapEx in order to drive our strategic growth priorities.” – CEO Phil Daniele .
“We have now set a new objective to have just under 300 Mega-Hubs at full buildout.” – CFO Jamere Jackson ; expanded on density tests and low cannibalization .
“We are going to invest in infrastructure and opportunities to take advantage of… growth opportunities… without it having a negative impact on operating income [in a lower comp environment].” – CFO Jamere Jackson .
“Fiscal 2025 top priorities are… growing share in our domestic commercial business and continuing our momentum in international.” – CEO Phil Daniele .

Q&A Highlights

Competitive dynamics: West Coast peer store closures could create long-term share gains; near-term discounting may be a slight headwind in an inelastic category .
Weather/cadence: Hurricanes depressed first 4 weeks commercial; volumes normalized in back half; early winter supportive but too soon to call .
Comps methodology: Calendar shift negatively impacted comps by ~1 point in Q1; expected drag in Q2 and reversal in Q3–Q4 .
Pricing/tariffs: Industry pricing discipline intact; supply chain diversified by country-of-origin and multiple suppliers; freight inflation likely flows into COGS and pricing over time .
Capital allocation: Leverage target ~2.5x EBITDAR maintained; flexibility to operate around that “area”; ongoing significant buybacks balanced with growth investments .
Mega-Hubs: Density testing supports more locations per market with minimal cannibalization; assets lift both DIY and commercial by reducing delivery times and expanding SKU availability .

Estimates Context

S&P Global consensus estimates for Q1 FY2025 were unavailable due to a daily request limit exceeded; as a result, this recap cannot assess beats/misses versus Wall Street consensus for revenue or EPS this quarter [GetEstimates error].

Key Takeaways for Investors

Q1 was resilient operationally: merchandising lifted gross margin while FX and SG&A deleverage weighed on EPS; constant currency comps improved vs Q3–Q4 baseline, with international strength notable .
FX is the dominant near-term swing factor: ~$0.68 EPS drag in Q1 and modeled ~$1.30 in Q2; monitor USD/MXN and USD/BRL into spring to refine EPS scenarios .
Commercial growth initiatives are gaining traction: inventory proximity (Hubs/Mega-Hubs), delivery speed tech, and Duralast brand strength support share gains as weather normalizes; watch weekly cadence .
DIY demand is soft but stabilizing: traffic down and discretionary categories underperforming; seasonal normalization and ticket growth recovery could aid comps as inflation reverts to historical levels .
Capex and footprint expansion are stock catalysts: >$1B capex, ~100 international stores in FY2025, and ramp to “just under 300” Mega-Hubs should enhance network effect and sales density over 12–24 months .
Model assumptions: use tax rate ~23.4%, interest expense ~$108M for Q2, zero LIFO credit, and incorporate FX translation drags; SG&A disciplined but still investing in IT and store growth .
Longer-term thesis: aging car park, underpenetrated commercial share (<~5% per commentary), and international runway underpin durable growth despite near-term macro and FX volatility .

Additional Source Documents Reviewed:

Q1 FY2025 press release & 8-K with detailed financial tables .
Prior quarters: Q4 FY2024 press release (17-week; adjusted 16-week metrics) ; Q3 FY2024 8-K and transcript (margin/LIFO, DC expansion; commercial initiatives) .
Organization changes PR (Dec 19, 2024) for context on merchandising/global sourcing leadership .

AUTOZONE INC (AZO)·Q1 2025 Earnings Summary