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AUTOZONE INC (AZO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 delivered solid topline and EPS growth aided by an extra week: net sales $6.21B (+9.0% y/y; +2.6% on 16-week adjusted basis), diluted EPS $51.58 (+11.0% y/y). Gross margin was 52.5%, down 21 bps y/y due to a 53 bps non-cash LIFO headwind; merchandising margins improved .
  • Domestic same-store sales were +0.2% (16-week), international +4.9% reported (+9.9% constant currency) as FX created roughly a 500 bps drag; commercial sales accelerated to +10.9% (+4.5% on a 16-week basis), while DIY comps were down ~1% and discretionary categories fell ~5% .
  • Management highlighted continued share gains, expansion of Hubs/Mega-Hubs (targeting >200 at full build-out; 20+ Mega-Hubs planned in FY2025 and mostly back-half weighted), new distribution centers coming online in 2025, and disciplined capital allocation (Q4 buybacks $711M; $2.2B remaining authorization) .
  • Street estimates from S&P Global were unavailable due to a data error, limiting beat/miss comparisons; management provided modeling guidance on tax rate (23.4% for Q1 FY2025), interest expense ($108M Q1), and FX headwinds (Q1: ~$55M revenue, ~$16M EBIT, ~$0.63 EPS; FY2025 at spot: ~$265M revenue, ~$90M EBIT, ~$3.64 EPS) .

What Went Well and What Went Wrong

  • What Went Well

    • Commercial (DIFM) momentum: Q4 domestic commercial sales +10.9% y/y; +4.5% on a 16-week basis; 5,898 programs and 109 Mega-Hubs with higher sales growth than the rest of commercial .
    • International strength ex-FX: ~+10% constant-currency comps; 49 new stores opened in Mexico/Brazil in Q4; plan to accelerate to ~200 international openings per year by 2028 .
    • Merchandising margins improved even with LIFO headwinds; management remains confident in gross margin expansion as pricing normalizes and supply chain investments ramp .

  • What Went Wrong

    • DIY softness and discretionary pressure: Q4 DIY comp down ~1%; discretionary categories (~18% of mix) down ~5% y/y due to pressured consumer sentiment .
    • FX headwinds: ~500 bps drag on international sales; ~$32M sales headwind, ~$8M EBIT headwind, and ~$0.32 EPS headwind in Q4; potential larger drag in FY2025 at current spot rates .
    • SG&A deleverage: Q4 SG&A 31.6% of sales vs 31.2% y/y, reflecting higher store payroll and accelerated investments in IT and growth initiatives .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Billions)$3.86B $4.24B $6.21B
Diluted EPS ($)$28.89 $36.69 $51.58
Gross Margin (%)53.9% 53.5% 52.5% (−21 bps y/y; 53 bps LIFO headwind)
SG&A (% of Sales)34.6% 32.2% 31.6%
Operating Profit (EBIT, $USD Billions)$0.74B $0.90B $1.30B
Total Company Same-Store Sales (%)3.0% 1.9% 0.7% (16 weeks)
Domestic Same-Store Sales (%)0.3% 0.0% 0.2% (16 weeks)
International Same-Store Sales (%)23.9% reported; 10.6% CC 18.1% reported; 9.3% CC 4.9% reported; 9.9% CC

Segment and sales breakdown (Q4 FY2024):

Segment / KPIQ4 FY2024YoY Change
Total Auto Parts Sales ($USD Millions)$6,092.8 +9.0%
Domestic Commercial Sales ($USD Millions)$1,662.6 +10.9%
Average Sales per Commercial Program per Week ($K)$16.7 0.0%
All Other (incl. ALLDATA) Sales ($USD Millions)$112.5 +11.2%
DIFM share of domestic auto parts / total company sales (%)31% / 27% (Q4) n/a

Key operating and balance sheet KPIs (Q4 FY2024):

KPIQ4 FY2024Prior Year / Prior Quarter
Cash Flow from Operations ($USD Millions)$1,070.3 $1,068.0 (Q4 FY2023)
Capital Spending ($USD Millions)$346.8 $366.2 (Q4 FY2023)
Free Cash Flow ($USD Millions)$723 (quarter) n/a
Accounts Payable / Inventory (%)119.5% 124.9% (Q4 FY2023)
Inventory per Store ($USD Thousands)$837 $807 (Q4 FY2023)
Net Inventory per Store ($USD Thousands)−$163 −$201 (Q4 FY2023)
Inventory Turns (Trailing 5 Quarters)1.5x 1.5x (Q4 FY2023)
Share Repurchases (Q4)244k shares; $710.6M at $2,915 avg. n/a
Shares Outstanding (End of Q4)16,926 17,857 (Q4 FY2023)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Tax RateQ1 FY2025~22.4% benefit 22 bps last year context (no explicit guide) ~23.4% before stock option credits New modeling guide
Interest ExpenseQ1 FY2025$91.4M (Q1 FY2024 actual) ~$108M Raised (higher debt and rates)
FX Impact (Revenue)Q1 FY2025n/a~−$55M at current spot New
FX Impact (EBIT)Q1 FY2025n/a~−$16M New
FX Impact (EPS)Q1 FY2025n/a~−$0.63 New
FX Impact (Full Year)FY2025n/a~−$265M revenue; ~−$90M EBIT; ~−$3.64 EPS New
LIFOQ1 FY2025Q1 FY2024 had ~$2M credit Not anticipating charges or credits in Q1 FY2025; ~$19M credits left to reverse Lowered (no near-term benefit)
Mega-Hubs Opening PlanFY2025Originally ~110 target; pipeline rebuild post-pandemic delays 20+ Mega-Hubs in FY2025; >200 at full build-out; ~70 in pipeline (most under construction) Reaccelerating openings (back-half weighted)
Distribution CentersFY2025n/aNew DCs expected to come online in 2025 New operational milestone

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q2 FY2024)Current Period (Q4 FY2024)Trend
Domestic DIY demandQ2: Domestic SSS +0.3%; Q3: flat DIY comp down ~1%; discretionary (~18% mix) −~5% y/y Softer DIY; discretionary pressured
Commercial accelerationQ2: DIFM +2.7%; Q3: +3.3% Q4: +10.9% reported; +4.5% (16-week) Sequential improvement
Gross margin & LIFOQ2: +160 bps GM, 63 bps LIFO favorability ; Q3: +102 bps GM, 15 bps LIFO favorability Q4: GM 52.5% (−21 bps y/y) with 53 bps LIFO headwind; merchandising margin up LIFO tailwind turned headwind; merch margins resilient
FX and InternationalQ2: International +23.9% reported; +10.6% CC ; Q3: +18.1% reported; +9.3% CC Q4: +4.9% reported; +9.9% CC; ~500 bps FX drag; explicit Q1/FY2025 headwind guide FX headwinds increased
Supply chain & ITQ2: supply chain costs favorable (GM leverage) DCs to come online in 2025; IT investment to improve service and speed to shop Investment ramping
Hubs/Mega-HubsQ3: continued adds; slower than FY2023 109 Mega-Hubs; 20+ planned in FY2025; ~70 pipeline; faster growth vs rest of commercial Reaccelerating asset deployment
Pricing/tariffsn/aIndustry pricing rationality; inflation returning would aid ticket growth; tariff pass-through playbook reiterated Expect gradual normalization
Regional trendsn/aDIY comps ~−1% across all 10 regions; weather impact modest except heat pockets Broad-based consistency

Management Commentary

  • Strategy and outlook: “We are investing in accelerated store growth, specifically Hubs and Mega-Hubs… Distribution centers that will drive efficiency… IT systems that will improve customer service… We believe that our industry is strong, and we have an opportunity to grow market share domestically and internationally.” — CEO Phil Daniele .
  • Commercial initiatives: “Our commercial acceleration initiatives are continuing to deliver good results… 109 Mega-Hub locations… These assets are performing well… lifting the entire network. We have an objective to have well north of 200 Mega-Hubs at full build-out.” — CFO Jamere Jackson .
  • Gross margin drivers: “Excluding LIFO from both years, we had a 32 basis point improvement in gross margin driven by continued improvement in merchandising margins.” — CFO Jamere Jackson .
  • International expansion: “Between Mexico and Brazil, we opened 49 new stores… We plan to accelerate our openings by 2028, targeting around 200 international openings per year.” — CEO Phil Daniele .
  • Capital allocation: “We repurchased $711 million of AutoZone stock in the quarter… just under $2.2 billion remaining under our share buyback authorization.” — CFO Jamere Jackson .

Q&A Highlights

  • Commercial growth timing: Management expects sequential improvement rather than a snapback, driven by better satellite inventory, Hub/Mega-Hub coverage, and faster delivery on hard-to-find parts .
  • Gross margin outlook: Merchandising margin gains expected to continue; early drag from adding DCs; inflation normalization would allow pushing retails more .
  • Hub/Mega-Hub pipeline: ~70 Mega-Hubs in pipeline (most under construction); >200 at full build-out; 20+ to be opened in FY2025; big 30k sq. ft. boxes in tough locations, pipeline rebuilt post-pandemic .
  • FX and noncontrollable headwinds: FY2024 had ~$40M LIFO credits that become headwind; ~$19M remaining credits to reverse; FX guidance provided for Q1 and FY2025 at spot rates .
  • Pricing and competition: Industry remains rational; average ticket growth tied more to cost inflation than competitor pricing; tariffs historically passed through to consumers .

Estimates Context

  • S&P Global Wall Street consensus for Q4 FY2024 EPS and revenue was unavailable due to a data error at the time of this analysis, so beat/miss versus consensus cannot be determined [SPGI error from GetEstimates]. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Commercial is the near-term growth engine; expect continued share gains as inventory availability and speed-to-shop improve, with Mega-Hubs providing outsized lift. Back-half FY2025 asset deployment is a catalyst .
  • DIY remains resilient in break-fix and maintenance, but discretionary categories are likely constrained until consumer sentiment improves; normalization of inflation could reaccelerate average ticket growth .
  • Gross margin expansion via merchandising remains intact; the LIFO dynamic turns from tailwind to headwind in FY2025, but management plans to protect operating margins through SG&A discipline if top-line or GM under-deliver .
  • FX headwinds are material for international; if spot rates hold, they could trim FY2025 EPS by ~$3.64. Still, international comp growth and store expansion underpin medium-term growth .
  • Strong cash generation supports buybacks and investments; Q4 buybacks totaled $711M, with $2.2B remaining authorization, providing EPS support despite macro noise .
  • Near-term modeling: use ~23.4% tax rate and ~$108M interest for Q1 FY2025; expect modestly improving comps in Q1 with better performance in Q2–Q3 per management commentary .
  • Medium-term thesis: Asset-led growth (Hubs/Mega-Hubs, DCs), international expansion, and margin discipline position AZO to sustain double-digit EPS growth over the cycle, contingent on normalization of inflation and FX stabilization per management .

Sources: Q4 FY2024 8-K and press release ; Q4 FY2024 earnings call transcript ; Q3 FY2024 8-K ; Q2 FY2024 8-K .