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AUTOZONE INC (AZO)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 printed mixed: net sales $6.24B (+6.9% YoY on a 16-week comparable) with domestic comps +4.8% and total constant-currency comps +5.1%, but gross margin fell 98–103 bps and EPS was $48.71, pressured by an $80M non-cash LIFO charge and FX headwinds .
  • Against S&P Global consensus, revenue was essentially in line ($6.24B actual vs $6.24B consensus*) while EPS missed ($48.71 actual vs $50.72 consensus*) as LIFO and FX reduced EBIT by ~$94M and EPS by ~$4.14 per share .
  • Commercial momentum accelerated: domestic commercial sales +12.5% YoY (16-week basis), average weekly sales per program rose to $18.2K, and megahubs reached 133 with 25–30 new sites planned in FY26 .
  • Outlook levers: management flagged modeling items (Q1 FY26 LIFO ~$120M; Q2–Q4 ~$80–85M per quarter; interest ~$112M for Q1; tax rate ~23.2% before option benefits; CapEx ~ $1.5B; 325–350 store openings back-half weighted) that could recalibrate Street numbers .
  • Capital returns remain active: post-quarter, the Board added $1.5B to the buyback authorization (cumulative authorizations now $40.7B), complementing $447M repurchased in Q4 at ~$3,821/share .

What Went Well and What Went Wrong

  • What Went Well

    • Commercial acceleration and share gains: domestic commercial sales +12.5% YoY (16 weeks); commercial traffic +6.2% and ticket +3.7% supported by better availability and faster delivery; megahubs growing faster than chain average .
    • Solid comps and international momentum (ex-FX): domestic comps +4.8%; international comps +7.2% constant currency; discretionary categories improved vs recent years; management: “Excluding this LIFO charge, our EPS would have been +8.7%” (16-week basis) .
    • Network expansion: record 141 net new stores in Q4 (304 for FY25), hubs/megahubs and two new DCs boosted assortment and service; CEO: “We expect to aggressively open stores in the new year” .

  • What Went Wrong

    • Margin pressure from LIFO and mix: gross margin 51.5% (-98–103 bps YoY), including an $80M LIFO charge (128 bps unfavorable YoY); SG&A deleveraged 53–80 bps on growth investments .
    • FX headwinds: Mexico peso translation reduced sales by ~$36M, EBIT by ~$14M and EPS by ~$0.57 in Q4 .
    • Inventory turns dipped and AP leverage moderated: turns 1.4x; AP/inventory 114.2% (vs 119.5% LY); inventory/store up 9.6% YoY on growth and inflation; net inventory/store less negative (working capital less favorable) .

Financial Results

Quarterly progression (oldest → newest)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($B)$3.95 $4.46 $6.24
Gross Margin %53.9% 52.7% 51.5%
SG&A % of Sales36.0% 33.3% 32.4%
EBIT ($M)$706.8 $866.2 $1,196.1
Net Income ($M)$487.9 $608.4 $836.95
Diluted EPS ($)$28.29 $35.36 $48.71

Q4 YoY (comparable 16-week view)

MetricQ4 2024 Adj. (16 wks)Q4 2025 (16 wks)YoY
Net Sales ($M)$5,839.5 $6,242.7 +6.9%
EBIT ($M)$1,209.9 $1,196.1 -1.1%
Net Income ($M)$841.5 $836.95 -0.5%
Diluted EPS ($)$48.11 $48.71 +1.3%

Same-store sales and commercial KPIs (oldest → newest)

KPIQ2 2025Q3 2025Q4 2025
Domestic SSS+1.9% +5.0% +4.8%
International SSS (reported)-8.2% -9.2% +2.1%
International SSS (constant FX)+9.5% +8.1% +7.2%
Total SSS (constant FX)+2.9% +5.4% +5.1%
Domestic Commercial Sales ($M)$1,051.8 $1,270.3 $1,762.0
Avg Weekly Sales/Program ($K)$14.7 $17.7 $18.2

Selected Q4 KPIs

KPIQ4 2025
LIFO charge (non-cash)$80M
FX headwind (sales/EBIT/EPS)~$36M / ~$14M / ~$0.57
Inventory/store ($K)918
AP/Inventory114.2%
Net Inventory/store ($K)-$131
Net store openings (Q4/FY)141 / 304
Megahubs (end of Q4)133

Q4 2025 Actual vs Consensus (S&P Global)

MetricActualConsensusDelta
Revenue ($B)$6.2427 $6.2432*-$0.0005B (~0.01% under)
Diluted EPS ($)$48.71 $50.72*-$2.01 (miss)

Values with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
LIFO chargeQ1 FY26Not provided~+$120M New detail (headwind)
LIFO charge run-rateQ2–Q4 FY26Not provided~$80–85M per quarter New detail (headwind)
Interest expenseQ1 FY26$108M in prior-year actual (for context) ~+$112M New modeling color
Tax rate (pre stock-option benefits)Q1 (management said “FY25” but context implies next Q1)Not provided~23.2% New modeling color
CapExFY26“Similar” to FY25 (~$1.4B) ~+$1.5B Slightly higher
Store openings (Americas)FY26Not provided325–350; back-half weighted New detail (accelerated growth)
Megahub openingsFY26Not provided25–30 new locations New detail
FX sensitivityQ1 FY26Not providedIf spot holds: +$32M revenue, +$9M EBIT, +$0.38 EPS New detail
DividendsOngoingNo dividend historicallyNo update; continued buybacks ($1.5B new authorization post-Q4) Capital return via buybacks

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q4 2025)Trend
Commercial accelerationQ2: “DIY and Commercial continued to perform well” ; Q3: Domestic commercial +10.7% YoY; avg weekly/program $17.7K Domestic commercial +12.5% YoY; traffic +6.2%; ticket +3.7% Improving momentum
Gross margin driversQ2: 53.9% flat; prior-year LIFO benefit of 36 bps ; Q3: 52.7% (-77 bps) on shrink, mix, DC start-up, $8M LIFO 51.5% (-98–103 bps) with $80M LIFO; ex-LIFO +25 bps merch margin Near-term pressured by LIFO; ex-LIFO healthy merch margin
Tariffs/inflationLimited in Q2/Q3 disclosures; Q3 noted mix/shrink At least ~3% ticket inflation; LIFO linked to tariffs; plan to pass costs rationally Inflation rising near term; disciplined pricing
InternationalCC comps: Q2 +9.5% , Q3 +8.1% CC comps +7.2%; FX headwind >5 pts; +51 openings in Q4 Strong ex-FX; FX translation drag
Supply chain/assortmentQ3 DC start-up costs, building capacity 2 new DCs opened; 133 megahubs; plan 25–30 more in FY26 Capacity/availability improving
Capital allocationOngoing buybacks each quarter $446.7M repurchased in Q4; +$1.5B authorization post-Q4 Continued buyback cadence

Management Commentary

  • “Excluding this LIFO charge, our EPS would have been plus 8.7% versus last year on a 16-week basis.” — Phil Daniele, CEO .
  • “Commercial sales were up 12.5% year-over-year… We believe the initiatives we have in place have a long runway and will drive strong results into the future.” — Phil Daniele .
  • “Excluding the LIFO comparison… we had a 25 basis point improvement to gross margin, driven by solid merchandise margin improvement.” — Jamere Jackson, CFO .
  • “We expect to build 325 to 350 stores in the Americas in FY26… majority of our planned CapEx of approximately $1.5 billion.” — Jamere Jackson .
  • “We were especially pleased to have opened 141 net new stores globally in the quarter and 304 net new stores for the year… We expect to aggressively open stores in the new year.” — Phil Daniele .

Q&A Highlights

  • LIFO trajectory: Model ~$120M charge in Q1 FY26; ~$80–85M per quarter in Q2–Q4; gains can reverse in future deflationary periods but timing uncertain .
  • SG&A and leverage: Elevated near term due to aggressive new store openings (325–350 FY26) and growth investments; expect mid-single-digit SG&A growth and to manage SG&A in line with sales over time .
  • Price elasticity: Limited in break-fix categories; management expects rational pricing to pass tariff-related costs without destroying demand; average tickets are modest ($35–40 DIY; $60–90 commercial) .
  • Mexico expansion: Large, fragmented market with older car park; majority of international builds to skew to Mexico; opportunity to add hubs/megahubs over time .
  • FY26 modeling color: Interest ~$112M in Q1; tax rate ~23.2% pre option benefits; FX at current spots could add ~$32M revenue, ~$9M EBIT, ~$0.38 EPS in Q1 .

Estimates Context

  • Q4 2025 results vs S&P Global consensus: revenue in line ($6.2427B actual vs $6.2432B consensus*), EPS missed ($48.71 actual vs $50.72*), with management quantifying LIFO/FX drag (~$94M EBIT; ~$4.14 EPS) .
  • Forward consensus (next three quarters): EPS* Q1–Q3 FY26 of ~$32.90 / ~$29.10 / ~$37.10; revenue* ~$4.64B / ~$4.29B / ~$4.82B, respectively. Given planned LIFO charges, rising SG&A tied to growth, and FX tailwind if spot holds, estimate dispersion may increase and revisions likely near term .

Values with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 quality under the hood: strong comps and commercial momentum offset by transitory LIFO/FX headwinds; ex-LIFO, EPS would have grown mid-to-high single digits .
  • Near-term EPS path shaped by tariffs/LIFO: management pre-announced sizable LIFO charges through FY26 H1; watch for normalization when cost pressures ease .
  • Growth algorithm intact: accelerating store openings (325–350 FY26), 25–30 megahubs, and improved availability should sustain share gains in commercial and support DIY resilience .
  • Margin mix manageable: merch margin initiatives aim to offset lower commercial gross margin rates; ex-LIFO gross margin improved .
  • FX sensitivity matters: with continued international expansion, translation can swing reported sales/EPS; Q1 spot rates imply a modest tailwind .
  • Capital return steady: continued buybacks plus a fresh $1.5B authorization underpin per-share growth, even as investment ramps .
  • Setup: Expect Street models to adjust for higher LIFO and SG&A in FY26, partially offset by stronger commercial growth and potential FX tailwind in Q1; catalysts include continued comp strength, execution on megahubs/store builds, and any easing in tariff-driven costs .

Notes:

  • Company-reported figures and commentary are cited to AutoZone’s Q4 FY25 8-K/press release and earnings call transcript as indicated. Consensus estimates and forward estimates are from S&P Global (marked with *).