AutoZone (NYSE: AZO) reported fiscal Q4 2026 net sales of $6.59 billion, up 5.6% year over year, and diluted EPS of $56.05, up about 15.1% from $48.71. Net income increased 11.3% to $931.6 million, while tariff refunds and a favorable non-cash LIFO impact drove most of the quarter’s 182-basis-point gross margin expansion.
Core Financial Results
For the 16-week quarter ended August 29, 2026, gross profit and operating profit grew faster than revenue. Diluted EPS also increased faster than net income, supported by a decline in weighted-average diluted shares to 16.62 million from 17.18 million.
The principal income-statement figures below are GAAP results. Percentage changes are approximate where calculated from the reported values.
| Metric | Fiscal Q4 2026 | Fiscal Q4 2025 | Year-Over-Year Change |
|---|---|---|---|
| Net sales | $6.595 billion | $6.243 billion | +5.6% |
| Gross profit | $3.518 billion | $3.216 billion | +9.4% |
| Gross margin | 53.3% | 51.5% | +182 bps |
| Operating profit | $1.317 billion | $1.196 billion | +10.1% |
| Operating margin | About 20.0% | About 19.2% | About +81 bps |
| Net income | $931.6 million | $837.0 million | +11.3% |
| Diluted EPS | $56.05 | $48.71 | +15.1% |
| Operating cash flow | $1.183 billion | $990.8 million | +19.4% |
Business and Store Performance
Total-company same-store sales increased 2.7% on a reported basis but only 1.5% in constant currency, down from constant-currency growth of 5.1% in the prior-year quarter. Domestic same-store sales rose 1.6%.
International same-store sales increased 10.7% as reported but only 1.3% in constant currency, showing that foreign-exchange movements accounted for most of the reported international growth. The difference is important because it indicates that underlying sales growth outside the U.S. was much more modest than the reported figure suggests.
Domestic commercial sales provided a stronger growth contribution, rising 8.6% to $1.913 billion. Average commercial sales per program per week increased 2.7% to $18,700.
AutoZone opened 175 stores during the quarter, compared with 141 a year earlier. The additions included 97 stores in the U.S., 68 in Mexico, and 10 in Brazil, bringing the total store count to 8,031. Sixteen of the new U.S. locations were Mega Hub stores. Revenue growth of 5.6% therefore came alongside substantial footprint expansion, while constant-currency growth at established stores remained relatively restrained.
Tariff Refunds and LIFO Drove Most of the Margin Expansion
Gross margin increased 182 basis points to 53.3%. AutoZone attributed 145 basis points of benefit to tariff refunds and another 105 basis points to a favorable net non-cash LIFO impact. Those two items contributed more than the total reported expansion, with higher commercial sales mix acting as a partial offset.
Operating expenses moved in the opposite direction. They increased to 33.4% of sales from 32.4%, with management attributing the deleverage primarily to growth initiatives. As a result, only part of the gross margin benefit reached operating margin, which rose by approximately 81 basis points to 20.0%.
The composition of the margin increase matters because a refund and a non-cash inventory-accounting impact differ from margin gains generated by pricing or recurring operating efficiencies. The release did not indicate that these benefits would recur at the same magnitude in subsequent quarters.
Cash Flow, Inventory, and Capital Allocation
Operating cash flow increased 19.4% to $1.18 billion, while capital spending rose about 4.0% to $498.8 million. On a simple operating cash flow less capital spending basis, cash generation after capital expenditures was approximately $684.5 million, up from about $511.1 million a year earlier.
Inventory increased 10.1% to $7.74 billion, which the company attributed primarily to growth initiatives. Inventory per store rose to $963,000 from $918,000, while inventory turns declined to 1.3 times from 1.4 times. Accounts payable still exceeded inventory, but net inventory was negative $861.0 million compared with negative $999.9 million a year earlier.
Cash and cash equivalents increased to $326.1 million from $271.8 million, while total debt rose to $9.08 billion from $8.80 billion. AutoZone repurchased 223,000 shares during the quarter for $697.5 million at an average price of $3,125 per share. It had $1.6 billion remaining under its repurchase authorization at fiscal year-end.
Management’s View
CEO Phil Daniele said the selling environment was difficult during the first eight weeks of the quarter but that sales strengthened during the final eight weeks. Management believes the company continued to gain market share and expects sales in the U.S., Mexico, and Brazil to accelerate during fiscal 2027.
The company remains focused on expanding inventory availability, improving delivery speed, opening stores and Mega Hubs, and serving both do-it-yourself and professional customers. These initiatives supported commercial sales and store growth but also contributed to operating-expense deleverage and higher inventory.
Recent Insider Transactions
The supplied six-month insider summary shows 16,537 shares purchased across 11 transactions and 12,570 shares sold across three transactions, producing net purchases of 3,967 shares. Among the latest entries, the following transactions were explicitly identified as purchases or sales.
| Date | Insider | Role | Transaction | Price per Share | Reported Value |
|---|---|---|---|---|---|
| August 7, 2026 | Dennis W. Leriche | Officer | Sale | $3,100.00 | $4.51 million |
| May 29, 2026 | Brian Hannasch | Director | Purchase | $2,987.00 | $492,855 |
| April 10, 2026 | Earl G. Graves Jr. | Director | Sale | $3,478.72 | $173,936 |
These disclosures describe the transactions but do not, by themselves, establish the insiders’ views about AutoZone’s valuation or outlook.
Risks Investors Need to Watch
- Slower underlying same-store sales: Constant-currency same-store sales grew 1.5%, compared with 5.1% a year earlier, and management described the first half of the quarter as a difficult selling environment.
- Dependence on specific margin benefits: Tariff refunds and the favorable non-cash LIFO impact accounted for most of the gross margin increase. Future margin comparisons could become more difficult if those contributions are smaller.
- Growth spending is pressuring expense leverage: Operating expenses rose to 33.4% of sales as AutoZone invested in stores, inventory, delivery capabilities, and other growth initiatives.
- Higher inventory and capital requirements: Inventory increased 10.1%, inventory turns declined, and capital spending reached $498.8 million. These trends raise the amount of capital required to support expansion.
- Currency sensitivity in international results: International same-store sales increased 10.7% as reported but only 1.3% in constant currency, demonstrating the material effect exchange rates can have on reported growth.
Summary
AutoZone’s fiscal fourth quarter combined mid-single-digit revenue growth with faster increases in operating profit, net income, EPS, and operating cash flow. Tariff refunds and the favorable LIFO impact were central to the margin improvement, while store expansion, commercial sales, and share repurchases also shaped the results. The main issues to monitor are whether underlying same-store sales accelerate as management expects, how margins perform without the same level of special benefits, and whether growth investments produce sufficient returns to offset higher expenses and inventory.
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