🔧 AutoZone $AZO Q3 2025 Earnings: Strong Sales, Margin Pressure
📈 Key Financials (GAAP)
Net Sales: $4.46B → +5.4% YoY
Operating Profit: $866M → -3.8% YoY
Net Income: $608M → -6.6% YoY
Diluted EPS: $35.36 → -3.6% YoY
Same store sales performance:
Domestic: +5.0%
International (Constant Currency): +8.1%
Total Company (Constant Currency): +5.4%
“We continue to be pleased with our strategy to grow our domestic and international DIY and Commercial sales.”
— Phil Daniele, CEO
🧮 Margin Details
Gross margin declined 77 bps to 52.7%, pressured by:
Higher inventory shrink
Unfavorable mix from commercial sales
Startup costs for new distribution centers
A non-cash LIFO charge of $8M
Operating expenses rose to 33.3% of sales (from 32.2%), driven by:
Higher self-insurance expense
Growth initiative investments
🏪 Growth & Expansion
84 new stores opened in the quarter:
54 in the U.S.
25 in Mexico
5 in Brazil
Total store count: 7,516 globally
Inventory up 10.8% YoY due to store expansion and sales initiatives
“We are excited about our momentum heading into the last quarter… well prepared for our summer selling season.”
— Phil Daniele, CEO
💵 Shareholder Value & Financial Position
Share Buybacks: 70,000 shares repurchased @ $3,571 avg → $250.3M spent
Remaining authorization: $1.1B
Cash & Equivalents: $269M
Adjusted ROIC: 43.5%
Adjusted Debt/EBITDAR: 2.5x
🔍 Bottom Line
AutoZone continues to deliver strong top-line growth, particularly in its domestic and international commercial segments. However, rising operational costs, margin pressure, and FX headwinds weighed on earnings.
The company’s commitment to expansion and disciplined capital allocation remains clear, setting the stage for long-term value — even as short-term profitability sees modest compression.
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