AutoZone Reverses Gross-Margin Decline on Tariff Refunds
Fourth-quarter net sales were $6.6 billion, up 5.6%, as gross profit as a percentage of sales reached 53.3%.
AutoZone, Inc. (AZO) reported net sales of $6.6 billion for the 16-week fourth quarter ended August 29, 2026, up 5.6% from the year-earlier period, a slower pace than the 8.4% increase in the 12-week third quarter and 8.1% in the second quarter.
The defining turn was in gross margin. Gross profit as a percentage of sales was 53.3%, an increase of 182 basis points versus the prior year, reversing a 57-basis-point year-over-year decline in the third quarter and a 137-basis-point decline in the second. The company said the lift came from a 145-basis-point impact from tariff refunds and a 105-basis-point net non-cash LIFO impact, partially offset by higher commercial mix.
Same-store sales, for stores open at least one year, cooled. Total company same-store sales were 2.7%, or 1.5% in constant currency, down from 5.5% (3.9% constant currency) in the third quarter and 5.2% (3.3% constant currency) in the second. Domestic same-store sales were 1.6%. International same-store sales were 10.7%, or 1.3% in constant currency, after 16.6% (1.6% constant currency) in the third quarter and 17.1% (2.5% constant currency) in the second.
President and Chief Executive Officer Phil Daniele said the first eight weeks of the quarter were a difficult selling environment and that sales results strengthened in the last eight weeks. He said the company continued to gain share and expects sales in each of the three countries in which it operates to accelerate in fiscal 2027.
Operating profit increased 10.1% to $1.3 billion, after 6.6% growth to $923.8 million in the third quarter and a 1.2% decline to $698.5 million in the second. Net income was $931.6 million, compared with $837.0 million a year earlier. Diluted earnings were $56.05 a share, versus $48.71 a year earlier. Operating expenses as a percentage of sales were 33.4%, versus 32.4% a year earlier, with deleverage primarily from growth initiatives.
The company opened 175 new stores in the quarter — 97 in the U.S., 68 in Mexico and 10 in Brazil — including 16 new U.S. Mega Hub stores, versus 82 in the third quarter and 64 in the second. Total store count reached 8,031, with 6,863 stores in the U.S., 1,001 in Mexico and 167 in Brazil.
Domestic commercial sales were $1.91 billion, up 8.6% from a year earlier, after 6.0% growth in the third quarter. Average sales per commercial program per week were $18.7 thousand.
Inventory increased 10.1% over the same period last year, after 10.8% in the third quarter and 13.1% in the second, driven primarily by growth initiatives. Net inventory per store was negative $107 thousand, matching the third-quarter level.
For the fiscal year ended August 29, 2026, net sales were $20.3 billion, up 7.4%. Gross profit as a percentage of sales was 52.3%, versus 52.6% a year earlier, with a 61-basis-point net non-cash LIFO impact partially offset by a 48-basis-point benefit from tariff refunds. Operating profit increased 3.1% to $3.7 billion. Net income increased 3.0% to $2.6 billion, and diluted earnings per share increased 5.3% to $152.55 from $144.87.
AutoZone repurchased 223 thousand shares in the fourth quarter at an average price of $3,125 a share, for $697.5 million. For the fiscal year it repurchased 579 thousand shares at an average of $3,496 a share, for $2.0 billion. At year end it had $1.6 billion remaining under its current share repurchase authorization.