IntrinsicIntrinsic
← All summaries

AUTOZONE INC

AZO
Financials & Chart →

Business Summary

AutoZone is a leading retailer and distributor of automotive replacement parts and accessories in the Americas, operating 6,627 stores in the United States, 883 stores in Mexico, and 147 stores in Brazil as of August 30, 2025. The industry is highly competitive, with competitors including national, regional, and local auto parts chains, independently owned parts stores, online automotive parts stores or marketplaces, wholesale distributors, jobbers, repair shops, car washes, auto dealers, discount and mass merchandise stores, hardware stores, supermarkets, drugstores, convenience stores, home stores, and other retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories, and tools. Key structural forces shaping competition include customer service, merchandise quality, selection and availability, product warranty, store layouts, location and convenience, price, and the strength of the AutoZone brand name and quality, trademarks, and service marks.

AutoZone competes on the basis of customer service, including the knowledge and expertise of its AutoZoners and its ability to provide prompt delivery to commercial customers; merchandise quality, selection and availability; product warranty; store layouts, location and convenience; price; and the strength of its AutoZone brand name and quality, trademarks and service marks. The company is a leading distributor of automotive parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts in the Americas. A key differentiating component versus competitors is its exclusive line of in-house brands, which includes Duralast and the family of Duralast brands, Econocraft, ProElite, ShopPro, SureBilt, TotalPro, TruGrade, and Valucraft.

AutoZone generates revenue primarily through the sale of automotive replacement parts, maintenance items, accessories, and non-automotive products to do-it-yourself (DIY) customers and commercial customers. The company also sells automotive diagnostic, repair, collision and shop management software through the ALLDATA brand. Revenue is transactional in nature, recognized when the customer takes possession of merchandise, with payment from retail customers at the point of sale and payment terms for commercial customers generally ranging from 1 to 30 days. The company does not derive revenue from automotive repair or installation services. Primary customer segments include DIY consumers and commercial accounts such as local, regional and national repair garages, dealers, service stations, and fleet owners.

The company's product line is extensive for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. Most stores carry approximately 20,000 to 25,000 unique SKUs with 40% to 50% of the space dedicated to hard parts inventory. Hub stores carry approximately 40,000 to 50,000 unique SKUs and mega hub stores carry approximately 80,000 to 110,000 unique SKUs with 70% to 85% of their space utilized for hard parts. During fiscal 2025, failure and maintenance related categories represented the largest portion of sales mix, at approximately 85% of total sales. The company offers multiple value choices in a good/better/best assortment for many products. Key in-house brands include Duralast, Econocraft, ProElite, ShopPro, SureBilt, TotalPro, TruGrade, and Valucraft.

In fiscal 2025, the company opened 305 new stores and closed 1 store, resulting in net new store openings of 304 . The company ended fiscal 2025 with 133 mega hub stores, an increase of 24 since the end of fiscal 2024, and has eight mega hub stores in Mexico. On April 14, 2025, the company issued $500 million 5.125% Senior Notes due June 2030. On April 15, 2025, the company repaid its $400 million 3.250% Senior Notes and $500 million 3.625% Senior Notes due April 2025. During fiscal 2025, the company repurchased 0.4 million shares of common stock at an aggregate cost of $1.5 billion . On October 8, 2025, the Board voted to increase the repurchase authorization by $1.5 billion , bringing the total value of authorized share repurchases to $40.7 billion .

For fiscal 2025, net sales increased to $18.9 billion , a 2.4% increase over the prior year. Operating profit decreased 4.7% to $3.6 billion , net income decreased 6.2% to $2.5 billion , and diluted earnings per share decreased 3.1% to $144.87 for the year. Gross profit for fiscal 2025 was $10.0 billion , or 52.6% of net sales, a 47 basis point decrease compared with $9.8 billion , or 53.1% of net sales for fiscal 2024. Net cash provided by operating activities was $3.1 billion in fiscal 2025.

Business Outlook

A primary growth vector is the expansion of the store network, with the company believing expansion opportunities exist in markets it does not currently serve, as well as in markets where it can achieve a larger presence. The company opened 305 new stores in fiscal 2025 and has grown its store count from 6,549 stores at August 29, 2020 to 7,657 stores at August 30, 2025, a compounded annual growth rate of approximately three percent . Achieving store development and expansion goals, domestically and in international markets, will depend upon the ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel, effective utilization of the supply chain and hub network, and the integration of new stores into existing operations.

Another growth vector is the commercial sales program, which operates in a highly fragmented market. The company is a leading distributor of automotive parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts in the Americas. Domestic commercial sales increased 6.7% in fiscal 2025, representing 31.7% of total Domestic sales. The company must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase its commercial market share. If the company cannot profitably increase its market share in the commercial auto parts business, its sales growth may be limited.

The decrease in gross margin for fiscal 2025 was driven by 55 basis points ($64.0 million charge in the current year versus $40.0 million benefit in the prior year) from non-cash LIFO impact. The increase in operating expenses as a percentage of sales was primarily driven by investments to support growth initiatives. The company's workforce costs represent its largest operating expense, and its ability to meet labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels.

The company has made, and plans to continue to make, significant investments in its supply chain, such as the construction of multiple new distribution centers which began operations in fiscal 2025 and the execution of various technology initiatives. These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with long-term store expansion goals. During fiscal 2026, the company expects to moderately increase the investment in its business as compared to fiscal 2025, with investments expected to be directed primarily to growth initiatives, including new stores and expanded hub and mega hub stores.

The company invested $1.3 billion in capital assets in fiscal 2025. During fiscal 2025, the company repurchased 0.4 million shares of common stock at an aggregate cost of $1.5 billion . On October 8, 2025, the Board voted to authorize the repurchase of an additional $1.5 billion of common stock in connection with the ongoing share repurchase program. Since the inception of the repurchase program in 1998, the Board has authorized $40.7 billion in share repurchases. The company currently does not pay a dividend on its common stock.

A significant headwind is the current global economic and geopolitical landscape, which has increased uncertainty about key areas of doing business internationally. During fiscal 2025, new global trade tariffs were announced on imports to the United States, including additional tariffs on various countries from which the company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others. These developments may have a material effect on global economic conditions, the stability of global financial markets, or global trade, and may impact the company's product cost, pricing, or competitive conditions, disrupt supply chains, impact the broader macroeconomic environment and consumer sentiment or otherwise negatively impact the company's business, financial condition and results of operations.

Demand for the company's products may be affected by a number of factors including the number of older vehicles in service, the number of miles vehicles are driven, rising fuel and energy prices, the economy, weather, technological advances, the prevalence of electric vehicles, the quality of vehicles manufactured by original vehicle manufacturers, and restrictions on access to telematics and diagnostic tools and repair information. These factors could result in a decline in demand for the company's products, which could materially adversely affect its business and overall financial condition.

Risk Factors

The company faces material risks from new global trade tariffs announced during fiscal 2025 on imports to the United States from various countries including Canada, China, and Mexico, which may impact product cost, pricing, competitive conditions, and supply chains. Demand for products is subject to factors including the number of older vehicles in service, miles driven, fuel prices, and economic conditions, which could cause a decline in demand. The company directly imported approximately 13% of its purchases in fiscal 2025, exposing it to risks associated with products sourced outside the U.S., including increased import duties, currency fluctuations, and supply disruptions. The company is self-insured for certain costs, with self-insurance reserve estimates totaling $268.8 million at August 30, 2025, and a 10% change in this liability would have affected net income by approximately $20.0 million for fiscal 2025. A downgrade in the company's investment-grade credit ratings could limit access to public debt markets and significantly increase borrowing costs.

Management Priorities

Management's message emphasizes the company's culture, rooted in its Pledge and Values, and its focus on customer service. The executive summary highlights that for fiscal 2025, net sales increased to $18.9 billion , a 2.4% increase over the prior year, while operating profit decreased 4.7% to $3.6 billion and net income decreased 6.2% to $2.5 billion . Management notes that fiscal 2025 comparisons were negatively impacted by foreign currency exchange rates which had an unfavorable impact to net sales of $273.1 million and operating profit of $88.2 million , and by an unfavorable net non-cash LIFO impact of $104.0 million . The two statistics management believes have the closest correlation to market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road. Strategic priorities emphasized include investing in growth initiatives such as new stores and expanded hub and mega hub stores, returning excess cash to shareholders in the form of share repurchases, and maintaining investment grade credit ratings.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Introduction
  2. [2] Item 1, Business — Introduction
  3. [3] Item 1, Business — Introduction
  4. [4] Item 1, Business — Store Formats
  5. [5] Item 1, Business — Store Formats
  6. [6] Item 1, Business — Store Formats
  7. [7] Item 1, Business — Store Formats
  8. [8] Item 1, Business — Store Formats
  9. [9] Item 7, MD&A — Executive Summary
  10. [10] Item 1, Business — Store Development
  11. [11] Item 1, Business — Store Development
  12. [12] Item 1, Business — Store Development
  13. [13] Item 1, Business — Store Formats
  14. [14] Item 1, Business — Store Formats
  15. [15] Item 1, Business — Store Formats
  16. [16] Item 7, MD&A — Debt Facilities
  17. [17] Item 7, MD&A — Debt Facilities
  18. [18] Item 7, MD&A — Debt Facilities
  19. [19] Item 7, MD&A — Debt Facilities
  20. [20] Item 7, MD&A — Debt Facilities
  21. [21] Item 7, MD&A — Debt Facilities
  22. [22] Item 7, MD&A — Stock Repurchases
  23. [23] Item 7, MD&A — Stock Repurchases
  24. [24] Item 7, MD&A — Stock Repurchases
  25. [25] Item 5, Market for Registrant's Common Equity
  26. [26] Item 7, MD&A — Executive Summary
  27. [27] Item 7, MD&A — Executive Summary
  28. [28] Item 7, MD&A — Executive Summary
  29. [29] Item 7, MD&A — Executive Summary
  30. [30] Item 7, MD&A — Executive Summary
  31. [31] Item 7, MD&A — Executive Summary
  32. [32] Item 7, MD&A — Executive Summary
  33. [33] Item 7, MD&A — Executive Summary
  34. [34] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  35. [35] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  36. [36] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  37. [37] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  38. [38] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  39. [39] Item 7, MD&A — Liquidity and Capital Resources
  40. [40] Item 1, Business — Store Development
  41. [41] Item 1A, Risk Factors — Strategic and Operational Risks
  42. [42] Item 1A, Risk Factors — Strategic and Operational Risks
  43. [43] Item 1A, Risk Factors — Strategic and Operational Risks
  44. [44] Item 7, MD&A — Executive Summary
  45. [45] Item 7, MD&A — Executive Summary
  46. [46] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  47. [47] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  48. [48] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  49. [49] Item 7, MD&A — Liquidity and Capital Resources
  50. [50] Item 7, MD&A — Stock Repurchases
  51. [51] Item 7, MD&A — Stock Repurchases
  52. [52] Item 7, MD&A — Stock Repurchases
  53. [53] Item 5, Market for Registrant's Common Equity
  54. [54] Item 1A, Risk Factors — Strategic and Operational Risks
  55. [55] Item 7, MD&A — Critical Accounting Estimates
  56. [56] Item 7, MD&A — Critical Accounting Estimates
  57. [57] Item 7, MD&A — Critical Accounting Estimates
  58. [58] Item 7, MD&A — Executive Summary
  59. [59] Item 7, MD&A — Executive Summary
  60. [60] Item 7, MD&A — Executive Summary
  61. [61] Item 7, MD&A — Executive Summary
  62. [62] Item 7, MD&A — Executive Summary
  63. [63] Item 7, MD&A — Executive Summary
  64. [64] Item 7, MD&A — Executive Summary
  65. [65] Item 7, MD&A — Executive Summary
  66. [66] Item 7, MD&A — Executive Summary
  67. [67] Item 8, Consolidated Statements of Income
  68. [68] Item 8, Consolidated Statements of Income
  69. [69] Item 8, Consolidated Statements of Income
  70. [70] Item 8, Consolidated Statements of Income
  71. [71] Item 8, Consolidated Statements of Income
  72. [72] Item 8, Consolidated Statements of Income
  73. [73] Item 8, Consolidated Statements of Income
  74. [74] Item 8, Consolidated Statements of Income
  75. [75] Item 8, Consolidated Statements of Income
  76. [76] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  77. [77] Item 8, Consolidated Statements of Income
  78. [78] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  79. [79] Item 8, Consolidated Statements of Cash Flows
  80. [80] Item 8, Consolidated Statements of Cash Flows
  81. [81] Item 8, Consolidated Balance Sheets
  82. [82] Item 8, Consolidated Balance Sheets
  83. [83] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  84. [84] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  85. [85] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024
  86. [86] Item 7, MD&A — Fiscal 2025 Compared with Fiscal 2024

Analysis on 6/8/2026