AutoZone Posts Record $20.3 Billion Year, Opens 374 Stores

AutoZone generated $20.3 billion in sales for fiscal 2026, crossing the $20 billion mark for the first time in its history and posting a 7.4% increase over the prior year. Fourth-quarter earnings per share rose 15.1% to $56.05, helped by a $96 million refund of IEEPA tariffs — a $4.43-per-share benefit — that outweighed a $15 million non-cash LIFO charge, CFO Jamere Jackson told analysts on the Sept. 22 earnings call.

The quarter's headline growth masked a split business. Total sales grew 5.6% to $6.6 billion, slower than the third quarter's pace. Domestic commercial — the do-it-for-me arm serving repair shops — grew 8.6% against last year's Q4, while domestic DIY same-store sales declined 0.6%. CEO Phil Daniele said sales bottomed in June before improving through the quarter, with domestic comps accelerating to +2.1% in August.

"We saw our sales bottom in June and then begin to improve as the quarter moved along," Daniele said. "We exited the quarter with good momentum, and we are optimistic about our sales trajectory for the new fiscal year."

Milder-than-usual temperatures across the Southeast and South Central markets early in the quarter hurt hot-weather categories, and higher oil and gas prices dampened foot traffic for most of the period. Same-SKU inflation ran at mid-single digits, pushing DIY average ticket up roughly 5%, offset by traffic declines that exceeded 5%. Jackson noted DIY ticket is up about 9% on a two-year basis.

Store expansion at record pace

AutoZone opened 175 stores in the quarter and 374 for the year — its highest ever — versus 304 last year. The company celebrated its 1,000th store in Mexico, opened its 8,000th store in Tennessee in August, and finished the year with 1,168 international locations, including 167 in Brazil. It plans approximately 400 new stores in FY2027.

Management laid out detailed store economics for analysts. A typical new store generates roughly $1.7 million in first-year sales on an average investment of $2.9 million, ramps to about $2.7 million by year six, and reaches roughly 15% return on invested capital by year four and over 20% by year six. Commercial sales typically more than double over that horizon, driven by under-penetrated smaller-shop customers.

Daniele said early performance of the accelerated store openings runs slightly ahead of the company's original forecast on sales and EBIT. The company invested approximately $1.5 billion in CapEx in FY2026 and plans about $1.65 billion in FY2027.

Mega Hubs as growth engine

The commercial engine leans heavily on the Mega Hub network — large-format stores carrying over 100,000 SKUs that feed surrounding locations. AutoZone opened 39 Mega Hubs in FY2026, ending with 172, and expects more than 40 in FY2027. Roughly 2,000 commercial programs linked to a Mega Hub sell 16% more annually than the rest of the chain, according to Jackson. The company targets approximately 300 Mega Hubs over the next three years.

For the full year, domestic commercial sales finished just under $5.8 billion, up nearly 11% versus FY2025. Average weekly sales per program hit $18,700, and the company added 345 domestic commercial programs to reach 6,443, covering 94% of its domestic stores.

International same-store sales grew 1.3% on a constant-currency basis but jumped 10.7% unadjusted, as the Mexican peso strengthened almost 9% against the dollar — a $70 million sales tailwind and an $0.87-per-share benefit. Daniele said Mexico's macro softness persisted but sales inflected upward in the final four weeks, and the company expects low double-digit constant-currency international comps in Q1.

The P&L details

Gross margin came in at 53.3%, up 182 basis points, though excluding LIFO charges in both years the gain was 76 basis points, boosted by the tariff refunds. Jackson guided to $85 million to $90 million in LIFO charges for FY2027 — down from $192 million in FY2026 — and flat-to-up-25-basis-point gross margins on a GAAP basis.

Operating expenses grew 8.9% as SG&A deleveraged 101 basispoints, driven by growth initiatives. Free cash flow reached $684 million in the quarter versus $511 million a year ago, and approximately $1.8 billion for the full year despite a $169 million increase in CapEx. The company repurchased $697 million of stock in the quarter and $2 billion for the year, with $1.6 billion remaining on its authorization. Leverage finished at 2.5x EBITDAR.

Asked whether the investments of recent years — supply chain, technology, accelerated store growth — are finally winding down, Daniele was direct: "We're in the latter innings of virtually all of those investments." The U.S. distribution center expansion is complete, the new Brazil DC is operational, and the doubled Monterrey, Mexico DC opened this quarter, with a third Mexico facility in León slated for late FY2028.

Outlook tempered on Brazil

For FY2027, AutoZone expects domestic same-store sales flat to up low single digits on roughly 4% ticket growth, domestic commercial sales up high single to low double digits, and international constant-currency comps up low to mid single digits. The company trimmed its FY2028 store-opening target from roughly 500 to 430, slowing Brazil to concentrate capital on the U.S. and Mexico.

"The top focus for fiscal 2027 will remain growing market share in our domestic commercial business and re-accelerating our international growth," Daniele said. AutoZone holds a 5%-6% share of what he called "a $100 billion business," leaving room to run if transaction trends — down more than 5% in DIY this quarter — normalize back toward their historical 1%-3% decline as tariff-driven inflation rolls off.