AZO 2026 Q2

Domestic commercial same-store sales growth decelerated sharply in the final two weeks of the quarter to just over 1%, down from over 12% growth in the prior ten weeks, as winter storms shut many commercial customers' shops.

“our commercial sales were up just over 1%, while the other 10 weeks of the quarter our commercial sales were up over 12%”— Philip Daniele, CEO

Commercial sales growth already snapped back to normal, better-than-double-digit levels in the earliest days of Q3 as weather-impacted shops reopened, reversing the late-Q2 slump.

“it has been back to normal as we would have expected in the very early goings of what is our Q3”— Philip Daniele, CEO

Management now expects DIY average ticket growth to continue rising sequentially through the third fiscal quarter before peaking in the fourth quarter, then decelerate as the company laps last year's price increases.

“we continue to expect our average ticket to grow sequentially through the third fiscal quarter”— Philip Daniele, CEO

Tariff-driven cost increases have not yet fully flowed through to retail prices, so management expects elevated ticket growth to persist through Q3 and Q4 as more tariff costs get passed on via price increases.

“All of the costs that we have seen so far from tariffs have not made its way through the system”— Jamere Jackson, CFO

Domestic commercial transaction trends turned slightly negative over the last four weeks of the quarter, reversing recent positive trends, as severe ice storms closed shops and reduced customer activity.

“The weather in the last four weeks of the quarter slowed transaction trends to a slight negative growth over those last four weeks”— Philip Daniele, CEO

Management now expects DIY traffic to improve later in the year as ticket growth begins to decelerate by late summer, a shift from the recent pattern of declining traffic.

“we expect traffic to improve as ticket growth begins to slow by late summer”— Philip Daniele, CEO

Management expects deferred maintenance projects to accelerate in the second half of the fiscal year as tax refund proceeds give customers more money to reinvest in vehicle repairs.

“we feel like those will accelerate coming into the second half of our year”— Philip Daniele, CEO

Average weekly sales per commercial program growth of 4.8% was temporarily dampened by opening 80 new programs in existing stores this quarter, which management says will accelerate total commercial growth going forward.

“which dampened our sales per program growth but will accelerate our total growth moving forward”— Jamere Jackson, CFO

Mexico same-store sales growth has slowed over the last several quarters due to weaker economic growth, though management expects sales to reaccelerate once Mexico's economy improves.

“sales growth has slowed over the last few quarters in Mexico due to slower economic growth in the country”— Jamere Jackson, CFO

Non-cash LIFO charges are escalating sharply due to tariff-driven cost increases, with full-year LIFO charges now expected at $277 million versus just $64 million last year, pressuring reported gross margin.

“$277 million in LIFO charges that we expect this year compared to $64 million last year”— Jamere Jackson, CFO

Management continues to anticipate additional merchandise margin benefits next quarter that should help offset the gross margin rate headwind from the ongoing mix shift toward faster-growing commercial sales.

“We continue to anticipate benefits from merchandise margins next quarter as well”— Jamere Jackson, CFO

Management now expects EBIT and top-line growth to accelerate starting in FY2027 and FY2028 as recently opened stores mature, signaling improving operating leverage despite ongoing commercial mix pressure.

“you will start to see these stores mature and that you will see our top line growth accelerate in FY 2027 and FY 2028”— Jamere Jackson, CFO

SG&A growth per store decelerated to 3.9% from the prior quarter's 5.8% increase, as management deliberately managed payroll and spending lower in response to softer sales during the storm-impacted weeks.

“our SG&A was up 3.9% compared to the prior quarter's 5.8% increase as we managed our SG&A per store lower as sales softened”— Jamere Jackson, CFO

Management does not expect SG&A growth to return to the double-digit rates seen last year, as the company begins annualizing the prior year's accelerated store growth investments.

“We do not expect to go back to double-digit rates over the back half of the year”— Jamere Jackson, CFO

Management believes AutoZone is moving up commercial customers' preferred-supplier 'call list' as hub, Mega Hub, and service execution strategies improve, strengthening its competitive position with commercial accounts over time.

“we continue to move up the call list”— Philip Daniele, CEO

IEPA tariffs, which represented a relatively small portion of the company's tariff exposure, have been stayed by courts, while the larger Section 232 tariffs remain in effect and continue to drive cost increases.

“the IEPA tariffs have been stayed at this point. That was a relatively small portion of our tariff bill”— Jamere Jackson, CFO

Store opening pace is accelerating, with FY26 now targeting 350-360 new stores versus 304 last year, part of a multi-year ramp management calls the 'middle innings' toward 500 annual store openings by FY2028.

“We are now on track to open approximately 350 to 360 stores for the full year”— Philip Daniele, CEO

Management raised its full-build-out target for Mega Hub stores to more than 300 locations, up from prior targets that grew progressively from roughly 40 to 100, 150, and 200 stores over the years.

“we believe we will have more than 300 at full build-out”— Philip Daniele, CEO

Management expects the severe winter weather in Rust Belt markets to become a demand tailwind in the coming spring and summer, as harsh ice and cold historically drive higher vehicle failure and maintenance events.

“have always indicated a pretty strong category performance on those markets as you move through spring and summer selling season”— Philip Daniele, CEO

Management now expects tax refunds to be slightly larger this year due to recent tax policy changes, which it views as an incremental demand tailwind heading into spring and early summer.

“we expect those to be slightly bigger, based on no tax on tips and all that sort of stuff”— Philip Daniele, CEO