On Tuesday, AutoZone, Inc. (NYSE:AZO) reported second-quarter earnings and sales that fell short of Wall Street expectations.
AutoZone generates most of its revenue by selling auto parts and accessories to Do-It-Yourself (DIY) customers and professional mechanics through its retail stores and online platforms.
The company posted quarterly earnings of $27.63 per share, narrowly missing estimates of $27.76, while revenue rose 8.1% year over year to $4.27 billion, coming in just below expectations of $4.31 billion.
Comparable Sales Growth and Margin Pressure
AutoZone’s quarterly total company same-store sales rose 5.2%. Its domestic same-store sales increased 3.4%, while the international same-store sales rose 17.1%.
AutoZone’s constant-currency same-store sales for its international unit are up 2.5%.
Gross margin was 52.5%, down 137 basis points year-over-year. The decline reflects a 138 bps non-cash LIFO headwind.
The company’s inventory increased 13.1% over the same period last year, driven primarily by growth initiatives and inflation.
Operating profit decreased 1.2% to $698.5 million.
Net income for the quarter was $468.9 million compared to $487.9 million in the prior year.
Capital Allocation and Store Expansion
AutoZone repurchased 85,000 shares in the quarter at an average price of $3,666. The total buyback outlay was $310.8 million.
At the end of the quarter, the company had $1.4 billion remaining under its current share repurchase authorization.
In the quarter ended February 14, 2026, AutoZone opened 43 U.S. stores. It also opened 18 in Mexico and 3 in Brazil, totaling 64 net new stores.
AutoZone exited the quarter with cash and equivalents worth $285.49 million.
It clocked an operating cash flow of $342.46 million, down from $583.75 million year-over-year.
Management Commentary on Demand Trends
CEO Phil Daniele noted that domestic DIY and Commercial sales performed well despite winter storms disrupting operations in late January and early February.
Daniele said international sales, on a constant-currency basis, came in slightly below expectations, but the company believes it continues to gain market share by outperforming competitors in Mexico and Brazil.
He added that the company remains focused on capturing additional market share in its fragmented industry and is committed to a disciplined approach to growing earnings and cash flow to enhance shareholder value.
AZO Price Action: AutoZone shares were down 5.88% at $3654.18 at the time of publication on Tuesday, according to Benzinga Pro data.
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