TLDR
- AutoZone Q4 sales rise 6.9% adj.; earnings dip on expenses, LIFO charges
- Strong sales, weaker margins: AutoZone Q4 shows mixed performance
- AutoZone’s Q4: Sales climb, EPS falls as costs and LIFO weigh results
- Growth in stores, sales momentum offset by profit margin squeeze
- AutoZone boosts sales and buybacks, but earnings decline in Q4
AutoZone, Inc. (NYSE: AZO) shares closed slightly higher at $4,130.80 (+0.26%) after a volatile trading session.
The stock initially dipped during regular hours but recovered in after-hours trading following the company’s Q4 earnings release. Strong adjusted sales growth and significant share buybacks supported renewed market confidence.
Sales Growth Stands Out Despite Fewer Weeks in Q4
AutoZone reported fourth-quarter net sales of $6.2 billion, up 0.6% compared to the prior year’s 17-week quarter. When adjusted for the extra week in the previous period, sales increased by 6.9%, indicating robust core performance. Same-store sales grew 4.8% domestically and 2.1% internationally, showing steady momentum across regions.
Total company same-store sales rose 4.5% overall, or 5.1% on a constant currency basis, reflecting operational consistency. On a full-year basis, net sales reached $18.9 billion, increasing 2.4% from fiscal 2024. These results underscore the strength of AutoZone’s retail and commercial segments despite a challenging macro environment.
Domestic commercial and DIY performance improved sequentially throughout Q4, contributing to the sustained sales increase. International same-store sales also grew 7.2% on a constant currency basis during the quarter. The company opened 141 net new stores in Q4 and 304 for the fiscal year, boosting its global footprint.
Earnings Decline Due to LIFO Charges and Expense Pressure
Despite solid sales, gross profit margins narrowed in Q4, falling 98 basis points year-over-year to 51.5%. A significant non-cash LIFO charge of $80 million, compared to no charge in the prior year, drove the margin compression. Merchandise margins improved, but rising expenses offset the gains.
Operating expenses rose to 32.4% of sales in Q4 from 31.6% last year, reflecting increased investments in growth initiatives. As a result, operating profit fell 7.8% to $1.2 billion for the quarter. Net income also dropped to $837.0 million, down from $902.2 million in the prior year.
Diluted earnings per share decreased 5.6% to $48.71 in Q4, influenced by margin and expense pressures. For the full year, operating profit declined 4.7% to $3.6 billion, while net income dipped 6.2% to $2.5 billion. Annual diluted EPS came in at $144.87, down from $149.55 last year.
$1.5 Billion in Buybacks and Strong Store Growth Signal Confidence
AutoZone repurchased 117,000 shares in Q4, investing $446.7 million at an average price of $3,821 per share. Over the fiscal year, it repurchased 447,000 shares for $1.5 billion, averaging $3,425 per share. These buybacks reflect the company’s strong cash generation and commitment to capital returns.
At the fiscal year-end, $632.3 million remained under the current share repurchase authorization. The company’s inventory rose 14.1%, driven by its expansion strategy and continued store growth. Net inventory per store stood at negative $131,000, reflecting efficient inventory management.
AutoZone continues to prioritize store expansion, having opened over 300 net new stores in the fiscal year. With improving international sales and stable domestic performance, it aims to increase market share further. These factors, combined with disciplined capital allocation, reinforce the long-term value proposition.
