AutoZone (AZO) Q2 2025 earnings summary

Executive summary

• Net sales grew 2.4% year-over-year to $4.0 billion for Q2 FY2025, with total company same store sales up 2.9% on a constant currency basis and domestic same store sales up 1.9%.

• International same store sales rose 9.5% on a constant currency basis, but reported a negative 8.2% due to currency headwinds.

• Domestic commercial sales grew 7.3% to $1.05 billion, while DIY sales were flat and discretionary categories underperformed.

• Net income declined 5.3% to $487.9 million, and diluted EPS fell 2.1% to $28.29, impacted by FX and higher expenses.

• 45 net new stores opened in the quarter, bringing the total to 7,432 across the U.S., Mexico, and Brazil.

Financial highlights

• Gross margin was 53.9%, flat year-over-year, with merchandising margin improvements offsetting LIFO and commercial mix drag.

• Operating expenses as a percentage of sales increased to 36.0% from 34.6% due to growth investments.

• EBIT declined 4.9% year-over-year to $706.8 million; net income was $487.9 million, down 5.3%.

• Free cash flow for the quarter was $291 million, up from $179 million last year; cash flow from operations was $583.7 million, up from $434.1 million.

• Inventory increased 10.4% year-over-year to $6.59 billion; accounts payable/inventory ratio was 118.2%.

Outlook and guidance

• Management expects continued FX headwinds, with projected full-year impacts of $356 million to revenue and $4.82 per share to EPS if current rates persist.

• Anticipate improved sales trends in both DIY and commercial segments in the second half as comparisons ease and growth initiatives gain traction.

• Plan to open around 100 international stores and 19 Mega Hubs in the back half of the year.

• SG&A growth will remain elevated for the next few quarters to support strategic investments, with normalization expected as comps accelerate.

• Management expressed confidence in continued momentum for the back half of the fiscal year, citing strong domestic and international performance and preparation for the spring and summer selling season.